New ActionAid research, tracking the offshore structures of the FTSE100, finds that the presence of the UK’s largest companies in tax havens has not diminished despite media scandals over tax avoidance and a promised government crackdown on tax havens.
Nearly 40 per cent of all the overseas subsidiary and associate companies of the FTSE100 are now registered in tax havens. 78 of the FSTE100 do business in developing countries. Every new entrant to the FTSE100 since 2011 has tax haven companies, averaging a third of all their overseas subsidiaries.
Mike Lewis, ActionAid’s Tax Justice Policy Adviser says that tax havens remain a key link in the chain that lets multinational companies and wealthy individuals drain billions from poor countries.
"Tax havens are one of the biggest hidden obstacles in the fight against global poverty. Poor countries lose an estimated three times more money to tax havens than they receive in aid each year – money needed to build roads, fund schools and finance developing countries’ own fight against hunger and poverty.
"Four years after G20 leaders promised an end to tax havens, tax haven structures are near-universal amongst the UK’s biggest multinationals."
“Now, with David Cameron promising action on tax havens at this year’s G8, the problem is on the UK’s doorstep. The UK is responsible for 1 in 5 of the world’s tax havens - that’s more than any other country.
These latest findings are an update of ActionAid research released in October 2011 analysing the subsidiaries, joint ventures and associated companies of the UK’s 100 largest publicly-listed companies. Eighteen months on, ActionAid found:
- 98 of the 100 FTSE100 multinational groups have companies in tax havens, as in 2011. Ten are themselves headquartered in a tax haven (up from nine in 2011). Despite 10 per cent of the FTSE100’s composition having changed since ActionAid’s last analysis, all new entrants to the FTSE100 have tax haven subsidiaries.
- Nearly 40 per cent of the FTSE100’s 22,000 overseas companies are located in tax havens. While the FTSE100’s total number of overseas companies has decreased since 2011, the proportion of these located in tax havens has slightly risen (from 37.8% to 38.2%).
- 78 FTSE100 companies, across 18 of the 19 business sectors represented in the FTSE100, operate in developing countries, and every one of these companies is a prolific tax haven user. No sector has fewer than a quarter of their overseas companies located in a tax haven.
- Banking maintains its position as the most prolific user of tax havens. Over half (58%) of all FTSE100 banks’ overseas companies are in tax havens (1,780 companies). Developing countries constitute almost a third of the countries in which FTSE100 banks operate, yet they have 13 times as many companies located in tax havens as in developing countries.
ActionAid points out that while the existence of tax haven subsidiaries is not proof of tax avoidance, and ActionAid is not accusing FTSE100 companies of tax avoidance or evasion, its findings highlight the extent of multinationals’ operations in jurisdictions that can provide substantial tax advantages and help obscure information.
The charity also says that fragile public revenues in some of the world’s poorest countries are being fatally undermined through corporate profit-shifting and other transactions through tax havens.
Mike Lewis adds that with one in eight people still going to bed hungry every night, ending tax havens’ secrecy and damaging tax regimes has never been more important.
"Stopping wealth being siphoned out of the poorest countries into tax havens is one of the most urgent tasks in the fight against hunger. But transparency deals that the UK and other European countries have recently struck with tax havens currently benefit rich countries only.
"David Cameron convenes the G8 leaders in Northern Ireland next month. They must deliver on their promise to call time on tax havens for the benefit of all countries, including the poorest."