Bermuda and the Cayman Islands have been named as the two most offensive corporate tax havens in the world in a new report examining the impact that tax-dodging corporations have on the world’s poorest people.
The report, by the international charity Oxfam, lists the two British territories because of the zero-rated corporate income tax and what the charity said is a lack of cooperation with international efforts against tax avoidance.
Responding to this latest critical report, Cayman Islands financial services minister, Wayne Panton, accused Oxfam of making errors on its list and of exploiting misinformed public opinion, as part of an agenda to influence the public policy of G20 countries.
“It is unhelpful at best,” Panton said about the report.
“Indeed, it may be detrimental to the overall shared goal of combating criminal behaviour and addressing income inequality. Oxfam’s overriding error is their failure to differentiate between capital flows and profit shifting.”
Panton explained that to engage in profit shifting, a country must attract significant multinational corporations, or MNCs.
“Cayman does not have this type of business. We do, however, receive capital flows that are used to the benefit of other jurisdictions, via investment projects,” the minister added.
But Oxfam stated in the report that there is a destructive race to the bottom on corporate tax.
This has seen governments across the globe slash corporate tax bills to attract business. But that competition between governments in every region of the world to offer ever more favourable tax rates to global corporations and the super-rich is damaging their own economies as well as those of developing countries and is not in the public interest, the charity pointed out.
“Tax revenues are needed to fund public goods and services, which contribute to the reduction of poverty and to the development of social and economic infrastructure,” Oxfam said.
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