Average effective tax rate of only 6% paid by top European banks in Ireland
Transparency standards needed to prevent Northern Ireland being used as a tax haven
Monday 27th March, 2017: Immediate release
Europe’s 20 biggest banks registered over a quarter (26 per cent) of their profits (at least £18 billion/€25 billion) in global tax havens in 2015, an Oxfam report revealed today – an amount at odds with the actual economic activity taking place in those countries. Tax havens accounted for only 12 percent of the banks’ global turnover and 7 percent of their employees.
The report – Opening the Vaults – suggests the discrepancy may have arisen because some banks are using tax havens to avoid paying their fair share of tax, to facilitate tax dodging for their clients, or to circumvent regulations and legal requirements.
The research for the report was only possible because of new EU transparency rules, requiring European banks to publish a country-by-country breakdown of their profits and tax payments, to assess their use of tax havens.
Michael McCarthy Flynn, Oxfam Ireland’s Senior Policy and Research Coordinator, said: “New EU rules give us a glimpse into the tax affairs of Europe’s biggest banks and it’s not a pretty sight. Governments must change the rules to prevent banks and other big businesses using tax havens to dodge taxes or help their clients dodge taxes.”
The research by Oxfam and Fair Finance Guide International reveals that Ireland is facilitating significant corporate tax avoidance, while UK-linked tax havens also proved popular with Europe's biggest banks. The report found that in Ireland European banks paid an average effective tax rate of no more than 6 percent – half the statutory rate of 12.5% – with three banks (Barclays, RBS and Crédit Agricole) paying no more than 2 percent.
Key findings from the report include:
Banks often pay little or no tax on the profits they post in tax havens. European banks paid no tax on €383 million of profit they posted in seven tax havens in 2015. In 2015 European banks posted at least €628 million in profits in tax havens where they employ nobody.
The 20 biggest banks posted €4.9 billion of profits in the tiny tax haven of Luxembourg in 2015 – more than they did in the UK, Sweden and Germany combined.
Ireland appears to be a very productive location for European banks studied with just the Cayman Islands, Curacao and Luxembourg having a higher average profit per employee. An average employee in Ireland generated €409,000 in profits in 2015, more than nine times the average for employees worldwide.
Oxfam said countries are being denied large amounts of potential tax revenue and this is contributing to inequality and poverty as governments are forced to decide between increasing indirect taxes such as value-added tax (VAT), which are paid disproportionately by ordinary people, or cutting public services, which hits the poorest hardest. At the same time, increased profits as a result of lower corporate taxation benefit wealthy companies’ shareholders, further increasing the gap between rich and poor. The report highlights the importance of financial transparency rules to help detect and stamp out tax dodging.
The UK Government has already secured the power to expand public country-by-country reporting rules (which require companies to publically report on a country by country basis where they make their profits and pay their taxes) from banks to other big businesses, but has not yet introduced this legislation. It has been waiting to see what steps the EU will take.
Mr. McCarthy Flynn added: “No changes to Northern Ireland’s corporate tax system should be undertaken until these transparency rules are implemented throughout the UK, including Northern Ireland. Such rules will ensure that companies have to report on their profits and the tax they pay in every country where they operate, as a safeguard to prevent companies from taking advantage to avoid tax owed elsewhere. Otherwise there is a risk that Northern Ireland could be used as a tax haven, leaving the most vulnerable to pay the price of reduced public services such as health and education.”
ENDS
Contact: To arrange an interview or for more information, please contact:
The report, Opening the vaults: the use of tax havens by Europe's biggest banks, a breakdown of bank data, infographics and a methodology document is available at https://oxfam.box.com/s/wn9mdt217isfp4ji8dzossuyxphb698d. The complete data on which Oxfam based its calculations is also available.
The 20 European banks assessed by Oxfam include: HSBC, Barclays, RBS, Lloyds and Standard Chartered (UK); BNP Paribas, Crédit Agricole, Société Générale, BPCE, and Crédit Mutuel-CIC headquartered (France); Deutsche Bank, Commerzbank AG, and IPEX (Germany); ING Group and Rabobank (Netherlands); UniCredit and Intesa Sanpaolo (Italy), Santander and BBVA (Spain); and Nordea (Sweden). All banks were asked to comment on the findings of the report before publication – their responses are outlined in the report.
