Latest news with #CTHI
Yahoo
14-05-2025
- Business
- Yahoo
Inside the European centres favoured for cross-border tax planning
Countries are estimated to be losing €416 billion ($492 billion) in tax revenue each year due to profit shifting by multinational corporations and offshore tax arrangements by wealthy individuals, according to the State of Tax Justice 2024 report by the Tax Justice Network. The UK, along with its Overseas Territories and Crown Dependencies, is cited in the report as the largest contributor to global tax revenue losses, accounting for 26% of the total. The report finds that Europe and its associated jurisdictions are collectively linked to over 70% of the risk of corporate tax base erosion globally. So, which European jurisdictions are most frequently used in international tax planning structures? Which countries play a prominent role in enabling such practices? And where do current rules make it easier for corporations to minimise their tax liabilities? The Corporate Tax Haven Index (CTHI) assesses jurisdictions based on how much they contribute to enabling multinational corporations to shift profits and reduce tax payments, using a system of scores and indicators developed by the Tax Justice Network. A jurisdiction's CTHI value reflects the extent of its involvement in facilitating global corporate tax base erosion, as calculated by the index. According to the 2024 report, countries are ranked by the scale and aggressiveness of their tax systems in offering corporate tax avoidance opportunities. The UK's network of Overseas Territories and Crown Dependencies features prominently. The British Virgin Islands, Cayman Islands, and Bermuda occupy the top three positions in the index, each scoring over 2,400 points. Among European jurisdictions, Switzerland holds the highest score outside the UK network (2,279), while the Netherlands (1,945) ranks highest within the European Union. Among Europe's top five economies, the UK (894) has the highest CTHI value, closely followed by France (883). Germany scores 590, with Spain at 557. Italy performs the best with a score of 342—since a lower score indicates better performance in limiting corporate tax avoidance. The CTHI Share is a critical metric that measures the proportion of global corporate tax avoidance risk attributed to each jurisdiction. According to the report, the UK and its network of Overseas Territories and Crown Dependencies are responsible for one-third of global corporate tax avoidance risks, while EU countries account for another third. Breaking it down further, just three British Overseas Territories account for 19.7% of global corporate tax avoidance risks: the British Virgin Islands (7.1%), the Cayman Islands (6.7%), and Bermuda (5.8%). The UK and its networks cost countries over €109 billion in lost tax In comparison, the UK itself accounts for just 2.1% — still the highest share among Europe's top five economies, followed closely by France, also at 2.1%. Germany and Spain have similar shares, at 1.4% and 1.3% respectively, while Italy is responsible for just 0.8%. Switzerland holds a 5.3% share. When other European countries and their associated jurisdictions are included, Europe's total share reaches 72%. The Haven Score is another key indicator used in the report. It measures the extent to which a jurisdiction's laws and regulations create opportunities for corporate tax avoidance, whether intentional or not. In 2024, the UK's network of Overseas Territories and Crown Dependencies dominated the rankings, with eight jurisdictions receiving the highest possible score of 100. The UK's score is 59. Aside from the UK network, Switzerland (89) has the highest Haven Score in Europe, while Ireland and Cyprus (both 79) lead within the EU. Portugal has the lowest score at 46. In 2021 alone, multinational corporations are estimated to have shifted €1.2 trillion worth of profits into jurisdictions with low or no tax rates, contributing to a €294 billion loss in direct tax revenue for governments globally. Global Scale Weight is another indicator that measures how much financial activity conducted by multinational corporations enters or exits a given jurisdiction. Europe and its overseas territories account for 61% of global financial activity, with the UK and its network holding the largest individual share at 16%. Among individual European countries, the Netherlands has the highest scale weight at 11.1%, followed by Luxembourg at 8.8%. The UK (8.3%), Germany (4.2%), Switzerland and Ireland (both at 3.4%), and France (3.1%) are also among the European countries with the highest scale weights. When a country offers special tax incentives or preferential tax arrangements to multinational corporations, these companies often end up paying significantly less than the statutory corporate income tax rate on their profits. This can result in much lower lower effective tax rates—known as the Lowest Available Corporate Income Tax Rate (LACIT). This measure is produced by the Tax Justice Network through analysis of potential legal disparities and tax planning strategies. According to the OECD, the statutory corporate income tax rate is zero in all eight of the UK's Overseas Territories and Crown Dependencies. However, there are significant discrepancies between statutory rates and the documented lowest available corporate income tax rates (LACIT) in several jurisdictions. The gap between statutory corporate tax rates and LACIT rates highlights the potential for tax planning strategies that can result in much lower effective rates. For example, in Luxembourg, the statutory rate is 24.9%, while the LACIT is just 0.3%. In Switzerland, the statutory rate is 19.7% vs. 2.6% LACIT, and in Ireland, the gap is 12.5% vs. almost zero. Belgium shows a difference of 25% vs. 3%, while Malta has the largest gap, with a statutory rate of 35% and a LACIT of just 5%. The Netherlands also demonstrates a sharp contrast, with a statutory rate of 25.8% vs. 5% for the LACIT. In its overseas territories, such as Aruba and Curaçao, statutory rates drop from over 20% to 0%. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Euronews
