As published on jerseyeveningpost.com, Wednesday 2 December, 2020.
JERSEY has been accused of causing the loss of almost $8 billion of tax revenues in other countries in a new report – but the Island’s finance sector says the study does not ‘give the whole picture’.
The Tax Justice Network’s State of Tax Justice report claims that the Island is the jurisdiction 15th most responsible for ‘global tax losses’, accounting for 1.85% of the $427 billion that is lost to ‘tax havens’ worldwide.
But Jersey Finance, which represents the industry, has hit back at the claims, pointing out that the Island enables money to be invested across the world, including in developing countries.
TJN’s report says that its figures are based on new data produced this year by the Organisation for Economic Cooperation and Development in response to the recent introduction of the international ‘country by country’ reporting regime, which requires multinational companies to provide details of their global allocation of income, economic activity and taxes.
Altogether Jersey is accused of ‘inflicting’ $7.9 billion of tax losses on other countries – $4.5 billion through ‘corporate tax abuse’ and $3.4 billion through enabling ‘private tax evasion’ for individual persons.
The report says that the UK and its ‘spider’s web’ of offshore jurisdictions, such as Jersey, is responsible for almost 40% of global tax losses.
‘The State of Tax Justice 2020 finds that the UK spider’s web is responsible for 37.4% of all tax losses suffered by countries around the world, costing countries over $160 billion in lost tax every year,’ it says.
In the report the TJN calls for multinational companies to be taxed globally on excess profits made during the pandemic, new wealth taxes to be introduced to help pay for the Covid-19 crisis and for the UN to introduce international standards on corporate taxation.
Jersey Finance’s chief executive Joe Moynihan said that TJN’s report was one-sided and narrow in scope.
‘This report regrettably only sees things from one perspective and does not give the whole picture,’ he said.
‘To be clear, financial flows are not simply “lost” in Jersey. Rather, investment is pooled in Jersey from around the world and is then packaged up and put to work elsewhere to support things like infrastructure development, businesses and the pension pots of millions of ordinary people.
‘Our own analysis shows that Jersey provides a net benefit to a broad range of developed and developing countries, including billions of pounds of greenfield foreign direct investment to Africa, Asia and the Middle East.’
He added: ‘Neither is Jersey secretive. In fact, it comes out time and again as one of the best in the world benchmarked against global standards, and it is precisely because of its tax transparency, robust regulatory framework and ability to co-operate with tax authorities around the world that Jersey is frequently recognised as a leading centre for cross-border investment.
‘Our ambition with organisations such as TJN is that the facts and figures around centres like Jersey are better understood and interpreted in order to promote more constructive, two-way engagement and a truer understanding of the positive impact we make on both local and international economies.’