UK Announces New Crackdown on Offshore Tax Evasion
In early May, the UK government announced new moves to crack down on offshore tax evasion. Specifically, the government will require its overseas territories, including the British Virgin Islands and the Cayman Islands, to make secretive company ownership information public within the next two years as part of the Sanctions and Anti-Money Laundering Bill.
The UK government has faced mounting scrutiny in the past several years regarding the scale of untaxed money in its overseas territories, driven in part by revelations in the Panama and Paradise papers. According to Transparency International, more than 50 percent of the companies mentioned in the Panama Papers were established in the British Virgin Islands. As a result of the bill, all British overseas territories will now need to adopt public registers of company ownership, making it more difficult for overseas companies to be used as vehicles for money laundering or tax evasion.
The public register component of the bill attracted bipartisan support in British Parliament, winning votes of 20 Tory MPs as well as the support of the Labor Party, the Scottish National Party, and the Liberal Democrats.
Advocates of tax reform have widely praised the bill to crack down on tax evasion.
“This bill brings Britain and its network of overseas enclaves closer to the heart of a global effort – in which the European Union is already a pace-setter – to bring large global companies, stolen money and money laundering into the grip, still too weak, of international regulation and sanctions,” the Guardian’s Editorial Board wrote earlier this month. “Britain, with its offshore havens, has a special responsibility to the rest of the world to be on the side of the law-keepers not the law-breakers. This bill is a move in the right direction.”
Still, others have pointed out that while the bill is a step in the right direction, it doesn’t necessarily go far enough. It does not apply to the Isle of Man or the Channel Islands (known as the crown dependencies), which are widely regarded as tax havens, because Parliament does not have the legal right to impose legislation upon them. Some also have argued that the 30-month period for the overseas territories to implement the public registry is too long, calling for swifter action.
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