This week the British Overseas Territories, including Bermuda, Gibraltar, the Cayman Islands, the British Virgin Islands and others, are meeting in London for their annual conference. And top of the agenda will be tax havens.
The territories, which the UK is ultimately responsible for, have come under enormous pressure to shed their tax haven label and end the secrecy and financial structures that allow big businesses to avoid paying billions of dollars of tax - often in poor countries.
But how much has really changed?
How Google has used Bermuda to avoid tax
The reality is that huge amounts of money are still being routed through tax havens – something recently illustrated by Google, which according to a recent report in the Financial Times, last year funnelled €8.8bn of investment into Bermuda.
That was an amount of cash that was a quarter up on the year before.
It’s a cunning ruse, because by routing royalty payments to Bermuda, Google legally reduces its overseas tax rate to about 5 percent.
Google is reporting revenues of over $300 million of revenues in India and is expanding in many other developing countries. The question is, if the same tax haven tricks are being used, could those countries also be losing out?
Meanwhile only last Friday, the British Virgin Islands was named by the OECD as one of a number of countries that has failed to live up to the already pretty low, international standards of financial transparency.
The Islands are home to 850,000 offshore companies – roughly 30 per head of population – and was reportedly marked down because “in a significant proportion of cases the responses to exchange of information requests were incomplete”.
What next for the campaign against tax avoidance?
After pressure from campaigners in the UK, Prime Minister David Cameron has been able to kick the issue of tax havens onto the international agenda. He recently announced that that the UK will set up a public register of beneficial ownership and has also got the Overseas Territories to commit to sign a multi-lateral convention on tax information sharing.
But the reality is there still remains much more to be done.
As the case of the British Virgin Islands has once again demonstrated, it’s not good enough just to sign agreements – they have to be acted upon.
For the Overseas Territories and others to finally shed their tax haven label, we need to see changes on a much bigger scale.
We still need to see greater transparency and putting company accounts on public record so they can be examined by all, would be a start.
But equally importantly, tax havens must also reform the harmful tax regimes and loopholes that continue to cost developing countries billions in lost revenue every year.
Until that happens the campaign goes on.