14-05-2025
- Business
- Euronews
Inside the European centres favoured for cross-border tax planning
Countries are estimated to be losing €416 billion ($492 billion) in tax revenue each year due to profit shifting by multinational corporations and offshore tax arrangements by wealthy individuals, according to the State of Tax Justice 2024 report by the Tax Justice Network. The UK, along with its Overseas Territories and Crown Dependencies, is cited in the report as the largest contributor to global tax revenue losses, accounting for 26% of the total. The report finds that Europe and its associated jurisdictions are collectively linked to over 70% of the risk of corporate tax base erosion globally. So, which European jurisdictions are most frequently used in international tax planning structures? Which countries play a prominent role in enabling such practices? And where do current rules make it easier for corporations to minimise their tax liabilities? The Corporate Tax Haven Index (CTHI) assesses jurisdictions based on how much they contribute to enabling multinational corporations to shift profits and reduce tax payments, using a system of scores and indicators developed by the Tax Justice Network. A jurisdiction's CTHI value reflects the extent of its involvement in facilitating global corporate tax base erosion, as calculated by the index. According to the 2024 report, countries are ranked by the scale and aggressiveness of their tax systems in offering corporate tax avoidance opportunities. The UK's network of Overseas Territories and Crown Dependencies features prominently. The British Virgin Islands, Cayman Islands, and Bermuda occupy the top three positions in the index, each scoring over 2,400 points. Among European jurisdictions, Switzerland holds the highest score outside the UK network (2,279), while the Netherlands (1,945) ranks highest within the European Union. Among Europe's top five economies, the UK (894) has the highest CTHI value, closely followed by France (883). Germany scores 590, with Spain at 557. Italy performs the best with a score of 342—since a lower score indicates better performance in limiting corporate tax avoidance. The CTHI Share is a critical metric that measures the proportion of global corporate tax avoidance risk attributed to each jurisdiction. According to the report, the UK and its network of Overseas Territories and Crown Dependencies are responsible for one-third of global corporate tax avoidance risks, while EU countries account for another third. Breaking it down further, just three British Overseas Territories account for 19.7% of global corporate tax avoidance risks: the British Virgin Islands (7.1%), the Cayman Islands (6.7%), and Bermuda (5.8%). In comparison, the UK itself accounts for just 2.1% — still the highest share among Europe's top five economies, followed closely by France, also at 2.1%. Germany and Spain have similar shares, at 1.4% and 1.3% respectively, while Italy is responsible for just 0.8%. Switzerland holds a 5.3% share. When other European countries and their associated jurisdictions are included, Europe's total share reaches 72%. The Haven Score is another key indicator used in the report. It measures the extent to which a jurisdiction's laws and regulations create opportunities for corporate tax avoidance, whether intentional or not. In 2024, the UK's network of Overseas Territories and Crown Dependencies dominated the rankings, with eight jurisdictions receiving the highest possible score of 100. The UK's score is 59. Aside from the UK network, Switzerland (89) has the highest Haven Score in Europe, while Ireland and Cyprus (both 79) lead within the EU. Portugal has the lowest score at 46. In 2021 alone, multinational corporations are estimated to have shifted €1.2 trillion worth of profits into jurisdictions with low or no tax rates, contributing to a €294 billion loss in direct tax revenue for governments globally. Global Scale Weight is another indicator that measures how much financial activity conducted by multinational corporations enters or exits a given jurisdiction. Europe and its overseas territories account for 61% of global financial activity, with the UK and its network holding the largest individual share at 16%. Among individual European countries, the Netherlands has the highest scale weight at 11.1%, followed by Luxembourg at 8.8%. The UK (8.3%), Germany (4.2%), Switzerland and Ireland (both at 3.4%), and France (3.1%) are also among the European countries with the highest scale weights. When a country offers special tax