The Guardian reports that a study performed at Stockholm University found that over 70 percent of illegal fishing operations and companies contributing to deforestation in the Amazon are registered in tax havens.
Many companies have been getting away with illegal, unregulated, and unreported operations by channeling their earnings through countries designated as tax havens, or countries that offer foreign businesses little to no tax liability and keep most of these transactions hidden from foreign tax authorities.
Victor Galaz, lead author of the study, spoke about the use of tax havens by these companies, according to The Guardian.
“The use of tax havens is not only a sociopolitical and economic challenge, but also an environmental one. While the use of tax haven jurisdictions is not illegal, financial secrecy hampers the ability to analyse how financial flows affect economic activities on the ground, and their environmental impacts.”
The study looked at a period of time between 2001 and 2011 and found that more than two-thirds of foreign capital that went to soy and beef industries in Brazil came through tax havens, more specifically through the Cayman Islands. This amounted to nearly $18.4 billion of the $27 billion of foreign capital sent to companies within these industries, as recorded by the Central Bank of Brazil.
A campaigner working at Friends of the Earth, Elaine Gilligan, explained the consequences of tax havens.
“This is dirty money, used for fueling illegal activities that are driving the global environmental crisis. Aggressive tax evasion deprives communities of funds needed for a range of measures, among them environmental protections that play a part in fighting climate chaos.”
Sustainable finance manager at WWF, Andrea Marandino, spoke more about the consequences.
“Nature is facing unprecedented threats as we continue to take more resources from the world’s richest natural areas. Tax havens make it very difficult to track international flows of capital and that means there is no accountability.”
Illegal fishing is of particular concern as the monitoring and regulation of fishing can vary greatly from location to location and fishing operations take advantage of this, often disguising their activities. Another widely used practice is to fly flags of convenience, which is when owners register a ship in a country other than their own and display the flag of the other country on their vessel.
Chief executive of Global Fishing Watch Tony Long commented on the illegal fishing practices, according to The Guardian.
“[The paper] adds to the growing evidence illustrating the criminal and shady practices providing cover for illegal, unreported and unregulated [IUU] fishing. An international focus on flags of convenience and their insufficient diligence in monitoring their flagged vessels is long overdue…Without [transparency in vessel movements], these unscrupulous operators will extract everything they can from our ocean, to line their own pockets with money at the expense of sustainable ocean resources.”
When money is channeled through tax havens, it makes it very difficult to find out how and where it has been used and causes governments to lose billions annually in lost tax revenues.