Tax havens abroad not only enable the rich to do billions in business – according to a new study, they also make it easier to exploit nature. According to this, 70 percent of all known ships that are involved in illegal and unregulated fishing sail under the flag of a tax haven. The deforestation of the Brazilian rainforest is apparently also being promoted by money from tax havens, write Swedish researchers in the magazine “Nature Ecology and Evolution”.
A direct proof of the causality of tax havens is not possible because of the financial secrecy, admits the team. It cannot be shown with certainty how the financial flows affect the local economic activities – and thus the environment.
Nevertheless, the researchers do not doubt their results: “Our analysis shows that the use of tax havens is not only a socio-political and economic problem, but also an environmental problem,” explains first author Victor Galaz from Stockholm University in a communication from his university. The existence of tax havens affects the sustainable management of the oceans and the Amazon rainforest.
The so-called tax havens are states or areas that levy little or no tax on income and wealth and promise a high level of discretion. That makes them not only attractive as company headquarters, but also interesting for money laundering and tax avoidance.
According to the scientists, tax havens such as Belize and Panama are used, among other things, to cover up illegal or unregulated fishing. In many countries, ships that violate international laws are not reported. They could drive under a double identity: one is being fished legally, the other illegally. While 70 percent of the ships involved in illegal and unregulated fishing sail under the flag of tax havens, according to the study, it is only 4 percent of all registered fishing vessels.
In a further study, the scientists uncovered that the nine largest companies in the Brazilian soy and meat industry got an average of more than two thirds of their foreign direct investments through tax havens between the years 2000 and 2011. Using data from the Brazilian central bank, among other things, they tracked that 18.4 billion US dollars flowed from there to the companies, largely via the Cayman Islands and the Bahamas. The recipient companies are largely responsible for the deforestation of the rainforest, which stabilizes the earth’s climate system.
The companies proceeded differently: They shifted profits through subsidiaries in countries with low tax rates or financed activities in countries with high taxes through loans from the subsidiary in the tax haven.
Following the revelations of the so-called Panama Papers about controversial business with letterbox companies, the leading economic nations (G20) have stepped up their efforts to dry up tax havens around the world and to curb tax tricks of international corporations.