Corporate tax abuse is facilitated the most by overseas UK territories, according to a tax advocacy group.

• The Tax Justice Network has ranked the British Virgin Islands, Cayman Islands, and Bermuda as the "most complicit" countries in assisting multinational corporations in evading corporate income tax.
• According to TJN, other countries lose an estimated $84 billion in corporate tax annually due to overseas British territories and the UK.

According to Tax Justice Network, British overseas territories are the world's top facilitators of corporate tax evasion.

According to the latest update to TJN's Corporate Tax Haven Index, the British Virgin Islands is the territory "most involved" in assisting multinational corporations to evade paying corporate income tax, with the Cayman Islands and Bermuda following closely behind.

A third (33%) of all corporate tax abuse risks, as measured by the index, is now attributed to the UK and its network of British tax havens, often referred to as the UK's 'second empire,' according to a spokesperson for TJN.

The UK ranked 18th, while Jersey, a self-governing dependency of the UK, came in at number eight. Singapore, Hong Kong, and Switzerland followed closely behind, ranking fourth, third, and second, respectively.

The UK and its British tax havens are estimated to cost other countries $84 billion in corporate taxes annually, according to TJN.

Some government spokespersons stated that they adhere to international tax standards established by the Organisation for Economic Co-operation and Development while refuting accusations from an advocacy group.

The UK has been following the Common Reporting Standard, which was approved by the OECD in 2014, as stated by the British government's Foreign, Commonwealth and Development Office to CNBC.

The purpose of CRS is to enhance global transparency regarding tax issues and enable tax authorities to identify income and foreign assets belonging to their taxpayers.

Over 9.2 million accounts were reported by more than 100 countries that shared CRS information with FCDO, as of the end of 2022.

The Crown Dependencies and Overseas Territories are separate jurisdictions with their own democratically elected governments responsible for their fiscal affairs, the agency stated.

The British Virgin Islands' financial services industry is represented by BVI Finance, which states that the territory follows global standards, participates in global tax transparency initiatives under the OECD, and fully cooperates with the UK Government and law enforcement agencies in sharing "relevant" information.

Neither the Cayman Islands nor Bermuda's government tax departments responded to CNBC's inquiries.

The British Virgin Islands, the Cayman Islands, and Bermuda are currently considered "not harmful" according to OECD standards for identifying and isolating countries that allow multinational corporations to abuse tax.

The Tax Justice Network (TJN) believes that the CRS standards are inadequate to address tax evasion and fraud and has supported the UN's efforts to regulate international tax policy.

The UN presented a plan in August for a global tax agreement that promotes global cooperation and ensures fair taxation.

The guidelines contain broad commitments to equitably tax multinational enterprises, combat tax evasion and avoidance by wealthy individuals, and efficiently resolve tax disputes.

The new treaty received the support of 110 UN Member States, with 44 abstentions and eight nations voting against it, including the UK.

The UK has been accused of double standards by TJN, as the country has strengthened its own defenses against global corporate tax avoidance while simultaneously voting against the UN treaty.

The U.S., Australia, Canada, Israel, Japan, New Zealand, and South Korea were among the nations that opposed the UN initiative.

If the OECD continues to be the world's global tax regulator, the TJN predicts that the world will lose approximately $4.8 trillion to tax havens over the next decade. However, the UN tax convention may be the solution to prevent this loss, according to the TJN spokesperson.

The OECD is currently advocating for a global minimum tax deal that would require large multinational corporations to pay a minimum effective tax rate of 15%.

TJN methodology — and pushback

TJN assessed a country's tax laws using 18 criteria, including the minimum corporate tax rate, tax exemptions, and the aggressiveness of its tax treaties with other countries.

The "Haven Score" of the British Virgin Islands, Cayman Islands, and Bermuda is the lowest across all 18 indicators, evaluating the amount of "wiggle room" for corporate tax abuse in these countries.

TJN assessed the level of financial transactions undertaken by multinational corporations entering and departing the country.

The TJN spokesperson stated that the index ranks corporate tax havens based on their practical harm to other countries, rather than just their theoretical harm.

The Corporate Tax Haven Index has been referenced by the European Parliament, European Commission, UN Human Rights Council, and Oxfam.

Tax experts, including Niels Johannesen, director at the Oxford University Centre for Business Taxation, believe that the index is not an accurate measure for tax avoidance.

While TJN's research is trustworthy in identifying which countries impose which legal measures against international tax evasion, Johannesen believes the index is not trustworthy in measuring the extent to which a jurisdiction facilitates tax evasion.

The best academic studies suggest that Bermuda and Caribbean jurisdictions are important for multinational corporations to shift profits, but Ireland is estimated to receive more shifted profits than all three of them combined.

Professor Leopoldo Parada, an associate professor in tax law and co-director at the University of Leeds' Centre for Business Law and Practice, raises concerns about the inclusion and framing of TJN's haven score indicators, specifically the lowest available corporate income tax.

Parada stated that countries employ various tools to compete for investment, with some focusing on infrastructure, others on technology or low labor costs. Countries with less competitive advantages in these areas often provide other incentives, such as low corporate income tax rates and favorable aspects of their tax systems.

"We should not assume that a country with a low corporate income tax rate is open to tax evasion. Instead, it is simply willing to pay the trade-off."