The 20 biggest lenders paid no tax on e383 million profit posted in seven tax havens that year, while booking 4.9 billion earnings in Luxembourg, more than the UK, Sweden and Germany combined, Oxfam and the Fair Finance Guide International said on Monday.
The study was based on data released under new EU regulations requiring banks to report earnings on a country-by-country basis.
Banks’ subsidiaries in low-tax jurisdictions are twice as profitable as offices elsewhere and employees are four times more productive, generating an average profit of 171 000 per person annually compared to 45 000 on average, according to the report.
Some of the world’s largest companies have been criticised for funnelling profits through places such as the British territories of Bermuda, Cayman Islands and Ireland, prompting promises of harsher measures from governments to ensure they collect more tax.
The Organisation for Economic Co-operation and Development has released a plan aimed at limiting companies’ ability to get low rates in jurisdictions where they lack genuine economic activity, estimating profit-shifting costs governments as much as $240 billion (R2.98 trillion) a year in lost revenue.
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“Governments must change the rules to prevent banks and other big businesses using tax havens to dodge taxes or help their clients dodge taxes,” said Manon Aubry, Oxfam’s senior tax justice advocacy officer.
“New EU rules give us a glimpse into the tax affairs of Europe’s biggest banks.”
At least e628 million profit was reported by European banks in tax havens where they have no staff, Oxfam said. The organisation cited as an example French bank BNP Paribas, which said it made e134 million profit in 2015 in the Cayman Islands, even though it had no employees there. Deutsche Bank, Germany’s largest bank, reported a loss in its home country and profits of e1.9 billion in tax havens, according to the report.
Banks came under scrutiny after the Panama Papers scandal in 2016.