incentives or preferential tax arrangements to multinational corporations, these companies often end up paying significantly less than the statutory corporate income tax rate on their profits. This can result in much lower lower effective tax rates—known as the Lowest Available Corporate Income Tax Rate (LACIT). This measure is produced by the Tax Justice Network through analysis of potential legal disparities and tax planning strategies. According to the OECD, the statutory corporate income tax rate is zero in all eight of the UK's Overseas Territories and Crown Dependencies. However, there are significant discrepancies between statutory rates and the documented lowest available corporate income tax rates (LACIT) in several jurisdictions. The gap between statutory corporate tax rates and LACIT rates highlights the potential for tax planning strategies that can result in much lower effective rates. For example, in Luxembourg, the statutory rate is 24.9%, while the LACIT is just 0.3%. In Switzerland, the statutory rate is 19.7% vs. 2.6% LACIT, and in Ireland, the gap is 12.5% vs. almost zero. Belgium shows a difference of 25% vs. 3%, while Malta has the largest gap, with a statutory rate of 35% and a LACIT of just 5%. The Netherlands also demonstrates a sharp contrast, with a statutory rate of 25.8% vs. 5% for the LACIT. In its overseas territories, such as Aruba and Curaçao, statutory rates drop from over 20% to 0%. Nvidia's shares surged 5.6% on Tuesday, boosted by a tens-of-billions-of-dollars artificial intelligence (AI) investment plan agreed between the US and Saudi Arabia. However, the AI powerhouse's stock remains down 4.5% year-to-date as of market close on 13 May, facing challenges stemming from US-China trade tensions and the launch of China's DeepSeek, a lower-cost AI model. CEO Jensen Huang was among the US tech leaders—alongside Tesla's Elon Musk, OpenAI's Sam Altman, AMD's Lisa Su, Palantir's Alex Karp, and other executives—who accompanied President Trump on his visit to Saudi Arabia. At the investment conference, the White House announced a $600 billion investment pledge by the Middle Eastern kingdom into the US, including a nearly $142 billion defence sales deal, an $80 billion commitment into 'cutting-edge transformative technologies' in both countries, and other agreements across energy, aerospace, and sports sectors. Trump also vowed to lift all sanctions against Syria during his visit, a political gesture to warm the relationship with key Middle East countries. He is also going to meet leaders of Qatar and the United Arab Emirates (UAE) later this week. Nvidia announced it will partner with HUMAIN, a subsidiary of Saudi Arabia's Public Investment Fund focused on AI, to transform the Kingdom of Saudi Arabia (KSA) into 'a global powerhouse in AI, cloud and enterprise computing, digital twins and robotics.' Nvidia will supply its most advanced AI chips over the next five years, including 18,000 units of the GB200 Grace Blackwell AI supercomputer with its InfiniBand networking in the initial phase. The purchase forms part of a broader project for HUMAIN to build AI factories in the kingdom, with a projected capacity of up to 500 megawatts. The announcement also includes a deal with the Saudi Data & AI Authority (SDAIA), which will 'deploy up to 5,000 Blackwell GPUs for a sovereign AI factory and enable smart city solutions.' Aramco Digital, the technology arm of oil giant Saudi Aramco, will also collaborate with Nvidia to develop AI infrastructure in the country. Saudi Arabia, an oil-rich nation, is seeking to diversify its economy, which still relies heavily on crude exports. The kingdom aims to attract $100 billion in foreign direct investment annually, as outlined under its Vision 2030 strategy. According to a Bloomberg report, the Trump administration is also considering a deal with the UAE, which would permit the import of over one million advanced Nvidia chips—well above the export limits imposed under the Biden administration. Other major US tech firms, including AMD, Global AI, Amazon, Cisco, and OpenAI, also announced AI investment plans in Saudi Arabia during the event. Trump's Middle East trip is shaping up to be a major win for US AI chipmakers, as the president looks to ease export curbs to China. On the same day, the US Department of Commerce (DOC) announced that it is rescinding the AI diffusion rule imposed during former President Joe Biden's administration, which had been due to take effect on 15 May. Biden's administration had implemented fresh restrictions on AI chip exports to China in January, its final month in office, expanding controls to much of the world, amid concerns that China was accessing US AI chips via third countries. Both Saudi Arabia and the UAE had also been subject to those restrictions. 'The Trump administration will pursue a bold, inclusive strategy to advance American AI technology with trusted foreign partners, while keeping the technology out of the hands of our adversaries. At the same time, we reject the Biden administration's attempt to impose its own ill-conceived and counterproductive AI policies on the American people,' stated the DOC. The department added that the Bureau of Industry and Security (BIS) issued new guidance to strengthen controls over overseas exports of AI chips to limit China's access to advanced US technologies.
