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ActionAid: 98 of 100 FTSE Companies Use Tax Havens

$s Published: 5 years, 1 months and 21 days ago. Tagged in extractive industries, tax havens, transparency

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Source: Revenue Watch Institute

Author:  Kathryn Joyce, RWI web editor

Date: 12th October 2011

Oil and mining companies are second only to the banking and financial sector in their reliance on tax havens, according to a report just released by economic justice advocates ActionAid.

The report, Addicted to Tax Havens (pdf), shows that 98 companies out of the FTSE 100 Index—the top companies listed on the London Stock Exchange—use tax havens, jurisdictions where nominal tax rules apply and there is a lack of transparency in information exchange with foreign authorities.

ActionAid has also used their data to create an online tool that allows readers to track the overseas subsidiaries that help companies mask their wealth.

“Corporate tax avoidance, which is one of the main reasons companies use tax havens, is having a massive impact on rich and poor countries alike,” ActionAid wrote in a release. “Developing countries currently lose three times more to tax havens than they receive in aid each year.”

Many resource-rich countries suffer these losses due to tax avoidance by the oil, gas and mining sector. According to Action Aid, BP and Shell alone have amassed 1,000 tax haven companies between them.

Nicholas Shaxson, author of Treasure Islands: Tax Havens and the Men Who Stole the Worldspoke with RWI in May about how tax havens damage countries’ incomes. A low estimate of U.S. tax losses to havens is $100 billion annually, said Shaxson, while the toll on developing nations is much higher, and compounded by the theft of money from development coffers.

“There’s a big misconception that this is just about tax,” said Shaxson. “[But] a huge part of the story is about financial regulation. These are essentially places you go to escape whatever it is you don’t like.”

“This report offers more evidence that greater transparency from oil, gas and mining companies is necessary,” said RWI Program Coordinator Rebecca Morse. “Offshore tax havens give companies the opportunity to evade responsibility for paying a fair share of their profits in their home countries and in the countries where they exploit natural mineral wealth, which are particularly vulnerable to revenue loss through tax avoidance.”

ActionAid’s research complements a new report from PWYP Norway, Piping Profits, which investigates the web of 6,038 subsidiaries created by the world’s most powerful oil, gas and mining companies—more than a third of which are located in tax havens or secrecy jurisdictions. The report calls for new legislation requiring country-by-country reporting of full financial information by oil, gas and mining companies.

RWI’s Deputy Director Antoine Heuty and Program Coordinator Rebecca Morse bloggedabout Piping Profits last week as part of coverage of the Task Force for Global Integrity and Financial Development 2011 conference.

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