Oxfam claims Ireland is a tax haven for banks

The profitability rate here is four times higher than the global average...

Oxfam claims Ireland is a tax haven for banks

Picture by: Peter Morrison/AP/Press Association Images

A new Oxfam report claims that there is strong evidence that Ireland is facilitating "significant corporate tax avoidance" by top European banks.

The 'Opening the Vaults' study, completed in conjunction with the Fair Finance Guide International, shows that banks reporting in Ireland made over €2.3 billion in profits on €3bn of turnover in 2015.

This 76% profitability rate is four times higher than the global average – only the Cayman Island had a higher rate with 167%.

The report of Europe's 20 biggest banks stated that:

"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% – half the statutory rate of 12.5% – with three banks (Barclays, RBS and Crédit Agricole) paying no more than 2%."

It named Luxembourg and Ireland as the "most favoured tax havens" in Europe, accounting for 29% of the profits banks posted in such areas in 2015.

The 20 biggest banks posted €4.9bn of profits in Luxembourg in 2015 – more than they did in the UK, Sweden and Germany combined.

Manon Aubry, Oxfam’s senior tax justice advocacy officer said:

“New EU transparency 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.

"All companies and individuals have a responsibly to pay their fair share of tax. Tax dodging deprives countries throughout Europe and the developing world of the money they need to pay for doctors, teachers and care workers."

Oxfam has argued that many countries are being cheated out of money needed to tackle poverty and inequality by corporate tax dodgers, with poor countries being hit the hardest.

The charity claims that tax avoidance by multinationals costs poor countries more than €90bn every year – "enough money to provide an education for the 124 million children who aren’t in school and fund healthcare interventions that could prevent the deaths of at least six million children."

Oxfam believes that a new European Commission proposal designed to extend public reporting beyond the banking sector is flawed, due to the fact that it is limited to companies with a turnover of €750 million or more.

This measure would exclude up to 90% of multinationals and does not require companies to report on their activities in all the countries in which they operate, including developing countries.   

Aubry added:

"The EU’s transparency rules are starting to open up the often murky world of corporate taxation to public scrutiny.  

"These rules must now be extended to ensure all large corporations provide financial reports for every country where they operate. This will make it easier for all countries – including the poorest – to establish if companies are paying their fair share of tax or not."