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12/12/16

Tax Havens: Ireland and four UK territories named on 'world's worst tax havens' list

The Republic of Ireland along with four UK-linked territories – Bermuda, the Cayman Islands, Jersey and the British Virgin Islands – appear in a new list of the world’s 15 worst corporate tax havens revealed by Oxfam.

They earned their place on the list of shame because they've adopted an aggressive set of policies to enable companies to minimise their tax bills.

And Oxfam chief executive Jim Clarken has warned there is "a risk" that Northern Ireland too could be used as a tax haven when it introduces its lower rate of corporation tax in 2018, leaving those who can least afford it to pick up the tab.

Oxfam analysed key practices such as offering unfair and unproductive tax incentives and zero corporate tax rates, as well as failure to cooperate with international processes to combat tax avoidance including measures to increase financial transparency.

The ‘Tax Battles’ report highlights how tax havens help to facilitate tax dodging that robs countries around the world of vital revenue that could be used to fight poverty.

In May more than 300 top economists, including Cambridge University professor Ha-Joon Chang, warned there is no economic justification for tax havens and urged world leaders to take on the powerful vested interests that benefit from the status quo.

The new report follows Oxfam-commissioned research in Northern Ireland, conducted by Millward Brown Ulster, which revealed that 89 per cent of people here are concerned that when big firms don’t pay their fair share of tax, ordinary people pay the price.

The survey showed that 87 per cent of people in Northern Ireland want Theresa May to prioritise ending tax avoidance.

Clarken said: “Ireland is part of a toxic global tax system servicing the very wealthiest while ordinary people pay the price and lose out on essential public services.

"And with Northern Ireland set to take control of corporation tax in 2018, there is overwhelming public support to ensure any new proposed tax regime here is fair, open and transparent – and that it does not impact negatively on vulnerable people.

“Any reform of the corporate tax system must contain safeguards preventing companies from taking advantage to avoid tax owed elsewhere. Otherwise there is a risk that Northern Ireland could be used as a tax haven, leaving those who can least afford it to pick up the tab."

He added: “Tax dodging isn’t an abstract accounting game – the lost revenue has devastating consequences for the world’s poorest people who miss out on life-saving medicines and the chance to go to school.

“Around the world Ireland is known as a country of good fun, bad weather and awful tax policies that facilitate worsening inequality by allowing some of the world’s richest companies to avoid paying their fair share to society. This is no badge of honour.

“Having the UK Overseas Territories and Crown Dependencies operate as tax havens undermines these islands’ efforts to be outward-facing, responsible members of the international community. It’s time to end this embarrassing contradiction in our own backyard.”

Bermuda tops the list of 15 countries followed by the Cayman Islands and the Netherlands. Switzerland and Singapore are in fourth and fifth place followed by Ireland.

Luxembourg is in seventh place, Curaçao is eighth and Hong Kong ninth. The countries ranked from 10th to 15th are Cyprus, the Bahamas, Jersey, Barbados, Mauritius and the British Virgin Islands.

Ireland’s score was based on its lack of effective rules to prevent corporate tax dodging and because it facilitates large-scale corporate tax avoidance through profit-shifting, aggressive tax planning structures and so-called sweetheart deals like the tax arrangements enjoyed by Apple that enabled the global tech giant to pay a 0.005 percent corporate tax rate.

Read more: Ireland and four UK territories named on 'world's worst tax havens' list - The Irish News

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