Tax havens - a secret scandal

Increasingly the world’s largest companies, including financial institutions, are using tax havens to dodge hundreds of billions in tax and to hide risky financial activities. Effectively these tax havens are supporting a ‘shadow economy’ hidden from the scrutiny of financial regulators.  It’s conservatively estimated that tax havens hold more than $11.5 trillion.

Tax justice campaign protest outside Royal Bank of Scotland, St Hellier, Jersey (2009)

The UK actually plays a major role in helping companies dodge the tax they owe. Many of the world's tax havens are British, whether overseas territories such as the Cayman Islands, Bermuda and British Virgin Islands or Crown Dependencies such as Jersey, Guernsey and the Isle of Man. The City of London itself acts as the nerve centre for these tax havens and supports an army of lawyers and accountants devoted to helping companies dodge tax.

Tax havens themselves even played a key role in the banking crisis. The banks were able to take advantage of the secrecy within tax havens because of poor reporting requirements and weak regulatory oversight. As a result banks were able to create risky financial products based largely on debt that contributed to the eventual banking crisis. A TUC report found that the 4 major banks (HSBC, Barclays, Lloyds & RBS) have some 1200 subsidiaries in tax havens while newspaper investigations found that Barclays and RBS had both dodged hundreds of millions in tax using tax havens.

In response to these concerns the leaders of the G20 promised to crack down on tax havens but unfortunately their actions didn’t match the rhetoric.  Tax havens continue to undermine our economy and drain the UK of valuable tax revenue. War on Want has been campaigning to highlight the role tax havens play in undermining developing countries fight against poverty. We are calling on the government to take action against UK tax havens.