An organisation opposed to the low tax status of offshore centres has estimated that $11.5 trillion ...
An organisation opposed to the low tax status of offshore centres has estimated that $11.5 trillion of assets is held in these jurisdictions by wealthy individuals. Tax Justice Network added that the annual income these assets might earn amounts to $860bn and the tax avoided could be more than $255bn each year.
In compiling these figures, Tax Justice Network said it had used a number of public sources, including information from McKinsey & Company and Boston Consulting Group. It pointed to the fact that the Bank for International Settlements had said in June 2004 there was $2.7 trillion in offshore bank deposits out of $14.4 trillion in total bank deposits. This means around one-fifth of all deposits are held offshore.
Tax Justice Network added that in 1998, the Merrill Lynch/Cap Gemini's World Wealth Report estimated around one-third of the assets of wealthy investors is held offshore. This stated that the amount of their wealth in offshore centres was $8.5 trillion out of total assets of $27.2 trillion. Tax Justice Network said this figure is increasing by $600bn annually, which brings the current figure to $9.7 trillion.
It also said 150,000 offshore companies are being set up every year. It estimated that tax avoidance in the UK costs anywhere between $46.80bn and $159.13bn.
Formed in 2003 by economists and tax practitioners, Tax Justice Network has a secretariat in London and among its stated aims are to eliminate cross-border tax evasion and limit the scope for tax avoidance so that "large corporations and wealthy individuals pay tax in line with their ability to do so." It aims to work with the United Nations and other international bodies to reverse what it described as the practice of hiding money from governments via offshore financial centres. It also wants to remove the "tax and secrecy incentives" that encourage the outward flow of investment capital from countries most in need of economic development. Tax Justice Network said there should be multi-lateral support to assist offshore centres in re-structuring their economies.
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