OXFAM has called for action to close a legal loophole that has seen a booming number of Scottish shell firms used for tax dodging and money laundering.

The global charity warned that the country was becoming one of the world’s “secret tax havens where the privileged minority hide billions from authorities”.

READ MORE: Agenda: Oxfam calls for end to tax haven loophole

Its demand came as The Herald obtained new figures showing that the firms providing the loophole – Scottish limited partnerships or SLPs – were thriving like never before.

The total number of off-the-shelf businesses advertised in Ukraine, Russia and elsewhere as “offshore zero-tax companies” has jumped by a quarter in just a year and is now close to 25,000. 

BACKGROUND: Scottish limited partnerships allegedly implicated in $1bn looting of Moldova, corruption involving nephew of Uzbek president and arms export skimming in Ukraine.

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Analysis hows thousands of such firms – often registered at virtual offices across Scotland – are owned in secretive tax shelters and are effectively able to act with a complete lack of accountability.

In a progressive and inclusive Scotland, there can be no place for dodgy tax practices,” said Lisa Stewart of Oxfam Scotland.

“First Minister Nicola Sturgeon has promised a ‘zero tolerance’ approach to tax avoidance in Scotland, and Justice Secretary Michael Matheson said earlier this year he was open to reviewing Scottish Limited Partnerships and to making representations to UK ministers.

“In the light of these revelations it is imperative that this loophole is closed immediately. It cannot be in Scotland’s interests to join the club of ‘secret tax havens’ where a privileged minority hide billions from tax authorities.

"These structures also rob the world’s poorest people of billions in lost revenue every year. Neither the Scottish nor the UK Government should allow this kind of flagrant exploitation of our tax laws. Both governments must urgently work together to close this loophole once and for all.”

READ MORE: Agenda: Oxfam calls for end to tax haven loophole

The Scottish Government has already said it will hold talks with the UK about SLPs. All corporate law, including Scots law, is reserved to Westminster.  

Green MSP Andy Wightman has been campaigning for reform of such companies to prevent them from being used as defacto tax havens within UK borders.

He said: “Scotland is clearly the favoured place to set up limited partnerships.

"This is undoubtedly due to the fact in Scotland, such partnerships have legal personality, can be set up very easily, are subject to very little scrutiny and accountability and despite calls for reform going back over a decade, neither the Scottish nor UK governments has done anything to clean up the widespread abuse that has become evident in recent years.”

Figures scraped from the website of the UK’s corporate register, Companies House, show that there were around 5,600 Scottish limited partnerships created between May 2015 and April 2016. Most of these were registered at addresses in virtual offices across Scotland and had two partners based in traditional offshore jurisdictions.

READ MORE: Agenda: Oxfam calls for end to tax haven loophole

This is the explicit model advertised in Baltic, Ukrainian and Russian agencies as a way of avoiding tax. Packages for such shell companies often include nominee directors, power of attorney to control their actions, UK certificates of good standing and postal addresses in Scotland.