Survival of the Richest

United Kingdom
The Anti-Corruption Summit also led to an agreement
that 11 countries (growing to a total of 48 by the end of
September 2016), including a number of UK Overseas
Territories and Crown Dependencies, will share information
on beneficial ownership with each other (not publicly). 795 This
reduces one barrier to genuine transparency, since it means
that the costs of obtaining and maintaining the records will
already be met – so there is no additional cost to making
this public. Crucially, however, the list did not include the UK
territory of the British Virgin Islands 796 – which, among all
jurisdictions in the world, is the most utilised jurisdiction in
the Panama Papers. 797
One other concrete, and potentially valuable, step forward
by the UK, linked to the Anti-Corruption Summit, was the
announcement that foreign companies would be banned
from purchasing property, or securing government
procurement contracts, if their beneficial ownership details
were not publicly available. 798
While the UK has been very progressive on the issue of
transparency around company ownership, the same cannot
be said when it comes to owners of trusts. In fact, when
the EU’s Anti-Money Laundering Directive (AMLD) was
negotiated a couple of years ago, the then Prime Minister
David Cameron personally intervened to try and ensure that
trusts did not become subject to the same transparency
requirements as companies. 799 In July 2016, the European
Commission put forward a proposal for revision of the
AMLD, which includes creating public registers of beneficial
owners of companies and some trusts. 800 The new UK
government has not yet taken a formal position on the issue.
According to the 2015 Financial Secrecy Index, the UK
has the 3rd highest level of financial secrecy out of the 18
countries included in this report (ranked at number 15 at the
global level). 801 However, as noted in the Financial Secrecy
Index, the UK would be top of the list if the British Overseas
Territories and Crown Dependencies were included in the
assessment. 802
Taxation
Tax Treaties
The UK has one of the world’s largest tax treaty networks.
In total, the UK has 67 treaties with developing countries,
which is the second highest among all the countries
covered by this report. 803 The average rate of reduction of
tax rates within those treaties – 4.7 percentage points – is
significantly above average (3.8 percentage points). 804
Additionally, research by ActionAid has shown that the
UK is tied with Italy as the countries that have entered
into the highest number of ‘very restrictive’ tax treaties
with developing countries. These treaties include strong
limitations on the taxing rights of the developing countries
that are signatories. 805 For example, ActionAid estimates
that a tax treaty with the UK cost Bangladesh more than
US$ 14,560,707 due to lower tax income on dividends
alone. ActionAid also highlights the treaty between the
UK and Zambia, which blocks Zambia from taxing British
companies any more than 5 per cent on dividends from
direct investments, as one of the "worst withholding tax
deals currently in force." 806
So far the UK has not committed to any impact assessment
for existing tax treaties. However, the tax authority, Her
Majesty’s Revenue and Customs (HMRC), does conduct a
treaty network review programme whereby interested
parties, including academics and civil society organisations,
can submit comments on existing treaties as well as plans
for new negotiations. 807
The UK is planning a number of new tax treaty negotiations
with the following developing countries: Nepal, Uzbekistan,
Ghana, Malawi, India, Fiji, Thailand, Kazakhstan and
Kyrgyzstan. 808
Harmful tax practices
A study on aggressive tax planning structures shows that the
UK has eight indicators, compared to the EU average of 10.6. 809
One of the indicators is active, namely the UK’s patent box.
Within the UK, so-called ‘clearances’, including advance
pricing agreements (or ‘sweetheart deals’), may be sought
by any business, regardless of whether it forms part
of a domestic group or part of a multi-national group.
The government has made clear that it will not provide
clearances where an arrangement may be caught by the
general Anti-Abuse Rule (GAAR). 810
96 • Survival of the Richest