Foreign banks in Britain pay fraction of tax rate
LONDON: Some of the biggest foreign investment and commercial banks operating in Britain paid an average tax rate of just six per cent on the billions of dollars of profits they made in the country last year, a Reuters analysis of regulatory filings shows.
That is less than a third of Britain’s corporate rate of 20 per cent. There is however nothing illegal about how they managed to reduce their taxes, and includes using losses built up during the financial crisis to offset current bills.
Seven of the biggest international banks operating in London - Europe’s main investment banking center - have published profit and tax data ahead of a year-end deadline stipulated by European Union (EU) law.
Five of them, all US banks, reported a profit - a combined US$7.5 billion - and paid corporation tax, or corporate income tax, of US$452 million.
Bank of America’s two main UK investment banking subsidiaries paid no corporation tax on combined profits of US$875 million. JPMorgan paid US$160 million in tax on US$3.3 billion in UK profits.
Goldman Sachs paid US$ 256 million tax on US$2.8 billion profit, while Morgan Stanley’s main UK unit paid US$33 million tax and earned US$530 million.
All the banks declined to comment on the data except San Franciscobased Wells Fargo, which reported US$2.7 million tax on US$34 million profit. It said its objective was to comply with all of its tax compliance requirements.
The British Bankers’ Association (BBA) said the data did not reflect the sector’s full contribution and that, including other taxes and payments, foreign banks contributed about US$20 billion to the UK treasury last year. — Reuters