‘Euro­pean banks route €25b through tax havens in 2015’

New Straits Times - - Business World -

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

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