Overseas Territories: Tax Transparency

James MacCleary Excerpts

Wednesday 5th February 2025 Westminster Hall

[James MacCleary (Lewes) (LD)]

I congratulate the hon. Member for Kensington and Bayswater (Joe Powell) on securing this timely discussion; it is a pleasure to take part in it.

New research from the Tax Justice Network reveals something that should shame us all: the world’s three biggest corporate tax havens—the British Virgin Islands, the Cayman Islands and Bermuda—are all British overseas territories. Those havens cost the world an estimated $84 billion in lost corporate tax revenue every year. That is money that could be spent on hospitals, schools and infrastructure.

What is more, thanks to financial secrecy, we still do not know the full scale of the problem. The UK Government cannot shrug off responsibility. British overseas territories are subject to UK law in key areas, as has been outlined by others, and in 2018 Parliament passed legislation requiring them to implement public registers of company ownership—a crucial step in tackling financial crime. However, successive Governments have failed to enforce that. This new Government must finally act and ensure that overseas territories meet the same transparency standards as the UK.

We must go further. Labour should back global efforts such as the UN tax convention to crack down on tax avoidance. We need a fairer tax system that works for everyone, not just the super-rich. That means reversing Conservative tax cuts for big banks, raising the digital services tax on tech giants and closing capital gains loopholes exploited by the wealthiest. A 4% tax on FTSE 100 share buy-backs would also encourage real investment in jobs and growth.

The British Virgin Islands case is a warning. Just last month, a jury in Florida convicted the former BVI Premier of drug trafficking and money laundering while in office. If the public register of company ownership had been in place as promised, that corruption would have been far harder to conceal. The Government assured Parliament that all overseas territories would have those registers by the end of last year. Where are they? Do the Government recognise their responsibility to tackle financial crime?

Then there is the issue of Russian assets. Transparency International UK has identified over £830 million-worth of UK-linked property belonging to individuals close to Putin and/or accused of corruption. While £7 billion in Russian assets has been frozen in the overseas territories, we must ask: what is being done to prevent Russian oligarchs from hiding their money there, and when will we start seizing those funds and using them for Ukraine’s reconstruction?

For too long, Britain has been the laundromat for dirty money. Under both Labour and Conservative Governments, our country has allowed autocrats and oligarchs to buy up property, infrastructure and influence. We have seen vital assets sold off to companies with links to the Chinese Communist party. That has made some people in Britain very rich, but it has come at a huge cost to our security, our economy and our sovereignty. The Liberal Democrats will put an end to that. We will close the loopholes in economic crime legislation, strengthen the register of beneficial ownership and give agencies such as the National Crime Agency and the Serious Fraud Office the resources they need to go after economic criminals.

The scale of tax avoidance is staggering. The OECD estimates that global profit shifting costs between $100 billion and $240 billion a year. The Tax Justice Network puts the figure even higher, at $348 billion annually. Where does 23% of that profit shifting happen? Through the UK, its Crown dependencies and the overseas territories: the so-called network of British tax havens.

The UK must be a leader in international tax reform. The Liberal Democrats have long called for an end to non-dom status, and we remain committed to the UN sustainable development goals. It is time that we worked with our international partners to clamp down on corporate tax avoidance and raise the global minimum corporation tax to 21%. Fair taxation is not just about economics; it is about justice. Let us ensure that everyone from the biggest corporation to the wealthiest elite pays their fair share.