Tax havens harming developing countries

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ALMOST half of all money invested in developing countries is channelled through tax havens and deprives the world’s poorest countries of tax revenue, according to the charity ActionAid.

In total, the OECD (Organisation for Economic Co-operation and Development) estimates that money lost to developing countries through tax havens is three times more than they receive in aid each year.

More foreign investments in developing countries go through tax havens than investments in developed countries, according to ActionAid’s report, How Tax Havens Plunder the Poor.

Mike Lewis, ActionAid’s tax expert who carried out the research, said: “As we have seen with recent cases like Google and Amazon, tax avoidance is a huge issue here in the UK.

“But evidence shows that poor countries are losing even more from tax avoidance and are least equipped to protect fragile public revenues.

“Developing countries are being deprived of billions of dollars of tax revenue 
by wealthy corporations and investors using secretive tax 

Mr Lewis said that tax havens are one of the main obstacles in the fight against global poverty.

He explained: “Their secrecy and harmful tax regimes leach money out of developing countries that could be used to end hunger and provide hospitals, schools and clean water.”

ActionAid reported that one single transaction through UK-linked tax havens would have provided India with US$2.2 billion (£1.5bn) in tax if it had not taken place offshore, according to the Indian government.

That sum is almost enough 
to provide every Indian 
primary school child with a 
subsidised midday meal for an entire year.

In another case, a major mining firm is reported to get 84 per cent of its revenue from Africa, but has just four of its 81 subsidiaries registered in African countries, while 47 are registered in tax havens.

The report comes shortly before the G8 Summit in 
June when world leaders, 
including Prime Minister 
David Cameron, have a historic opportunity to call time on tax havens.

The UK is responsible for one-in-five global tax havens – more than any other country.

G8 countries are collectively responsible for 40 per cent of tax havens.

Research by ActionAid shows that 98 of the FTSE 100 companies use tax havens, showing the high involvement of British companies.

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