Why is the UK’s Treasure Island tax haven in trouble? Crime News:

The UK’s exotic Treasure Island tax haven could be the biggest threat to its existence in half a century after the United States and its allies promised to levy more taxes on large, lucrative multinational corporations.

The often remote islands of the former British Empire have served as a priority for everyone from wealthy Chinese officials to Russian oligarchs to Western firms to hedge lower tax revenues or complete secrecy.

But a tax deal by G7 finance ministers on a large mansion near 19th-century Buckingham Palace is likely to hit Britain’s Treasure Islands hard after attempts to recoup the profits of large economies.

“This is a turning point,” said Alex Cobham, chief executive of the Tax Justice Network, an advocacy group advocating for tax evasion. “In five or 10 years we will look back and say, ‘Yes, that’s the time to move on.’

“There is a narrative shift. “This active commitment is to end the race down,” Cobham said, although he acknowledged that the details were not yet clear, and that politicians had promised tough action for years.

According to the tax justice network, the world loses $ 427 billion annually due to corporate tax evasion. Of that, $ 245 billion is lost to multinational corporations for tax havens, and the remaining $ 182 billion is lost to wealthy individuals amassing assets.

If the details of the G7 promise become a reality, global hidden profits could be transformed into one of the most important forms since the days when the British Empire collapsed in the 20th century.

When British rule collapsed, some of its holdings became self-governing territories that were not part of the United Kingdom but were part of British defense treaties with strong ties to London.

Some of these 14 overseas British territories, including the Bermuda Islands, the British Virgin Islands (BVI), the Cayman Islands, Ibraltar, the Turks and Caicos Islands, began to experience a wealth of beach tourism, both exotic and financially active. distant taxpayers have changed briefly.

Competitive networks

The British tax havens are responsible for 29 percent of the $ 245 billion in tax lost to corporations worldwide, according to the Tax Justice Network, which ranks BVI, Cayman Islands and Bermuda as the top three corporate tax evaders on the planet.

The BVI, Cayman Islands and Bermuda Treasury did not immediately respond to requests for comment.

Cobham says the British Isles, which has been hit hardest by the recalculation of corporate profits, are facing a calculation that will undermine their decades-old business model.

In fact, two competing, intertwined tax havens developed. British network և more continental European flavor network, which includes Ireland, Cyprus, Luxembourg, Malta, the Netherlands և Switzerland.

The G7 tax deal will make corporate tax havens much more attractive, as it gives countries the right to supplement taxes on corporate profits in countries where tax rates are below the global minimum.

“Those who have traditionally served the private market, that is, the palm market, if you want, they will largely avoid it,” said Richard Murphy, a management accountant at the University of Sheffield. School.

“Big companies like Luxembourg, like Ireland and the Netherlands, are really going to get a hit here,” he said.

The worst-hit countries are expected to lobby for their tax benefits as much as possible. Basic accounting definitions such as “profit” և “tax paid” have yet to be defined, Murphy said.

Although Murphy saw less of an impact on traditional British tax havens, he said that, ultimately, the strongest part of the G7 message was that it sent a signal to the corporate world. “Cleanse your deed.”

He said this would be a particular concern, as many Western councils face stakeholders who are pushing for better environmental, social and corporate governance.

“This sends a very big message to the business community: ‘Stay away from these places. “You can be in trouble,” he said. “Some of them will be in trouble,” he said.

“Tech is obviously going to hit, but so are financial services in a big way,” Murphy said. “The bank and the finances are in the main fire for this, as are some pharmaceutical companies.”

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