Charities claim lost tax on hidden company profits in British overseas territories acting as tax havens could generate double the money developed countries spend on overseas aid.
A collective of charities is campaigning for more transparency by governments in like the British Virgin Islands, Bermuda and the Caymans who they accuse of making money out of tax secrecy.
However, their claims have been blasted by Prime Minister David Cameron.
“It’s not fair to call these places tax havens,” he said ahead of the annual joint ministerial conference of leaders from the territories in London.
“They have all taken action to make tax fairer and more open.”
Tax information sharing
In recent months, all the territories have signed up to a UK tax information sharing agreement along the lines of the US Foreign Account Tax Compliance Act (FATCA), which demands automatic exchange of financial data between governments in a bid to crackdown on tax avoidance.
The Caymans and Bermuda have already indicated they will sign FATCA treaties with the US.
The British government has also been tasked with compiling a central register of companies based on the territories to reveal financial information and details of directors.
The charities, including War on Want, Action Aid and Oxfam claim that more openness could raise around £180 billion in tax. That’s more than the combined total the developed world gives in aid to the rest of the world.
“Tax havens offer a veil of secrecy over corporate affairs and low tax rates – and Britain’s overseas territories offer both,” said Action Aid‘s Chris Jordan.
Oxfam’s Claire Godfrey also explained the joint ministerial meeting is an opportunity to end the row over tax havens.
Fair and transparent
“Only when every place acting as a tax shelter agrees to join a fair and transparent global tax system will the world’s poorest countries be able to reap the taxes they’re due,” she said.
War On Want has hit out at global search giant Google, which allegedly fed £6 billion through Bermuda in 2012. The cash amounts to around 80% 0f the company’s global revenue.
Bermuda has no corporation tax, no registers of company ownership and no requirement to file company accounts, said the charity.
“Cameron claims the world has too many tax havens where the wealthy and corporations can avoid paying tax,” said tax campaigner Murray Worth. “However, he steadfastly denies Britain’s overseas territories are a network of tax shelters.”
The Foreign Office expects tax to be on the agenda for the two-day conference, said a spokesman.