More statistics from the report:
Subsidiaries in tax havens are on average twice as lucrative for banks as those elsewhere. For every €100 of activity, banks make €42 of profit in tax havens compared to a global average of €19.
Bank employees in tax havens appear to be 4 times more productive than the average bank employee – generating an average profit of €171,000 per year compared to just €45,000 a year for an average employee.
In 2015 European banks posted at least €628 million in profits in tax havens where they employ nobody. For example, the French bank BNP Paribas made €134 million tax free profit in the Cayman Islands despite having no staff based there.
Some banks are reporting profits in tax havens while reporting losses elsewhere. For example, Germany’s Deutsche Bank registered low profits or losses in many major markets in 2015 while booking almost €2 billion in profits in tax havens.
Oxfam is an international confederation of 19 non-governmental organisations working with partners in over 90 countries to end the injustices that cause poverty. www.oxfamireland.org
Fair Finance Guide International is an international civil society network, initiated by Oxfam that seeks to strengthen the commitment of banks and other financial institutions to social, environmental and human rights standards. http://fairfinanceguide.org/
In Ireland, three banks paid an effective tax rate of no more than 2%
Massive average profitability rate here of 76% for top European banks
Average employee in Ireland of banks studied generated €409,000 in profits in 2015, over 9 times worldwide average
Monday 27th March, 2017: Immediate release
There is strong evidence that Ireland is facilitating significant corporate tax avoidance by top European banks, according to a new report published today by Oxfam and the Fair Finance Guide International.
The report, Opening the Vaults, studied Europe’s 20 biggest banks (16 of which operate in Ireland). The research was made possible by new EU transparency rules that require European banks to publish information on the profits they make and the tax they pay in every country in which they operate.
The research found that a disproportionate amount of profits of the top European banks are reported in Ireland, with these banks in 2015 making more than €2.3bn in profits here on €3bn of turnover – a massive profitability rate of 76% that is four times higher than the global average. Only the Cayman Islands had a higher average profitability rate (167%).
Ireland appears to be a very productive location for European banks with just the Cayman Islands, Curacao and Luxembourg having a higher average profit per employee, according to the report. An average employee in Ireland generated €409,000 in profits in 2015, more than nine times the average for employees worldwide. The Spanish bank BBVA stands out in this respect: while the bank’s employees generated on average a profit of €33,000 each, an average employee in Ireland generated €6.8m, well over 200 times as much.
The 16 top European banks operating in Ireland examined in the research paid an average effective tax rate in Ireland of no more than 6 percent – half the statutory rate of 12.5% – with three banks (Barclays, RBS and Crédit Agricole) paying no more than 2 percent.
Oxfam said countries are being denied large amounts of potential tax revenue and this is contributing to inequality and poverty as governments are forced to decide between increasing indirect taxes such as value-added tax (VAT), which are paid disproportionately by ordinary people, or cutting public services, which hits the poorest hardest. At the same time, increased profits as a result of lower corporate taxation benefit wealthy companies’ shareholders, further increasing the gap between rich and poor.
Oxfam Ireland’s Senior Policy and Research Coordinator Michael McCarthy Flynn said: “The massive profitability levels of European banks in Ireland suggests that large profits may be reported in Ireland as a tax avoidance strategy. This is creating little additional benefit to the Irish economy and tarnishing Ireland’s reputation.
“The cost to the Irish exchequer of loopholes that facilitate banks to pay such low levels of tax is rarely publicly documented and accounted for. For example, if RBS’ profits had been taxed at the statutory rate of 12.5 percent, the bank would have paid €120.5m in additional taxes.
“The research raises serious questions about the effectiveness of the Irish Government’s measures to tackle corporate tax avoidance. The rules must be changed to prevent banks and other big businesses from dodging taxes or helping their clients dodge taxes. Tax dodging deprives countries throughout Europe and the developing world of the money they need to pay for doctors, teachers and care workers.”
