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Report labels Bermuda a corrosive tax haven

Bermuda has been placed at number two on a list of “the most corrosive corporate tax havens in the world”, by the campaign group Tax Justice Network.

The group says the UK has waged a corporate tax war “against the ordinary citizens of rich and poor countries through a network of satellite jurisdictions to which the UK has outsourced some of its corporate tax havenry”.

It places the Overseas' Territories British Virgin Islands, Bermuda and Cayman Islands, at numbers one, two and three on its corporate tax haven index, while Jersey, a Crown Dependency is seventh. It notes that Bahamas, a member of the Commonwealth, is ninth, while the UK comes thirteenth.

However, Andy Burrows, chief executive officer of the Bermuda Business Development Agency, responded to the report saying the island has a long record of complying with compliance and global standards, and that it “is not a place to hide capital.”

The Tax Justice Network's study has been reported around the world by news agencies, including Reuters, Al Jazeera, and The Guardian and The Independent national newspapers in the UK.

The Tax Justice Network claims the UK has “effectively outsourced the corporate tax haven game to a ‘spider's web' of Overseas Territories and Crown Dependencies, which opted to stay politically and institutionally connected to Britain after the collapse of the British Empire in the 1950s and 1960s. Britain has full powers to impose or veto lawmaking in these places”.

The group claims there is an “Axis of Avoidance”, consisting of the UK and its “corporate tax haven network”, the Netherlands, Switzerland and Luxembourg, which it said are collectively responsible for half the world's corporate tax avoidance risks.

Alex Cobham, chief executive at the Tax Justice Network, said: “The hypocrisy revealed by the Corporate Tax Haven Index is sickening. A handful of the richest countries have waged a world tax war so corrosive, they've broken down the global corporate tax system beyond repair.

“The UK, Netherlands, Switzerland and Luxembourg — the Axis of Avoidance — line their own pockets at the expense of a crucial funding stream for sustainable human progress.

“The ability of governments across the world to tax multinational corporations in order to pay teachers' wages, build hospitals and ensure a level playing field for local businesses has been deliberately and ruthlessly undermined.

Mr Cobham added: “When our laws for taxing global corporations stop working, the global economy stops working for the vast majority of us. All around us we see inequalities go addressed, political extremism unchallenged and democratic institutions faltering — and the thread that runs through it all is a failure to defend progressive taxation.

“To curtail the corporate tax avoidance that costs hundreds of billions of dollars every year, governments must finally deliver international rules that ensure profits are declared, and tax paid, in the places where real economic activity takes place. Corporations should be taxed where their employees work, not where their ledgers hide.”

Reacting to the report, the BDA's Mr Burrows, said: “Bermuda's long-respected record of compliance with global standards is unquestioned and strengthens the global discussion about tax-transparency matters and regulatory best practices.

“Our jurisdiction is known as a top-tier international financial centre whose businesses make a significant contribution, particularly via re/insurance, to countries around the world. Bermuda is not a place to hide capital; it is a place to raise capital.”

The Tax Justice Network said it scored each country's tax system based on the degree to which it enables corporate tax avoidance.

It said each country's corporate “tax haven score” is then combined with the scale of corporate activity in the country to determine the share of global corporate activity put at risk of tax avoidance by the country. The greater the share of global corporate activity jeopardised by the country's tax system, the higher it ranks on the index.

The TJN report can be viewed at http://bit.ly/2MefUbw and the corporate tax haven index at http://bit.ly/2wrehws

Under fire: the Tax Justice Network has listed Bermuda as the second “most corrosive corporate tax haven in the world” (File photograph)

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Published May 28, 2019 at 5:57 pm (Updated May 28, 2019 at 5:57 pm)

Report labels Bermuda a corrosive tax haven

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