💸 Overseas Territories: Tax Transparency

Westminster Hall

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The UK Parliament debated the urgent need for tax transparency in the Overseas Territories, focusing on the British Virgin Islands, due to their role in facilitating global tax evasion and money laundering. MPs highlighted how these territories enable wealthy individuals and corporations to hide assets, exacerbating inequality and depriving countries of crucial tax revenues. There was a strong consensus across parties for implementing public registers of beneficial ownership to combat these issues, with frustration over delays and calls for the UK Government to enforce stricter measures if the territories fail to comply. The debate underscored the broader implications for public finances, housing, and international anti-corruption efforts, urging immediate action to close transparency loopholes.

Summary

  • Purpose of the Debate: The debate focused on the need for increased tax transparency in the UK’s Overseas Territories, aiming to fight corruption, improve international reputation, and support the UK’s fight against economic crime.

  • Current Situation: The UK and some of its Overseas Territories, like Gibraltar and Montserrat, have implemented public registers of beneficial ownership. However, major financial centres such as the British Virgin Islands (BVI), Bermuda, and the Cayman Islands are still resistant to these measures, creating a loophole for illicit finance.

  • Impact on UK and Globally: Lack of transparency in the Overseas Territories impacts the UK’s Treasury, contributes to the housing crisis, enables organised crime, hinders sanctions enforcement against figures like Putin, and exacerbates global poverty.

  • Examples of Illicit Finance: High-profile cases include Roman Abramovich using complex corporate structures in the BVI and Cyprus to allegedly dodge up to £1 billion in UK taxes, and the use of Overseas Territories to launder money into the UK property market, which affects local communities.

  • Proposed Solutions: The UK Parliament has pushed for full public registers of beneficial ownership across all Overseas Territories by the end of 2023, a deadline repeatedly missed. Urgent calls were made for these registers to be implemented, including trust-owned properties in the UK’s register of overseas entities.

  • Government Commitments: The UK Government expects the Overseas Territories to implement registers accessible to those with a legitimate interest by June 2025 at the latest, and is committed to working with them to ensure compliance with these commitments.

  • Calls for Action: MPs emphasized the need for immediate action, stronger enforcement, and potential use of an Order in Council to mandate compliance if necessary. There was a strong consensus on the urgency of tackling tax evasion and money laundering through increased transparency.

Divisiveness

The session on ‘Overseas Territories: Tax Transparency’ exhibited a high degree of consensus among the Members of Parliament. Key indicators of low disagreement include:

  1. Cross-Party Support: Several Members, including Joe Powell (Labour), Mr Andrew Mitchell (Conservative), and Bobby Dean (Liberal Democrat), expressed strong support for the implementation of public registers of beneficial ownership in the overseas territories. This was highlighted by Mr Mitchell’s comment on the ‘huge cross-party agreement’ on this issue.

  2. Shared Goals: All speakers underscored the necessity of enhancing tax transparency to combat financial secrecy and illicit activities in the overseas territories. Jim Shannon (DUP) and Rachel Blake (Labour/Co-op) highlighted the impact on local communities and the need to seize assets linked to corruption.

  3. Consistent Criticism of Delays: There was a unanimous concern about the delays in implementing public registers, as noted by the repeated references to missed deadlines. Both Mr Mitchell and Phil Brickell (Labour) expressed frustration over these delays, with Mitchell describing the British Virgin Islands’ latest proposal as a ‘contempt of Parliament’.

  4. Call for Action and Accountability: While there was criticism of the lack of progress, the focus was more on urging action and setting clear expectations rather than overt disagreement among the MPs themselves. For example, Joe Powell and James MacCleary (Liberal Democrat) both called for more decisive governmental action.

  5. Constructive Tone: The debate was characterized by a constructive tone seeking solutions, with speakers like Mark Garnier (Conservative) acknowledging the legitimate roles of tax havens but emphasizing the need for transparency.

  6. Government Response: The Exchequer Secretary, James Murray, responded positively to the concerns raised, reiterating the government’s commitment to public registers and outlining actions being taken, which further indicates alignment with the MPs’ views rather than contention.

Despite the strong criticisms directed towards the overseas territories for not meeting transparency commitments, these were not centered around disagreement among the MPs themselves but rather a unified call to address the external issue. The debate concluded with a resolution that was unanimously agreed upon, to consider tax transparency in the Overseas Territories, indicating a lack of significant internal disagreement.