Tax havens account for 26 percent of the profits (an estimated €25 billion) made by the 20 biggest European banks but only 12 percent of banks’ global turnover and 7 percent of the banks’ employees – well out of proportion to the level of real economic activity that occurs in these countries. While there may be legitimate business reasons for booking high profits in some cases, the report suggests that discrepancies may have arisen because some banks are using tax havens to avoid paying their fair share of tax, to facilitate tax dodging for their clients, or to circumvent regulations and legal requirements.
Oxfam says transparency measures, such as EU rules making corporations publically report on a country by country basis where they make their profits and pay their taxes, are vital tools in the global fight against tax dodging. (Ireland is opposed to the public element of this reporting). However, a new European Commission proposal designed to extend public reporting to all big companies needs to be enhanced. The proposal is limited to companies with a turnover of €750 million or more, a measure that would exclude up to 90 percent of multinationals, and does not require companies to report on their activities in all the countries in which they operate – including developing countries.
Mr McCarthy Flynn continued: “It’s only fair that businesses open their books to scrutiny so that we can see whether they are paying their fair share towards public services in both rich and poor countries. As a matter of urgency the EU should strengthen and extend its draft directive to require that all large multinationals publish separate financial reports for every country where they operate, and the Irish Government should end its opposition to these new transparency proposals. This will make it easier for all countries – including the poorest – to establish if companies are paying their fair share of tax or not.
“In addition, Ireland’s transfer pricing regime should be amended to give Irish Revenue officials the power to investigate where companies may be using inter-company transactions to avoid tax.”
ENDS
Contact: To arrange an interview or for more information, please contact:
The report, Opening the vaults: the use of tax havens by Europe's biggest banks, a breakdown of bank data, infographics and a methodology document is available at https://oxfam.box.com/s/wn9mdt217isfp4ji8dzossuyxphb698d. The complete data on which Oxfam based its calculations is also available.
The 20 European banks (16 of which operate in Ireland) assessed by Oxfam include: HSBC, Barclays, RBS, Lloyds and Standard Chartered (UK); BNP Paribas, Crédit Agricole, Société Générale, BPCE, and Crédit Mutuel-CIC headquartered (France); Deutsche Bank, Commerzbank AG, and IPEX (Germany); ING Group and Rabobank (Netherlands); UniCredit and Intesa Sanpaolo (Italy), Santander and BBVA (Spain); and Nordea (Sweden). All banks were asked to comment on the findings of the report before publication – their responses are outlined in the report.
More statistics from the report:
Luxembourg and Ireland are the most favoured tax havens, accounting for 29 percent of the profits banks posted in tax havens in 2015.
Banks often pay little or no tax on the profits they post in tax havens. European banks paid no tax on €383 million of profit they posted in seven tax havens in 2015. In 2015 European banks posted at least €628 million in profits in tax havens where they employ nobody.
Tax havens account for 26 percent of the profits made by the 20 biggest European banks – an estimated €25 billion – but only 12 percent of banks’ turnover and 7 percent of the banks’ employees.
Subsidiaries in tax havens are on average twice as lucrative for banks as those elsewhere. For every €100 of activity, banks make €42 of profit in tax havens compared to a global average of €19.
Some banks are reporting profits in tax havens while reporting losses elsewhere. For example, Germany’s Deutsche Bank registered low profits or losses in many major markets in 2015 while booking almost €2 billion in profits in tax havens.
Oxfam is an international confederation of 19 non-governmental organisations working with partners in over 90 countries to end the injustices that cause poverty. www.oxfamireland.org
Fair Finance Guide International is an international civil society network, initiated by Oxfam that seeks to strengthen the commitment of banks and other financial institutions to social, environmental and human rights standards. http://fairfinanceguide.org/
Fighters in the Yemen war and their international backers are knowingly pushing the country to the brink of famine, Oxfam warned today, ahead of the two year anniversary of the escalation of the conflict. Nearly 7 million people have been pushed to the brink of starvation and 70 per cent of the population is in need of humanitarian aid.
Oxfam is calling for urgent action on two fronts: an immediate resumption of the peace process and for donors to provide the additional $2.1bn the UN says is needed for the humanitarian response. Currently the appeal is only 7 per cent funded.
