Tiny islands, big investors
The coast of Bermuda in the Southampton area is lined with chalky cliffs. (Jim Byers/Toronto Star)
Offshore tax havens don't reveal who sends their cash over and how much - that's the point. They are secretive and above the law. But here's some data that illuminates how they work. The OECD just released a report on the issue today.
Barbados, the British Virgin Islands and Bermuda receive more direct foreign investment than economic powerhouses Germany or Japan. What this means is these tiny countries are where citizens and companies of major countries send their money to cut down their tax bills. The British Virgin Islands, Bermuda and the Bahamas are among the top five investors into Russia, the report said.
"Some macro data are quite meaningful: some very small jurisdictions are in the top 10 investors in large countries," said Pascal Saint-Amans, head of the tax centre at the Organization for Economic and Cooperation Development in Paris, in an interview.
Saint-Amans and his team are now putting together an action plan and coming up with practical ways for G20 countries to clamp down on tax dodgers. G20 finance ministers will be discussing the problem this week at a meeting, he said.
Saint-Amans added that multinational companies should welcome an overhaul of the system because it is about protecting capitalism.
"It will also protect multinationals from uncertainty or double taxation, which would have a negative impact on investment, and thus on growth and employment globally."
Hamida Ghafour is a foreign affairs reporter at The Star. She has lived and worked in the Middle East and Asia for more than 10 years and is author of a book on Afghanistan. Follow her on Twitter @HamidaGhafour