Brexit means that the EU can rightfully turn on the UK’s tax havens

Posted on

The Guardian reported last night that:

Eight British overseas territories and crown dependencies, including Jersey, the British Virgin Islands and Cayman Islands, could face EU economic sanctions after Brussels identified them as having low or no corporation tax.

Experts have published a scorecard showing red flag warnings set against a list of the 81 countries that may attract companies or individuals seeking to avoid or evade European taxes.

They then added:

Of the 10 jurisdictions flagged on the scorecard for their low tax rate, eight are British overseas territories or crown dependencies: Anguilla, Bermuda, the British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey and the Turks and Caicos Islands.

And:

The UK’s ability to influence discussions about which jurisdictions make it on to the final tax haven list will be limited following the Brexit vote. Britain has previously fought hard to protect the interests of crown dependencies and overseas territories in Brussels.

I have to say that this is welcome. I am not saying the EU proposal is without its own contradictions (it is absurd that no member state is considered a tax haven when some very obviously are) but let’s leave that aside for now. The attack on tax havens is still too half hearted to not applaud a move from the EU, which is the organisation that has, in my opinion, done the most to crack down on them over time.

We will, of course, need to know how these lists will work: they have not had a great reputation in the past which means that to back them up the EU has to suggest enforcement by tax withholding if anything is really going to bite. But if that is done then this will be a very big step.

Even if the exercise was toothless though it still says that the UK is the epicentre of much of the tax haven world. And that is undoubtedly true, which means that at least this listing is heading in the right direction. Let’s hope it continues to move that way.