Edited by Iain Hay and Jonathan V. Beaverstock
Chapter 21: Troubling tax havens: multijurisdictional arbitrage and corporate tax footprint reduction
It is well known among tax experts that corporate tax planning schemes are typically organized through a multitude of jurisdictions (Western et al., 2011; Palan, 2014a). Companies, large and small, are normally seen as unitary entities. They are referred to by their trademark names – Google, Amazon, IBM, British Telecom, BMW or Toyota, and so on – and are commonly thought of as American, British, German or Japanese, as the case may be. In reality, the vast majority of such companies consist of a multitude of companies, veritable ecologies in some cases, typically numbering in the hundreds or even thousands. Goldman Sachs, a dual entity combining a bank holding company (BHC) with a financial holding company (FHC), consists of 3115 separate legal entities, 1670 of which are registered outside the USA. JPMorgan Chase and Co, another BHC, consists of 3389 separate legal units, 451 of which are registered outside the USA (Avraham et al., 2012). BP, supposedly a British company, consists of 1180 affiliates in 84 countries going 12 tiers deep (that is, 12 tiers of affiliates holding other affiliates and so on) (OpenOil, 2014). They are registered in various jurisdictions, among which notable tax havens, such as the Cayman Islands, British Virgin Islands, Jersey, Ireland, the Netherlands or Luxembourg, feature heavily.
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