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Bahamas on another tax haven list

The Bahamas is on another tax haven list. This time it’s number nine on a list of the “top ten most corrosive corporate tax havens in the world”, as outlined by the Corporate Tax Haven Index.

The index is compiled by the Tax Justice Network, which focuses on research, analysis and advocacy in the area of international tax and financial regulation, including the role of tax havens.

The top ten countries “that have done the most to proliferate corporate tax avoidance and break down the global corporate tax system” as recorded by the index are the British Virgin Islands, Bermuda, Cayman Islands, Netherlands, Switzerland, Luxembourg, Jersey, Singapore, The Bahamas and Hong Kong.

“These ten jurisdictions alone are responsible for over half (52 percent) of the world’s corporate tax avoidance risks as measured by the Corporate Tax Haven Index,” the statement points out.

“Over two-fifths of global foreign direct investment reported by the International Monetary Fund (IMF) is booked in these ten countries, where the lowest available corporate tax rates averaged 0.54 percent. The top three ranked jurisdictions are part of the British-controlled network of satellite jurisdictions to which the UK has outsourced some of its corporate tax haven activity.”

The article further notes that some of the  “world’s most aggressive countries in terms of driving down other countries’ withholding tax rates through treaties”, also find themselves in the “top ten most corrosive corporate tax havens in the world” list. Both the Netherlands and Switzerland are on the list.

The Netherlands recently added The Bahamas and 15 other countries to a tax haven black list, extending the list of five countries that were already on the European Union’s (EU) black list.

Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands and the Turks and Caicos Islands were among the countries added to the Dutch black list along with The Bahamas.

The statement points out that the United Kingdom and its “satellite jurisdictions” are responsible for the lion’s share of the “breakdown of the global corporate tax system”.

The statement goes further by taking the EU to task under a subsection called “EU hypocrisy”, explaining: “The Corporate Tax Haven Index documents the sobering hypocrisy of the European Union. Excluding the UK, the EU is responsible for over a third (35 percent) of the world’s corporate tax avoidance risks as measured by the Corporate Tax Haven Index.”

The researchers behind this first-time index are calling for new tax rules that “tax corporations where employees work, not where ledgers hide”.

“These countries have aggressively undermined the ability of governments across the world to meaningfully tax multinational corporations,” the statement notes.

“An estimated $500 billion in corporate tax is dodged each year globally by multinational corporations – enough to pay the UN’s under-funded humanitarian aid budget 20 times over every year.”

The first ever study of its size and scope, the Corporate Tax Haven Index scores each country’s tax system based on the degree to which it enables corporate tax avoidance.

“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 jeopardized by the country’s tax system, the higher it ranks on the index.”

“The ‘axis of avoidance’ – the UK, with its corporate tax haven network; Netherlands, Switzerland and Luxembourg – dominate the top of the Corporate Tax Haven Index,” the Tax Justice Network states.

“Together, they are responsible for half of the world’s corporate tax avoidance risks. Over 40 percent of foreign direct investments reported by the International Monetary Fund – $18 trillion in value – are booked in these four countries’ jurisdictions, which on average have offered corporate tax rates of 3 per cent or less.

“The ‘axis of avoidance’ have booked and exposed to dangerous degrees of corporate tax avoidance risk, international direct investments from multinational corporations equivalent to over a fifth of global GDP, or almost the entire economic output of the EU.”

According to the network, the banking and financial sectors receive the largest portion of tax incentives across the world.

“Over half of EU countries (57 percent) allow companies engaged in financial activities to pay no tax, while an additional 29 percent grant partial exemptions,” the statement points out.

Senior Business Reporter at The Nassau Guardian
Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian.
Education: Florida International University, BS in Journalism
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