When it comes to the dubious world of offshore wealth and the respective tax losses subsequently inflicted on other countries, not only does the UK rank second, but a further three British overseas territories make the top 10.
In fact, when these tax losses to other nations via this offshore wealth are combined, it sits at a staggering £64.5bn, according to new research that was exclusively shared with City A.M. today.
By taking advantage of the tax loopholes available through offshore investment, wealthy individuals and organisations around the world are able to streamline the tax they pay.
While it’s a very grey area that often attracts some unsavoury practices and people, it’s not, in itself, illegal.
“It’s fair to say that UK tax laws are fairly rigorous and while there are ways to improve your tax efficiency, those with a substantial level of wealth will often exploit a myriad of loopholes in order to dramatically reduce the tax they owe,” said Bradley Post, CEO of RIFT Tax Refunds, the tax refund firm that carried out the research, which focused on the world’s 10 worst offenders.
In total, the combined tax lost to offshore wealth across the UK and these three British overseas territories sits at a huge £64.5bn per year, Post told City A.M. today.
“One of these loopholes is the process of holding wealth within offshore tax havens but while the legalities are complex, it’s not technically illegal,” he added.
When it comes to the nation inflicting the largest tax losses to other global nations as a result of the offshore wealth held there, the notorious tax haven of the Cayman Islands ranks top, Post continued.
With an estimated £35bn each year, the tax lost to offshore wealth held in the Cayman Islands sits comfortably ahead of any other country in the world.
Despite the crackdown on dirty money being held in the UK by Russian nationals, we rank as the world’s second-worst offender, costing other countries £23bn in tax losses each and every year as a result of the offshore wealth held here.
|Top 10 nations based on tax loss inflicted due to offshore wealth|
|Nation – top offenders (based on available data)||Annual tax losses inflictedon other countries(GBP full value)|
|British Virgin Islands||£3,835,965,293|
|UK and overseas territories||£64,494,828,109|
US, Luxembourg and Ireland
The United States ranks third where offshore wealth contributes to £15bn of tax losses each year, with Luxembourg (£12bn), Ireland (£7bn), the Netherlands (£6bn), France (£3.5bn) and Hong Kong (£3bn) also rank amongst some of the worst.
While Hong Kong hasn’t been under the control of the British Empire since 1997, there are two other British overseas territories that make the top 10.
The British Virgin Islands sits seventh, with the offshore wealth held there inflicting tax losses to the tune of £3.8bn per year, while Jersey is the tenth worst offender at £2.5bn.