Tax Havens

Last updated: October 2015


Ethical Consumer's list of tax havens


Coming up with a list of tax havens is not a straight forward exercise as they are far from a homogeneous group. Britain, for example, has certain characteristics which are indicative of it being a tax haven. Different territories manipulate different laws and exploit different comparative advantages.

Ethical Consumer’s list of tax havens was compiled in 2012 and takes as its starting point the Financial Secrecy Index (FSI), which was launched in 2011 by the Tax Justice Network.



This ranking of tax havens, or secrecy jurisdictions as they are increasingly referred to, is “a tool for understanding global financial secrecy, corruption and illicit financial flows”.

It is the product of a detailed analysis of a territory’s laws, regulations and treaties, which are assigned a ‘secrecy score’. This is then weighted according to the region’s size and it’s overall importance to financial markets. 

However, the FSI is problematic for our ranking approach because it includes territories (such as the UK, the USA, Canada and India) in which a lot of legitimate trading activity takes place. Using the list as it is would invariably lead to false positives.

We have therefore applied an additional filter to the FSI which is the size of a territory’s population. Subsidiaries in jurisdictions with low population figures are less likely to be serving those populations, and therefore more likely to be there in order to avoid tax or scrutiny.

There is a clear grouping of 38 countries on the FSI with a population of below 550,000. The next largest population is Cyprus, with over a million people. We began with these 38 territories, but this excluded some key tax haven territories. We have therefore added remaining regions that rank in the top ten secrecy jurisdictions on the FSI but are not major global economies.

The USA, Japan and Germany all have a GDP of over £3 billion and therefore do not make it onto the list. The remaining either already feature on the list of 38 territories, or have a GDP of below £400 million. So we’ve added Switzerland, Hong Kong, Singapore, and Bahrain.

We’ve also added three US states, Delaware, Wyoming and Nevada. According to Nicholas Shaxson, these offer “very low-cost and very strong forms of almost unregulated corporate secrecy that has attracted large amounts of illicit money, and even terrorist finance, from around the globe.”1

So now we have a list of 45 territories. It isn’t perfect. Ireland,for example, is not on it. With a 12.5% rate of Corporation Tax,compared to 24% in the UK, it is extensively used by American software and IT companies to avoid tax in Europe. But we’re not keen on cherry picking additional territories.

If you think there’s a strong case for adding or removing jurisdictions from the list while maintaining an over-arching rationale, please get in touch. The jurisdictions, their FSI and secrecy scores and their population size are shown on the table, listed A-Z.



Tax avoidance rating - The way we rank tax havens


Ethical Consumer has been tracking corporate activity in tax havens since 1997. Until now we have just looked for subsidiaries in tax havens, and companies with two or more have lost half a mark in the Anti-Social Finance column.

As part of our tax avoidance research, grant funded by the Network for Social Change, we were able to improve our methodology and update our list of tax havens. We’re now going to include an analysis of the type of company in each tax haven to assess the likelihood that they are located in these territories for tax avoidance purposes.

Two or more high risk company types in jurisdictions on our list will now receive a full negative mark. Companies that report their activities country by country will score best in this category regardless of tax haven activity, in order to encourage best practice, though as far as we know no-one makes the grade as yet.

Spotting risky company types

We’re going to group companies into low, medium or high risk of being used for tax avoidance purposes.

  • Low risk (best score, no marks lost):No activity in territories on our list of tax havens, or subsidiaries in these regions are likely to be conducting legitimate trading activity in territory, for example, retail outlets.


  • Medium risk (middle score, half mark lost):Companies have two or more subsidiaries in territories on the list, but no information on the type of company could be found or they were not the types of companies recognised as high risk.


  • High risk (worst score, full mark lost):Companies who have a Ultimate Holding Company (UHC) or two or more subsidiaries in territories on the list, and these are: Holding Company, Trust, Nominee Company, Limited Liability Partnership, intellectual property company, internal finance company, insurance subsidiary, management services company.


Further Reading: What is a tax haven?

Move Your Movey offer

Introduction to tax havens

Richard Murphy reveals the 'secrecy world' of offshore activites and how these companies are able to get away with such dubious practices.

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Further Reading: Corporate Takeover

George has got his dream: the UK is now a tax haven

Richard Murphy explains what the latest corporate takeover says about tax haven UK.

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