Almost all of Britain's FTSE 100 firms 'use tax havens'

Wednesday, 12 October 2011 11:11

By Guy Kilty

All but two of Britain's most valuable companies legally avoid tax in the UK, according to new research.

A report from anti-poverty charity ActionAid has revealed 98 of the FTSE 100 companies base their operations in territories where there is low or no tax, including the partly state-owned financial institutions Royal Bank of Scotland and Lloyds.

Chris Jordan, tax justice expert at ActionAid, said the study raised "serious questions" that the UK's biggest firms had to answer.

"Tax havens have a damaging impact on the UK exchequer, the stability of the international financial system and vitally on the ability of developing countries to raise tax revenues which would lift them out of poverty and make them less dependent on aid," he remarked.

Britain's four biggest financial firms – HSBC, Barclays, Lloyds and RBS – have 1,649 tax haven enterprises between them, the study found.

ActionAid went on to call on the government to "urgently rethink" current proposals that would make it easier for firms to base their operations abroad.

"The Treasury itself estimates these changes will result in an £840 million tax break for multinational companies that use tax havens," it added.

A state or territory is considered a tax haven if it provides a low or zero rate of tax alongside a politically and economically stable environment.

Mr Jordan continued: "When multinationals use tax havens to avoid paying their fair share, ordinary people in both poor and rich countries are left to pick up the bill.

"Spending on doctors, nurses and other essential services gets cut for those who need it most. Tax havens might provide the lure of financial secrecy and low tax rates for big companies, but at a time when all countries are desperate for revenues, the UK government can't afford to turn a blind eye."

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