Colm Byrne, Oxfam Ireland’s Humanitarian Manager, said: “If the parties to the conflict – and those fuelling it with arm sales – continue to ignore Yemen’s food crisis, they will be responsible for a famine.
“The people of Yemen are being starved to death and may not survive the situation much longer. A fully funded humanitarian response is vital to prevent countless people dying needlessly but ultimately what Yemenis need is an end to the fighting.All sides to the conflict need to understand that famine is the real enemy of Yemen. Preventing famine must take priority over any side’s military aims. The world cannot wait for famine to be declared in Yemen or it will be too late.”
Airstrikes and fighting have killed more than 7,600 people, including over 4,600 civilians, forced over 3 million people from their homes and left 18.8 million people – 70 percent of the population – in need of humanitarian assistance, the greatest number in any country in the world.
Ports, roads and bridges, along with warehouses, farms and markets have been regularly destroyed by the Saudi-led coalition, draining the country’s food stocks. The Houthi led authority is delaying the delivery of life-saving relief, and sometimes detaining aid workers. This, coupled with a flattened economy, has created an abyss of hunger and led 6.8 million people to the brink of famine.
A blockade has been imposed on Yemen, preventing food coming into the country. While this has been partially eased, new restrictions on shipping and the destruction of many port facilities, such as the cranes of Al-Hudaydah port in August 2015, are punishing the Yemeni population and the country’s food supplies are running a critically low.
Fighting on Yemen’s west coast escalated last month, especially around Al-Hudaydah and Mocha ports, which risks cutting off vital supplies to millions of people. In a worst-case scenario where food imports drop substantially or where conflict prevents supplies being moved around the country, famine is possible.
An Oxfam food survey of 2,000 families who have been forced to flee their homes in north-west Yemen, between November and December 2016, found that 85 percent of people were going hungry. The only options they have are to reduce the amount of food they eat or feed what little they have to their children and go hungry themselves. They skip meals and end up buying food of lesser quality, often on credit. Some have no source of food at all and only survive thanks to humanitarian aid and people’s generosity.
In order to save the lives of millions of starving people, Oxfam is urging the United Nations Secretary General to pressure all parties to the conflict to resume peace talks, to reach a negotiated peace agreement and improve the economic situation in the country.
Oxfam is calling for all land, sea and air routes to Yemen to remain open and for attacks targeting military objects related to supply routes and infrastructure to not disproportionately affect civilians in accordance with International Humanitarian Law.
Oxfam is also helping people facing starvation in East Africa, South Sudan and Nigeria. In South Sudan, Oxfam is distributing food to over 415,000 people as well as providing over 140,000 people with clean water and sanitation. The agency is also helping over 300,000 in Nigeria, 255,000 people in the Southern Somali region of Ethiopia and has begun a response to the drought in Somalia with immediate plans to reach a minimum of 10,000 people with clean water, sanitation and cash assistance for food.
Oxfam spokespeople are available for interview on the ground in the region and also here in Ireland, including Colm Byrne, Oxfam Ireland’s Humanitarian Manager.
CONTACT:To arrange an interview or for more information, please contact: Alice Dawson, Oxfam Ireland, on +353 (0) 83 198 1869 or at alice.dawson@oxfamireland.org
We have reached more than a million people in eight governorates of Yemen with water and sanitation services, cash assistance, food vouchers and other essential aid since July 2015
We have given cash to more 205,000 people so families can buy food or livestock
35,000 have taken part in our cash-for-work programmes
Agency calls for urgent action for people in need ahead of rainy season
People facing famine in South Sudan are forced to walk through water for days in order to reach food and with the rainy season about to begin, it is a race against time to save lives, Oxfam warns.
The agency is urging members of the public to donate to its hunger crisis appeal to support people in desperate need of food, including those in South Sudan.
With support from Irish Aid, Oxfam is using canoes and employing canoe operators to make sure vulnerable people can access food distributions and medical care without having to endure long journeys which risk their safety. In Nyal in Panyijar County, Unity State, Oxfam has helped almost 40,000 of the most vulnerable people living there access food in the past year alone.
