The secret life of the UK’s biggest companies listed on the London Stock Exchange has been uncovered today revealing that 98 out of 100 are using tax havens. ActionAid’s research show for the first time just how deeply embedded this practice is for nearly all of Britain’s top multinationals.
Corporate tax avoidance, which is one of the main reasons companies use tax havens, is having a massive impact on rich and poor countries alike. Developing countries currently lose three times more to tax havens than they receive in aid each year.
ActionAid's report Addicted to tax havens shows banks are doing a brisk business via tax havens, despite the ongoing repercussions of a global financial crisis they helped to create. The banking and financial sector are by far the heaviest users with the ‘big four’ High Street names HSBC, Barclays, Lloyds Group and RBS notching up 1,649 tax haven companies.
Chris Jordan, ActionAid’s tax justice expert said: “ActionAid’s research showing the use of tax havens by Britain’s biggest companies raises serious questions they need to answer.
“Tax havens have a damaging impact on the UK exchequer, the stability of the international financial system, and vitally on the ability of developing countries to raise tax revenues which would lift them out of poverty and make them less dependent on aid.”
ActionAid’s key findings:
- 98 multinationals declared tax haven companies. The banking sector makes heaviest use of tax havens, with a total of 1,649 tax haven companies between the ‘big four’ banks. They are by far the biggest users of the Cayman Islands, where Barclays alone has 174 companies.
- The biggest tax haven user overall is the advertising company WPP, which has 611 tax haven companies.
- A quarter of the 34,216 companies set up by FTSE 100 multinationals are located in tax havens.There are over 600 FTSE 100 companies in Jersey (more than in the whole of China), 400 in the Cayman Islands and 300 in Luxembourg – all tiny tax havens.
- Only two little-known companies Fresnillo and Hargreaves Lansdown, don’t use tax havens
The use of tax havens facilitates tax avoidance and evasion, which undermines the revenue bases of both developing and developed countries. Additional revenues are urgently needed both to invest in the fight against poverty and to tackle the deficits incurred during the financial crisis in rich countries.
Chris Jordan continued: “When multinationals use tax havens to avoid paying their fair share, ordinary people in both poor and rich countries are left to pick up the bill. Spending on doctors, nurses and other essential services gets cut for those who need it most.
“Tax havens might provide the lure of financial secrecy and low tax rates for big companies, but at a time when all countries are desperate for revenues, the UK government can’t afford to turn a blind eye.”
ActionAid is calling on the government to urgently rethink its current proposals to relax UK anti tax haven rules. The Treasury itself estimates these changes will result in an £840 million tax break for multinational companies that use tax havens.
With both developing and developed countries bearing the brunt of debilitating losses, ActionAid says the UK must ensure the G20 takes the decisive action it promised on tax havens at the London summit in 2009.