UN: Foreign Investment in Caribbean Tax Haven Dwarfs India and Brazil

More foreign investment was pumped into the British Virgin Islands, a tax haven in the Caribbean, than some of the world's largest developing economies during 2013.

According to the United Nations Conference on Trade and Development (Unctad), total foreign direct investment (FDI) that flowed into the British Virgin Islands was $92bn (£55.4bn, €67.3bn).

This compares to $63bn of FDI into Brazil, one of the world's biggest emerging markets and a potential future superpower to rival China and the US.

Just $56bn flowed into Singapore over the same period and even less – $28bn – into India.

Moreover, Luxembourg, another tax haven, rocketed from 198<sup>th place in 2012 for FDI to 15<sup>th the following year with inflows totalling $31bn.

There is zero corporation, income or capital gains tax in the British Virgin Islands.

The net is closing on tax avoidance, however. Leaders across the G20 have agreed on a set of principles to tackle firms and individuals trying to dodge taxation by sheltering their money in havens.

Amid austerity programmes undertaken by governments the world over, which are seeking to balance their budgets by cutting back spending on welfare and public services, public anger over tax avoidance has intensified.

One by one, havens are signing up to information-sharing deals with developed economies as various tax offices hunt down exported and untaxed profits.

In November, UK Chancellor George Osborne signed a deal with the Cayman Islands that will see information handed over on British taxpayer with accounts in the haven.

The Cayman Islands is a tax free jurisdiction where no income or capital gains tax is levied on money that flows through the tiny state.

Top of Unctad's list for FDI in 2013 was the US at $159m. Second was China at $127m and third Russia at $94m – just ahead of the British Virgin Islands in fourth.