The annual rainy season, which starts in April/May, will cause flooding which means roads and airstrips will become impassable – making things even more difficult for isolated communities and the aid agencies trying to reach them.
Colm Byrne, Oxfam Ireland’s Humanitarian Manager, said: “The people sheltering in areas like Nyal are among the most desperate caught up in this devastating crisis – and the flooding caused by the rainy season will leave them even more at risk.
“After being forced to flee their homes in fear for their lives, they are now forced to travel on foot, sometimes walking through water – hungry and exhausted – for two or three days, to access the food they can’t live without.
“Through Irish Aid funds, the Irish people have helped us provide canoes and employ local people to operate them so that we can make sure people do not have to choose between safety and life-saving aid. Instead they can access food distributions and medical care without trekking days to do so and are kept safe from attack.”
In South Sudan, urgent action is required to support 4.9 million people in desperate need of food and over 1.8 million displaced by fighting. Today, the Irish Government announced new funding of €11m to assist people affected by famine, drought and conflict in the Horn of Africa, with specific focus on South Sudan (as well as Sudan and Somalia).
Oxfam is distributing food to over 415,000 people in South Sudan as well as providing over 140,000 people with clean water and sanitation.
Byrne continued: “Ultimately what the people of South Sudan need is an end to the conflict. Until then, we will continue to provide humanitarian aid and longer-term assistance – but we must be given support and safe access to communities in need. Hunger and impending rains present a deadly combination and we urgently need funds to reach more people before it’s too late. Lives depend on it.”
Oxfam is also helping people facing starvation in East Africa, Nigeria and Yemen. The agency is already helping over one million people in Yemen, over 300,000 in Nigeria, 255,000 people in the Southern Somali region of Ethiopia and has begun a response to the drought in Somalia with immediate plans to reach a minimum of 10,000 people with clean water, sanitation and cash assistance for food.
CONTACT: Oxfam spokespeople are available for interview, including Colm Byrne, Oxfam Ireland’s Humanitarian Manager, who recently travelled to Niger and has previously worked in South Sudan.
To arrange an interview or for more information, please contact:
001 and 002: In Nyal, Panyijar County, South Sudan, Oxfam is using canoes to make sure vulnerable people who could not make it by themselves can access food distributions and medical care. Photo: Bruno Bierrenback Feder/Oxfam
Notes to the Editor:
WHAT OXFAM IS DOING IN SOUTH SUDAN
Providing water and sanitation to prevent cholera and diarrhoea
Working to position supplies ahead of the rainy season which makes it even more difficult for people to access aid
Providing canoes and travel vouchers for people to reach food distributions, as well as employing canoe operators
Providing emergency food distributions and working with people to produce their own food and other income
Helping people to claim their rights, flee violence, find safety and access aid
So far we have helped over 600,000 people across the country and almost 40,000 of the most vulnerable in Panyijar County, Unity State, to where many people have fled from famine-hit areas
WHAT OXFAM IS DOING IN NIGERIA
Providing people with emergency food support, cash and vouchers
Providing clean water and better sanitation, including showers and toilets
Distributing food and cooking equipment, and kits to help people avoid disease
We have helped some 300,000 in northeast Nigeria’s Adamawa, Borno and Yobe states since May 2014. We aim to help up to 500,000 this year
WHAT OXFAM IS DOING IN YEMEN
We have reached more than a million people since July 2015 with clean water, hygiene kits and other essentials
Given cash to more 205,000 people so families can buy food or livestock
35,000 have taken part in our cash-for-work programs
WHAT OXFAM IS DOING IN SOMALIA
Launching a humanitarian response in Somaliland, with aim of reaching at least 10,000 people with clean water, sanitation and cash assistance for food
As the drought worsens in the next few months, we hope to secure enough funding to expand our response across the region
Agency warns that hunger and deaths will rise if aid does not reach countries in need, including South Sudan, Yemen, Nigeria and Somalia
Famine likely to be declared in Yemen and Somalia in the coming months
In East Africa, 19 million people are on the brink of starvation due to conflict and drought
Wednesday 13 March 2017
Oxfam Ireland has launched an urgent public appeal in response to unprecedented levels of hunger and famine affecting more than 38 million people across six countries – more people than six times the entire population of the island of Ireland.
