Did you know that bank staff are responsible for booking your flights?

Written by By S.R. Suresh, CNN Did you know that the bankers or financial firms who you call to book travel — say, to Mumbai or Bangkok — might actually be paying for your…

Did you know that bank staff are responsible for booking your flights?

Written by By S.R. Suresh, CNN

Did you know that the bankers or financial firms who you call to book travel — say, to Mumbai or Bangkok — might actually be paying for your flight from London?

News broke this week that Isle of Man bank staff paid expenses for travellers on routes to far-flung, low-tax locations such as Seychelles or Malaysia, according to leaked documents.

British newspaper The Guardian reported that the staff of the 3,700-employee Barbican Bank in the Isle of Man, a British overseas territory, were recorded on travel invoices paying for fuel for planes that took passengers to the Indian Ocean island of Borneo or the Malaysian-occupied territory of Sabah.

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On Wednesday the Isle of Man’s finance minister, Peter Owen, held a news conference in which he apologized to the British parliament. “In the past, I have known and worked with a number of people who were called to services from a Barbican Bank representative in London,” he said. “We should have done a lot more to ensure that standards were high and appropriate. And for that I am truly sorry.”

But others questioned the documents. “Who thought it was a good idea to set up an offshore business when you are not trading?” asked Joy Root, author of the book The World’s Most Secretive Nations: Tax Dodging, Human Smuggling and the Exporting of Violence.

This is an international scandal, but it’s truly just the tip of the iceberg. Developing countries are swallowing large portions of tax revenues lost elsewhere. Never is that more important to keep this list in plain sight.

In a statement Wednesday, Isle of Man finance minister Owen said that not a single taxpayer or bank had been prosecuted.

Separately on Wednesday, The Guardian reported that a former finance minister of the Cayman Islands bank was involved in a major fraud in the early 2000s.

Sorting it out

“It’s a very complex world out there,” said William Reeve, deputy director of the U.K. Council for International Co-operation.

A report by the U.K. government’s National Audit Office earlier this year warned that there are “wholesale deficiencies” in the way the tax gap — which is the difference between tax paid and tax missed by the government — is calculated. “Absolute global losses may be underestimated by as much as £30bn,” it said.

In 2017, the gap between actual tax paid and total taxes missed by the U.K. was estimated at £10.2 billion.

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The UK government is considering putting more detailed rules in place for how taxation systems can assess whether tax avoidance — or “tax dodging” — is taking place. On Monday, Prime Minister Theresa May announced plans to amend the U.K.’s tax laws to bring in a global standard for taxpayer disclosure. Under these plans, public companies operating in the UK would need to disclose payments to members of their own country’s Parliament and judicial bodies.

But Reeve warned that not only do multinationals get away with paying very little tax in the country where they’re based, but there are also real weaknesses in the way money is taxed worldwide. “There’s a move to collect taxes from income instead of wealth, which doesn’t make sense,” he said.

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