Guernsey Press

CDs and OTs are accused of ‘daylight robbery’ from UK

THE Crown Dependencies and Overseas Territories have been accused of ‘daylight robbery’ costing the UK exchequer $80bn in lost taxes every year, by a Labour Peer.

Published
Lord Sikka. (34000138)

Lord Sikka, a qualified accountant, secured a House of Lords debate on low and no tax jurisdictions this week, where the future prospects for the OECD’s Pillar I and II tax changes, under threat from President Trump, were also raised.

He warned that the OECD Beps project was stalling under US influence, though local experts and politicians have denied such claims.

Lord Sikka said that HMRC in the UK had no idea of how much profit was being shifted out of the UK and the related tax losses.

‘Multinational corporations are shifting annual profits of around $1.4tn into tax havens, causing governments around the world to lose $348bn a year in direct tax revenue,’ he said.

‘Over $329bn of profit is shifted into the UK’s Crown Dependencies and Overseas Territories by multinational corporations every year, causing a tax loss of $80bn.

‘This daylight robbery is facilitated by financial engineering and opacity from a rapacious tax abuse industry located in the UK and its global dependencies.’

He highlighted two instances where Jersey had been involved in alleged profit shifting and said it required ‘urgent attention’ in the UK.

Lord Livermore, financial secretary to the Treasury, responded that the Crown Dependencies and Overseas Territories were ‘committed to upholding international tax standards’ and expressed confidence in the Pillar I and II arrangements.

Guernsey expects that under Pillar II it could expect to receive some £30m. a year in extra taxes from multinational companies operating locally who would pay tax at 15%.

Lord Livermore said that the UK was forecasting to raise more than £15bn over the next six years.

‘This is an international agreement signed by over 135 countries after many years of detailed negotiation. We believe it represents a fair approach to how countries compete for cross-border investment.’

Baroness Kramer, Liberal Democrat Treasury spokeswoman in the Lords, suggested the UK should link up with allies to stand firm against base erosion and profit shifting in the new Trump era.

‘This really has to be done collectively, because it is one of those areas where we hang together or, frankly, we hang separately.’

Policy & Resources president Lyndon Trott said that he had personally advised UK Prime Minister Sir Keir Starmer than investment from Guernsey funds into the UK had grown by 14% since 2020 at a time when foreign direct investment into the UK was falling, and that the island channelled £57bn of investment into UK assets.

‘It is crystal clear that the Guernsey finance sector provides a material, net benefit to the UK economy. Contrary to the misassumption that Guernsey is acting as a drain on investment into the UK, Guernsey and the UK are linked in a symbiotic, mutually beneficial relationship.’