The United Kingdom is requiring many of the top tax havens worldwide to reveal their hidden records.
Prime Minister Theresa May’s government recently gave in to this opposition amendment.
Opening the Books
The bill will require U.K. Overseas Territories to open their corporate books. This includes some of the most notorious tax havens around the world such as the British Virgin Islands, the Cayman Islands and Bermuda. These locations will need to publish registries of precisely who owns the companies registered in those islands.
At the moment, the islands aren’t required to provide any meaningful corporate ownership information. As a result, those locations have been abused by a spectrum of different types of tax evaders. This was revealed in the Panama Papers leak, in which it was revealed that nearly all exposed companies had been founded in the British Virgin Islands.
Applause from Anti-Corruption Campaigners
“The UK’s tax havens have featured in countless corruption and money laundering cases—ending their corporate secrecy will throw a huge spanner in the works of corrupt dictators, tax evaders and organized criminals,” said Global Witness NGO’s Naomi Hirst in a prepared media statement.
At the moment, there has yet to be a firm estimate of the total of wealth held within those tax havens. One estimate by the Boston Consulting Group of the wealth in Panama and the Caribbean is about $1.3 trillion. This represents over 10 percent of the total estimated offshore wealth holdings.
Outraged Response
The tax havens to which the bill applies have responded with outrage. The financial sector and those tax havens have been in strict opposition to the U.K.’s bill to require transparency. They have objected in a spectrum of ways, such as accusations that the islands will lose their primary industry, and that the U.K. is acting as though it is imposing power as a colonizer.
The bill does not mean that there won’t be any offshore tax havens or secrecy. There is still quite a distance to travel before that could happen. However, investors seeking to hide their identities will need to move to new locations.