LONDON: Some of the biggest foreign investment and commercial banks operating in Britain paid an average tax rate of just 6 per cent on the billions of dollars of profits they made in the country last year, a Reuters analysis of regulatory filings shows.
That is less than a third of Britain’s corporate rate of 20pc. There is however nothing illegal about how they managed to reduce their taxes, and includes using losses built up during the financial crisis to offset current bills.
Seven of the biggest international banks operating in London — Europe’s main investment banking centre — have published profit and tax data ahead of a year—end deadline stipulated by EU law.
Five of them, all US banks, reported a profit — a combined $7.5bn — and paid corporation tax, or corporate income tax, of $452 million.
Bank of America’s two main UK investment banking subsidiaries paid no corporation tax on combined profits of $875 million. JPMorgan paid $160 million in tax on $3.3bn in UK profits.
Goldman Sachs paid $256 million tax on $2.8bn profit, while Morgan Stanley’s main UK unit paid $33 million tax and earned $530 million.
All the banks declined to comment on the data except San Francisco-based Wells Fargo, which reported $2.7 million tax on $34 million profit. It said its objective was to comply with all of its tax compliance requirements.
The British Bankers’ Association (BBA) said the data did not reflect the sector’s full contribution and that, including other taxes and payments, foreign banks contributed about $20bn to the UK treasury last year.
The British tax authority, Her Majesty’s Revenue and Customs, declined to comment but has previously said it makes sure that all companies pay the tax due under the law. The finance ministry was not available to comment.
The 6pc rate is still higher than the average rate of 1pc paid for 2014 by the 10 biggest foreign investment and commercial banks that reported UK profits and taxes.