‘European banks route €25b through tax havens in 2015’
LONDON: Europe’s largest banks routed €25 billion (RM119.11 billion) through tax havens in 2015, about a quarter of their profit, amid an international crackdown on corporate tax avoidance, according to a report by Oxfam International.
The 20 biggest lenders paid no tax on €383 million of profit posted in seven tax havens that year, while booking €4.9 billion of earnings in Luxembourg, more than the United Kingdom, Sweden and Germany combined, said Oxfam International and the Fair Finance Guide yesterday.
The study was based on data released under new European Union regulations requiring banks to report earnings on a country-by-country basis.
Banks’ subsidiaries in low-tax jurisdictions are twice as profitable as offices elsewhere and employees are four times more productive, generating an average profit of €171,000 per person annually compared with €45,000 on average, said the report.
Some of the world’s largest companies have been criticised for funnelling profits through places such as the British territories of Bermuda and the Cayman Islands, and Ireland, prompting promises of harsher measures from governments to ensure they collect more tax.
The Organisation for Economic Cooperation and Development has released a plan aimed at limiting companies’ ability to get low rates in jurisdictions where they lack genuine economic activity, estimating profit-shifting costs governments as much as US$240 billion (RM1.05 trillion) a year in lost revenue.
“Governments must change the rules to prevent banks and other big businesses using tax havens to dodge taxes or help their clients dodge taxes,” Manon Aubry, Oxfam’s senior tax justice advocacy officer.
At least €628 million of profit was reported by European banks in tax havens where they have no staff, said Oxfam . Bloomberg