But a representative of Jersey’s finance sector has called their assessment ‘subjective’ and ‘confused’, claiming that it ignores the fact that Jersey abides by international standards and actually provides a ‘net tax benefit’ to the UK.
The Corporate Tax Haven Index, which has been published for the first time by the Tax Justice Network, ranked the Island seventh among countries that have ‘done the most’ to enable tax avoidance and ‘break down the global corporate tax system’.
Other British territories on the list include the British Virgin Islands, Bermuda and the Cayman Islands, which are ranked first to third respectively.
The report says that the UK bears the ‘lion’s share of responsibility’ for corporate tax avoidance due to the use of companies and trusts based in its ‘controlled network of satellite jurisdictions’.
It adds: ‘The UK, with its corporate tax haven network, is by far the world’s greatest enabler of corporate tax avoidance.
‘[It] has single-handedly done the most to break down the global corporate tax system, accounting for over a third of the world’s corporate tax avoidance risks as measured by the Corporate Tax Haven Index.
‘That’s four times more than the next greatest contributor of corporate tax avoidance risks, the Netherlands, which accounts for less than 7%.’
The rankings are determined on factors such as how aggressive a jurisdiction’s corporate tax haven laws,
loopholes and policies are, as well as the size of corporate activity in the jurisdiction.
Jersey was viewed to have a relatively small level of corporate activity in the annual assessment, but scored very badly in terms of encouraging loopholes, aggressive tax planning and transparency of company or trust accounts.
Joe Moynihan, chief executive of Jersey Finance – the body which promotes the Island’s industry – questioned the credibility of the index, however, and said that the Island helped capital to be invested around the world using its specialist corporate structures.
‘This index appears to be based on rather subjective assessments, to confuse tax neutrality with tax avoidance and to ignore global standards,’ he said.
‘To be absolutely clear, independent research all points to the positive impact Jersey plays in enabling global capital to be put to work around the world, where it is needed most.
‘Jersey provides a net tax benefit to the UK, for instance, of around £14 billion a year, to the EU of 1 billion euros, and facilitates foreign direct investment of some $13 billion each year to support greenfield site investment in a broad range of developed and developing countries.
‘All the while meeting and, in some cases, exceeding international standards of transparency and cooperation.’
The top ten list is: British Virgin Islands, Bermuda, Cayman Islands, the Netherlands, Switzerland, Luxembourg, Jersey, Singapore, the Bahamas and Hong Kong.
