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Corporate Tax Avoidance – UK and Holland Singled Out

We are hearing a lot about corporate tax avoidance in the news recently, and according to a new study about 40% of the money goes through the UK and Holland.

Of course, the money doesn’t hang around here for long, and is pretty soon off to tax havens such as the Cayman Islands or British Virgin Islands where many of these tax dodgers stash their cash.

The study found out that corporations within the EU avoid up to £159 Billion in tax every year, and nearly half of that goes through the UK and Holland at some point. They came to this conclusion after taking a closer look at the ownership structure of thousands of firms throughout Europe.

It’s illegal though, and that is why the European Commission have vowed to go after the corporations who avoid tax and put their money in offshore accounts. Something tells me we are going to be witnessing a crackdown over the next few years.

Figures uncovered during the study show that 23% of money goes through Holland that eventually arrives in a tax haven, while the UK was responsible for 14%. Other countries mentioned include Switzerland (7%), Singapore (2%), and Ireland (1%).

Interestingly, Europe now has a bigger corporate tax avoidance problem then the USA, where it is estimated that only £100 billion pounds makes it way through America on route to a tax haven.

It was also found out that countries typically have a strong correlation with particular tax havens and offshore accounts.

For example, corporations using the UK to dodge tax usually send their money off to places such as the Cayman Islands, British Virgin Islands, and Jersey…all of which have some kind of link with the UK from the past.

The main country that businesses in Holland send their money to is Cyprus, which has long been known as a place where people can set up an offshore bank account.

It is also alleged that many American companies are setting up a base in Ireland, and then eventually getting their money to Luxembourg in a bid to avoid tax.

Who knows for sure exactly what is going on. This study may be completely wrong and inaccurate. The only real proof of innocence or guilt is when it is proven in a court of law.

What I do know is the the vast majority of contractors in the UK don’t care about tax havens and offshore bank accounts…all they really care about is finding a good accountant and doing everything above board.

In my opinion, that is the best way to play it. Do everything legally with the help of a contractor accountant.

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