British taxpayers fork out £45m in foreign aid to paradise islands that charge NO TAX
Under a controversial new law introduced by the Prime Minister, Britain is legally obliged to spend 0.7 per cent of Gross Domestic Product (GDP) on foreign aid spending.
However, critics of the foreign aid commitment reacted with fury after it was revealed millions are being handed over to countries that set minimal or even zero tax rates.
This is despite the nation - which has an estimated population of less than 15,000 - charging no income, capital gains or any other form of direct taxes on residents or companies, with it described as a "zero-tax jurisdiction".
In total, 13 countries included on the tax haven blacklist received £45million from the Department for International Development (DfID) in 2013, the most recent year for which aid spending figures are available.
These nations are Anguilla, Antigua and Barbuda, Belize, Grenada, Liberia, Maldives, Marshall Islands, Mauritius, Montserrat, Panama, Seychelles, St. Vincent & Grenadines and Vanuatu.
John Christensen, director of the Tax Justice Network, blasted Britain's foreign aid spending in tax havens as "incoherent".
He told the newspaper: “Donor countries need to pay far more attention to whether aid-recipient countries are making sufficient effort to tax their wealthy citizens and tackle tax avoidance.
"Tackling tax dodging is an important step towards reducing reliance on aid and external debt.”
"We need to rethink our entire approach to aid and ensure it is going to the world's poorest and making their lives demonstrably better."
A spokesperson for the Department for International Development said countries where its aid was directed tended to be very poor.
She also said the UK has an international obligation to assist economic development in British Overseas Territories, which include Montserrat.