It is no secret that high-net-worth individuals, as well as corporations, try to do whatever they can to pay low taxes, including using offshore tax havens. Most countries frown on these tax havens since they reduce the country’s revenue from taxes. Even so, the policies and desire to reduce tax havens do not always line up with action. Most recently, it came to light that companies known to be tax havens received 18 million pounds of public money from the Scottish Government for Glasgow property developments.
The Funds Received
The Sunday Mail revealed in mid-December 2018 that Fore Jersey VI Mezzco Limited and Tarn Crag Limited both received publicly funded loans. Each of these companies is based in a tax haven. The information regarding the company names was not originally available due to redacted documents, but it came to light in mid-December. The two companies are registered in St Helier and the Isle of Man, respectively. £9.7 million went to Fore Jersey VI Mezzco Limited while Tarn Crag received £8.35 million. Both companies received the relevant funds in March 2017.
Both of the locations that these companies are based are known for being tax havens. Most businesspeople and world leaders recognize the areas as tax avoidance hubs that companies and high-net-worth individuals alike use to reduce their tax bills.
This is particularly controversial in the case of the £18 million from the Scottish government due to the supposed purpose of the loans. The loans are designed and were theoretically awarded for two commercial development projects of offices in Glasgow’s city center.
The loans do come with an interest rate, of 4 or 9 percent depending on the loan in question. Despite this, the controversy continues with the fact that the general public is unaware of when the loans must be paid back. They will not need to be paid until mysterious terms that the Scottish government will not reveal due to their commercially sensitive nature.
After the revelation of the companies who received the £18 million in loans, there was an outcry. Politicians pointed out that people expect their money to support businesses that contribute to the community and pay taxes, not those in tax havens. Others want to know why the companies were not initially named.
At the very least, both of the companies are using the funds to work on offices in Glasgow, the purpose for which the loans were earmarked. Fore’s parent company, Fore Partnership, will be creating a 94,000-square-foot office complex in the center of Glasgow that includes a cycle-in ramp while Tarn Crag’s parent company, Praxis, will renovate Dalmore House on St Vincent Street in Glasgow.
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