The agency has asked the public to help it raise €/£500,000in the coming weeks so it can reach more people quickly in communities in South Sudan, Yemen, north-east Nigeria, Somalia, Ethiopia and Kenya. Oxfam Ireland warned that hunger, starvation and deaths will increase exponentially without urgent action.
The UN announced today that levels of hunger have increased by 20% in Yemen since June 2016 and there are now over 17 million people in the country who are dangerously hungry - a massive humanitarian response is required to avert famine.
Famine has already been declared in South Sudan where 4.9 million people face starvation and is likely to be declared in Somalia in the coming months where almost three million are in desperate need of food.In north-east Nigeria at least 4.4 million people are in immediate of humanitarian assistance.
Jim Clarken, Oxfam Ireland Chief Executive said: “We are witnessing levels of hunger and famine right now that have not been seen for decades. War-ravaged South Sudan was the first country in the world to declare famine since 2011 but beyond its borders tens of millions of children, women and men are facing starvation and death in East Africa, Nigeria and Yemen.
“In East Africa alone drought and conflict has left 19 million people on the brink of starvation, in desperate need of food, water and medical treatment – many have already died. Behind that incomprehensible number are real people. People like Fadumo, a mother and farmer from the Somali region in Ethiopia who lost three of her children, triplets, to malnutrition when they were less than one month old. Meanwhile drought claimed the majority of her livestock and source of income, leaving her destitute.”
Oxfam is supporting communities facing famine and hunger by distributing emergency food supplies and cash or cash vouchers, and providing clean water and sanitation. Oxfam is already helping over one million people in Yemen, more than 600,000 in South Sudan, over 300,000 in Nigeria, 255,000 people in the Southern Somali region of Ethiopia and plans to begin a response to the drought in Somalia.
Mr Clarken continued: “When famine is declared it suggests the international community has failed to organise and act in time. We must act now before levels of hunger rise and people exhaust their last efforts to feed their families.
“The international community must respond immediately and collectively to fulfil the UN’s urgent appeal for $4.4 billion – and commit to responding earlier to warning signs so that this never happens again. Meanwhile, aid agencies must be given more and better access to all people in need to prevent further suffering and needless loss of life.
“We’re also calling on people across the island of Irelandto help us raise vital funds quickly so that we can ramp up our response to this devastating food crisis. We are already on the ground in countries in East Africa and in Nigeria and Yemen but what concerns us now is the people we have yet to reach.”
CONTACT: Oxfam spokespeople, including from East Africa, Nigeria and Yemen, are available for interview. To arrange an interview or for more information, please contact:
· Providing water and sanitation to prevent cholera and diarrhoea
· Working to position supplies ahead of the rainy season which makes it even more difficult for people to access aid
· Providing travel vouchers for people to take canoes to reach food distributions
· Providing emergency food distributions and working with people to produce their own food and other income
· Helping people to claim their rights, flee violence, find safety and access aid
· So far we have helped over 600,000 people across the country and almost 40,000 of the most vulnerable in Panyijar County, Unity State, to where many people have fled from famine-hit areas
WHAT OXFAM IS DOING IN NIGERIA
· Providing people with emergency food support, cash and vouchers
· Providing clean water and better sanitation, including showers and toilets
· Distributing food and cooking equipment, and kits to help people avoid disease
· We have helped some 300,000 in northeast Nigeria’s Adamawa, Borno and Yobe states since May 2014. We aim to help up to 500,000 this year
WHAT OXFAM IS DOING IN YEMEN
· We have reached more than a million people since July 2015 with clean water, hygiene kits and other essentials
· Given cash to more 205,000 people so families can buy food or livestock
· 35,000 have taken part in our cash-for-work programs
WHAT OXFAM IS DOING IN SOMALIA
· Launching a humanitarian response in Somaliland, with aim of reaching at least 10,000 people with clean water, sanitation and cash assistance for food
· As the drought worsens in the next few months, we hope to secure enough funding to expand our response across the region
