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Major contributors of FDI in India among the biggest tax havens: report

An estimated $500 billion in corporate tax is dodged each year globally by multinational corporations through these nations

twitter-logoBusinessToday.In | May 30, 2019 | Updated 16:45 IST
Major contributors of FDI in India among the biggest tax havens: report
The UK, with its corporate tax haven network, is by far the world's greatest enabler of corporate tax avoidance, says the report. Photo: TJN

Tax Justice Network, an independent international network that aims to address issues related to tax, tax havens and financial globalisation, has ranked the three British territories, including British Vergin Island, Bermuda and Cayman Islands, at the top for enabling corporate tax avoidance across in the world. The Netherlands and Switzerland follow the list as they received the highest corporate tax haven scores for enabling corporate tax avoidance.

As per the TJN report, named 'Corporate Tax Haven Index', an estimated $500 billion in corporate tax is dodged each year globally by multinational corporations. The amount, it said, is enough to pay the UN's under-funded humanitarian aid budget 20 times over every year.

The Corporate Tax Haven Index covers 64 countries based on their corporate tax haven score -- reflecting how aggressively they use tax cuts, loopholes, and secrecy to attract abusive multinational activity -- and a global scale weight, reflecting how big a player it is in cross-border activity. Big MNCs that want to avoid scrutiny, thus, route their money by making investments in these nations.

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Other nations included in the top 10 most corrosive corporate tax havens are Luxembourg (6), Jersey (British dependency, 7), Singapore (8),  Bahamas (9) and Hong Kong (10). These 10 territories alone are responsible for 52 per cent of the world's corporate tax avoidance risks, said the report.

Many of such countries, including UAE (12), Mauritius (14) and Cyprus (18), through which a lot of foreign direct investment (FDI) comes to India, have made it to the not-so-coveted list. Mauritius, Singapore, Netherlands, Japan and the US are among the top nation investors in India.

Slamming the UK for using its territories as tax havens, the report says the country, with its corporate tax haven network, is by far the world's greatest enabler of corporate tax avoidance and has single-handedly done the most to break down the global corporate tax system. "That's four times more than the next greatest contributor of corporate tax avoidance risks, the Netherlands, which accounts for less than 7 per cent," it added. Nearly 14 per cent of the world's FDI - over $6 trillion - is booked in the UK network, with the lowest available corporate tax rates averaging at 1.73 per cent, said the report.

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Edited by Manoj Sharma

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