UK Identified as the 'Largest Facilitator' of Corporate Tax Evasion

A recent study by the Tax Justice Network has identified the United Kingdom as the world's largest facilitator of corporate tax evasion.

UK's Role in Global Tax Evasion

As demonstrated in the infographic below by Anna Fleck from Statista, British Overseas Territories and Crown Dependencies are predominantly featured in the top eight places that allow multinational corporations to evade tax on their profits. This means the UK is accountable for approximately one third of the global tax evasion risk.

Global Distribution of Corporate Tax Abuse Risk

EU countries also account for a third of the risk of corporate tax abuse, while African nations are responsible for only four percent, and Latin America for a mere three percent. Countries that have seen a decline in their performance include Brazil, Poland, and Mexico.

New Entrants and Rankings in the Tax Evasion Index

For the first time in 2024, Ireland made it to the top ten list with an index value of 1,622, securing the ninth position. Following Ireland are Luxembourg (1,480) and the Bahamas, the latter being an independent member of the British Commonwealth but not an Overseas Territory or Crown Dependency. The Isle of Man and Guernsey, both Crown Dependencies, rank 12th and 13th respectively. The United Kingdom itself ranks 18th with a value of 894.

Monetary Losses to Tax Havens

According to the Tax Justice Network, tax havens are responsible for a loss of about half a trillion dollars every year.

Methodology of the Index

The index evaluates jurisdiction laws and monitors the volume of corporate financial activity entering and leaving jurisdictions. A Haven Score is determined by more than 70 questions under 18 indicators to find the extent to which a jurisdiction’s laws and regulations allow for corporate tax abuse. The outcome of these indicators are then combined with global scale weights, which are based on IMF data on foreign direct investments. The final figure is a measure of the contribution of each jurisdiction to the global problem of corporate tax abuse.

Bottom Line

The findings of the Tax Justice Network's study shed light on the significant role the United Kingdom and its territories play in enabling corporate tax evasion on a global scale. The implications of these findings are far-reaching, affecting economies and societies worldwide. What are your thoughts on these revelations? Do you think more should be done to curb corporate tax evasion? Share this article with your friends and discuss. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.