The Malta Independent 27 November 2021, Saturday

UK's top companies condemned for prolific use of tax havens – 30 in Malta

Malta Independent Thursday, 16 May 2013, 09:44 Last update: about 8 years ago

The UK's 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens, according to research published on Monday, raising fresh concerns about the full extent of corporate tax avoidance.

The figures, published by the charity ActionAid, show that only two of the companies listed on the UK's FTSE 100 have no subsidiaries in tax havens – while companies such as Barclays and Tesco own hundreds.

Corporate use of offshore subsidiaries has been roundly criticised by tax campaigners as a tactic to legally reduce corporate tax bills, with Vodafone, Starbucks and Amazon attracting widespread protests and criticism from MPs.

An analysis of the subsidiaries shows that 30 are registered in Malta. This is by far one of the lowest: the US state of Delaware has 2,556, the Netherlands 1,282, Ireland 736 and Jersey 808.

Of the 30 registered in Malta, seven are HSBC subsidiaries, four are by Shire, and by the Vodafone Group, three are by British American Tobacco and two are by the Intercontinental Hotel Group, and The Weir Group.

David Cameron has pledged to put tackling the issue of tax avoidance and offshore secrecy at the heart of next month's G8 summit, which Britain chairs this year.

Speaking after Saturday's meeting of G7 finance ministers, the chancellor, George Osborne, said international action was needed, adding it was "incredibly important that companies and individuals pay the tax that is due".

But many of the offshore jurisdictions used by the FTSE 100 have close ties to the UK, illustrating the challenge facing Cameron and Osborne ahead of negotiations with other G8 leaders.

In total, FTSE 100 companies have 1,685 subsidiaries in UK Crown dependencies such as Jersey, or overseas territories such as the British Virgin Islands (BVI), Bermuda and Gibraltar.

The research also compiled data covered by a wider definition of tax haven, including onshore jurisdictions such as the US state of Delaware – accused by the Cayman Islands of playing "faster and looser" even than offshore jurisdictions – and the Republic of Ireland, which has come under sustained pressure from other EU states to reform its own low-tax, light-tough, regulatory environment.

By this measure, the UK's biggest public companies keep a total of 8,311 subsidiaries in tax havens – more than one in three of all the FTSE100's 22,042 foreign subsidiaries, associates and joint ventures.

The figures show that banks are the most prolific user of havens, with the big four – Barclays, HSBC, the Royal Bank of Scotland, and Lloyds – among the top 10.

Barclays said in 2011 it was working to cut the number of its offshore subsidiaries in the Caymans, but the research shows it still had more than 120 subsidiaries in the Caribbean territory, along with dozens of others in other overseas jurisdictions with low tax rates or limited disclosure rules to other tax authorities.

But use of offshore jurisdictions extends far beyond the banking world. Food manufacturers, retailers, and drinks firms were among the FTSE 100 companies using offshore jurisdictions.

The retailer with the most subsidiaries in countries dubbed tax havens was Tesco, which had 107, often tied to its financial services provisions. These included eight firms based in Jersey, nine in the BVI, and 14 in the Cayman Islands.

Particular concern is expressed by campaigners about the cost of offshore tax deals to the populations of developing countries.

For instance, Tullow Oil, which describes itself as "Africa's leading independent oil company" draws 84% of its revenues from the continent, but only four of the 81 companies it lists as subsidiaries are registered in African countries. By contrast, more than half (47) are registered in tax havens including the BVI, St Lucia, the Channel Islands and Netherlands.

Three-quarters of these tax haven companies refer to developing countries, such as Liberia, Kenya, Malawi and Sierra Leone, in their names.

While the countries highlighted by the ActionAid study have been targeted because of their rules on secrecy or tax management, a company's presence in such countries does not mean they are necessarily engaging in such practices.

There is no suggestion that any of the FTSE 100 firms have engaged in practices in contravention of tax laws.

The two FTSE 100 companies found to have no subsidiaries in tax havens were the mining group Fresnillo and the financial advice business Hargreaves Lansdown.

A spokesperson for Tullow Oil said the company did not avoid tax and did not use companies in tax havens to avoid tax, adding: "Our clear aim in tax planning is to ensure that the appropriate amount of tax is paid in the jurisdiction in which the activities are undertaken.

"As such, no country in which we operate is losing out because some of the companies that we own are located in tax havens."

Seven of its subsidiaries were dormant with no profits and were scheduled for elimination while five were holding companies with minimal activity, he added.

A Barclays spokesperson said the company was among the UK's top taxpayers and acted ethically.

She said: "This story is based on misconception and is misleading. Delaware is not a low-tax jurisdiction. Profits in the state are subject to US corporate tax at 35%, as well as Delaware state tax.

"Barclays has substantial businesses in many of the jurisdictions mentioned.

"In the Caymans virtually all of the profits generated in these companies are subject to corporate tax at the UK corporate tax rate. The number of Barclays' entities in low-tax jurisdictions reduced from 339 in 2009 to 252 by February 2013 – a 26% reduction. We plan to make further reductions in 2013."

A Tesco spokesperson said: "We are one of the largest payers of tax in the UK. In the year ended February 2012 we contributed £1.5bn directly, including £519m in corporation tax. We do have a number of companies within low-tax jurisdictions, but these are all either holding companies, dormant, registered for UK tax, or subject to controlled foreign company regulations and agreed with HMRC."

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