Cattle-ranching activities in Brazil’s Amazon basin receive a large portion of investment from foreign companies based in tax havens.Credit: Mario Tama/Getty

Tax havens may facilitate deforestation and illegal fishing, according to an analysis published on 13 August in Nature Ecology and Evolution1.

Researchers scoured publicly available databases to find out where ships caught fishing illegally were registered. Of the 209 ships involved in illicit fishing, 70% were flagged under﻿ the jurisdiction of tax havens — territories that impose very low taxes and provide secrecy around financial activities. By contrast, only 4.4% of the world’s total fishing vessels were registered in these territories (s﻿ee ‘Fishing for trouble’﻿).

Most vessels involved in illegal fishing were registered in Belize and Panama, two countries dubbed ‘flags of convenience’ states. These states impose few repercussions on ship owners who break international law, in addition to providing﻿ the financial benefits of a tax haven.

Source: V. Galaz et al. Nature Ecol. Evol. http://doi.org/cszj (2018)

The team also looked at how tax havens were used by beef and soya producers operating in Brazil’s Amazon basin — two sectors that are driving deforestation of the region. They found that, between October 2000 and August 2011, 68% of foreign-cash transfers into the nine large companies they examined came via tax havens, totalling US$18.4 billion (see ‘Deforestation driver’).

Ref. 1

Tax havens may protect unscrupulous fisheries and provide cash injections into environmentally damaging industries — yet these environmental consequences have been largely ignored by policymakers in international discussions about tax havens, says the study’s lead author Victor Galaz, a political scientist at Stockholm University. The new paper provides “the first global assessment to put this issue on the agenda”, Galaz says.