A new paper published in Nature found that 68 percent of all investigated foreign capital to nine focal companies in the soy and beef sectors in the Brazilian Amazon was transferred through tax havens, primarily the Cayman Islands and the Bahamas. The paper is careful not to draw conclusions that are not verifiable, but notes that tax avoidance can be linked to environmental damage in several ways. First it provides “indirect subsidies to economic activities with possibly detrimental global environmental consequences.” Second, lower taxes mean higher profits and increased cash flows leading to stimulated growth, and growth has been proven to lead to expansion of operations with consequent damage to the Amazon ecosystem.
Lack of data on how the foreign capital has been invested and whether it has directly caused deforestation means that ‘causality’ cannot be established, but the paper says: “there is an established link between the two drivers (soy and beef production) as soybean expansion into cleared lands is pushing cattle pastures into the rainforest.”
