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June 25, 2013 12:02 am
Tax campaigners plan to stage protests against government cuts in HSBC branches next month, after singling out the bank for its large numbers of subsidiaries in low-tax jurisdictions.
The stunts are a sign that pressure on business and government over tax is likely to continue in spite of efforts by world leaders to strike a blow against avoidance and evasion at last week’s G8 summit.
UK Uncut said it was targeting HSBC “for its links to tax havens and its role in facilitating tax avoidance”, in its first national action since last December when it targeted Starbucks, the coffee chain. It planned to transform HSBC branches into food banks to make a point about the government’s “political choice” to exacerbate poverty by making cuts rather than tackle corporate tax avoidance.
The protest group said it wanted the bank to pull out of tax havens, dismissing the government’s efforts to tackle them as “spin”. Angela Walker, a UK Uncut activist, said: “The G8 summit saw a lot of tough talk on tax, but no real action.”
HSBC last month told shareholders it expected to “significantly reduce” its activities in tax havens over the next few years although they would not be eliminated.
Douglas Flint, chairman, defended the existing structure, saying the bank and its customers conducted legitimate activities through the so-called havens, including Bermuda and Hong Kong which were “natural home bases” for the group. He said: “It is wrong to assume everything done through these countries is in some way immoral or wrong.”
The bank also denied facilitating tax avoidance, saying it did not seek to engage in artificial transactions and it applied the spirit, as well as the letter, of the law. HSBC said it was one of the biggest taxpayers of any British company. It said: “The $9.3bn we paid in tax globally last year demonstrates that we do not employ a strategy to avoid UK or other taxes.”
HSBC said it had more tax haven subsidiaries than other banks largely because of its structure which relied on subsidiaries rather than branches. It said: “The number of entities in so-called ‘tax havens’ is a function of having local-regulated banks and tax-approved securitisation vehicles in those territories.”
UK Uncut cited research by Action Aid, an aid charity, suggesting that HSBC had 496 subsidiaries in tax havens, a number only exceeded by two other FTSE 100 companies. The Action Aid research uses a very broad definition of tax havens, largely drawn from the US congressional research, which includes countries like the Netherlands, Ireland, Singapore and Switzerland.
HSBC’s reputation was severely knocked by the Mexican money laundering scandal, for which it was fined almost $2bn by US authorities last year. It was also hit by allegations of tax evasion involving its Geneva operation in 2010, after the alleged theft of data by a former employee. Last year it stepped up efforts to prevent money laundering and tax evasion by introducing a new “global standard on tax transparency”.
The G8 summit endorsed a drive for greater transparency, saying that automatic exchange of tax information was a new global standard and governments should know the ultimate owners of companies. Multinationals will also be required to be more transparent about their global tax payments.
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