Tax haven responses underline need for government action
Last week, ActionAid identified 8492 tax haven-registered companies owned by the 100 biggest businesses on the London Stock Exchange, a number far in excess of that previously disclosed.
So how have companies responded? We found advertising giant WPP had the most operations in tax havens and its spokesperson admitted candidly:
“I am not saying there are not any companies there for tax planning reasons…. That's one of the reasons we moved [WPP's head office] to Dublin."
"All foreign subsidiaries are included in returns to HMRC either because they are UK tax resident and file UK tax returns or because they are listed on returns giving information on income earned that may be subject to UK tax under what is referred to as the controlled foreign company legislation."
You can be forgiven if your eyes glazed over at that point, but the reference to "controlled foreign company legislation" is important. These rules are designed to deter tax haven abuse by companies, but the Treasury is proposing to relax them, giving an £840 million tax break to the very multinational companies that use tax havens.
Not only would the UK lose out on almost a billion pounds in revenue from big business, but the changes would give the green light for UK companies to shift even more of the profits they make in the developing world into tax havens. The government must urgently re-think its plans.
Ordinary people and small and medium-sized enterprises in both developing and developed countries lose out when companies use tax havens to avoid their taxes. Given the ongoing economic crisis, government action is urgently needed to wean companies off their addiction to tax havens.
ActionAid has published its tax haven data and asked supporters to use it to create their own infographics. The bubble chart above shows the number for FTSE 100 owned subsidiary companies in tax havens. Visit ActionAid's Facebook page for more.
Chris Jordan is tax justice campaigner for ActionAid.
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