According to the analysis conducted by ActionAid, the share of global investment moving through tax havens has increased – to the tune of about $700 billion in just two years. ActionAid, an NGO, analyzed figures from the IMF and found that there was an increase of 5 percent in the investment going through tax havens between 2013 and 2015, increasing from $11.8 trillion to $12.5 trillion.
For developing countries, the re-routing of these funds through tax havens is detrimental. Of that $12.5 trillion, roughly $132 billion in corporate investment in India was routed through tax havens, while $35 billion of corporate investment in Nigeria was routed through tax havens. Moreover, these corrupt capital flows have serious impacts in these countries, undermining governing capacity and development outcomes. In Nigeria, for example, 10 percent of children die before the age of 10 – making it the country with the highest infant mortality rate in the world. All in all, it’s estimated that developing countries lose out on about $200 billion every year because of international organizations making use of tax havens to skirt around tax obligations.
ActionAid specifically published the report last month to align with a meeting the UK Prime Minister, Theresa May, held with the leaders of the UK’s overseas territories, including Bermuda, the Cayman Islands, and the British Virgin Islands, which are among some of the world’s most prominent tax havens. In fact, it’s estimated that $1.1 trillion moved through the British Virgin Islands, while $710 billion moved through Bermuda and $568 billion moved through the Cayman Islands.
So, will ActionAid’s report convince the British government to change the ways of its overseas territories? Well, there is considerable backing in Parliament, with a variety of MPs supporting reform. In fact, some 80 MPs are currently backing an amendment to the UK’s criminal finances bill in order to force overseas territories to have greater transparency around financial flows.
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