Tax Havens: The Most Notorious – Let Off The Hook
While the Brexit battle continues to overshadow just about all news in the UK
British Virgin Islanders are British Overseas Territories citizens and since 2002 are British citizens as well. Although the territory is not part of the European Union and not directly subject to EU law, British Virgin Islanders are deemed to be citizens of the EU by virtue of their new found British citizenship.
Why was citizenship granted? The latest United Nations estimate (2016) of population – 30,661. Number of offshore companies with post box addresses – 400,000. Amount of money passing through the BVI with hardly a cent dropped into the economy – unknown but estimated to be in hundreds of billions. Current assets held in offshore companies in the BVI – latest estimated at $1.5 trillion. Only China can match that sum with the largest sovereign wealth fund in the world at $1.5 trillion and the oil/gas state of the United Arab Emirates in second place at $1.3 trillion.
The government makes 52 percent of its income from these companies and 48 percent from tourism where the vast majority of its citizens work. Contrary to various reports stating that the BVI average income is very high, one third of the population live on ‘very low incomes.’
The national currency of money laundering globally is the US dollar – hence the USD is the BVI’s national currency.
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The main island, just 20 km long houses some 90 percent of the indigenous population. Only 37% of the entire population were born in the territory, the balance are migrant workers.
The BVI is an overseas territory of Britain and yet British citizens are not represented at all.
- 37% local born (many locals go to St. Thomas or the United States for maternity services)
- 7.2% Guyana
- 7.0% St. Vincent and the Grenadines
- 6.0% Jamaica
- 5.5% United States
- 5.4% Dominican Republic
- 5.3% United States Virgin Islands
As there are no real businesses just business mail box addresses and a few building that house ‘accountants’ and the facilitators of money laundering services, there is no postal service other than P.O. boxes.
It is thought that one-third of all offshore companies that exist in the world are located in the BVI. Britain is home to 13 other such tax havens called ‘British Overseas Territories.’
Bloomberg’s recent report into the BVI noted that – “The BVI’s place in the dark offshore economy was illuminated by the 2016 Panama Papers leak, in which 11.5 million documents from the law firm Mossack Fonseca were released by the International Consortium of Investigative Journalists. The disclosures sparked probes worldwide into money laundering, sanctions violations, and tax avoidance, and it didn’t pass without notice that more than half the companies outed in the leak were registered in the BVI.”
The 60-island archipelago are owned by rich people from other countries (Richard Branson owns Necker Island; Google’s Larry Page owns Eustasia) and although they are often billionaires, the capital is starved of much needed money. Hurricane Irma swept over the islands in September 2017 and damage from the storm is still evident everywhere.
It’s interesting that it is the EU that was pushing to blacklist the BVI and other territories some years ago unless they adopted rules to prevent global corporations from avoiding taxes by shifting profits to shell companies in zero-tax offshore jurisdictions. The biggest threat to the bankers offshore money laundering operations emerged in 2014 with strongly worded proposals to internationally outlaw blacklisted tax havens such as the BVI. By 2017, the EU would publish its tax haven blacklist. Such is the power of the ‘financial services’ industry that the BVI among some of the most notorius tax havens in the world have been let off the hook.
The British Virgin Islands, Bahamas, Bermuda, the Cayman Islands, Guernsey, Hong Kong, the Isle of Man, Jersey and Panama were de-listed entirely by the EU . Some of them were at the centre of recent global tax scandals highlighted by the Paradise Papers and Panama Papers. There are now just 12 tax haven states left on the list – with British overseas territories no longer represented.
Multinational companies shifted USD 600 billion in profits to tax havens in the last estimate in 2015.
“EU governments have once again let some of the world’s worst tax havens off the hook,” said Chiara Putaturo, of the anti-poverty group Oxfam.
Oxfam tax advisor Johan Langerock said – “Years of austerity across Europe have widened the gap between rich and poor, contributing to increasingly polarised societies and plunging the EU and its member states into crisis. It is time for EU governments to put their own house in order.”
Tax havens continue to be in rude health and it appears that regardless of legislation, international pressure or otherwise, nothing will now change.