TJN beats OECD, Big 4 to be voted leading force in global transfer pricing

From International Tax Review:

Wowsers. It's because of our unitary tax campaign, spearheaded by Professor Sol Picciotto, which is behind the result. ITR continued:

"This year's poll acknowledged that not everyone agrees with the concept of unitary taxation, but the campaign is strong all the same."

Links May 21

The seven craziest findings in the US investigation of Apple’s tax avoidance practices Quartz

See also: Apple Holds Billions of Dollars in Foreign Tax Havens Citizens for Tax Justice, and Apple’s Web of Tax Shelters Saved It Billions, Panel Finds NY Times

Google faces new pressure over tax claims The Guardian

Gloves coming off in row over taxes Irish Independent

Luxembourg versus Ireland: tax havens competing to be more rotten than each other Treasure Islands

EU tax: Barroso urges full automatic exchange of data BBC

Clock ticks on Swiss banking secrecy BBC

Global Witness calls on Shell to drop support for anti-transparency lawsuit
Global Witness is attending Shell’s AGM in The Hague to ask the company to drop its support for a lawsuit that aims to kill off vital a U.S. transparency law - the Dodd-Frank Act.

Anonymous companies: A Global Witness briefing

Argentina: Homeless people were used to launder $ 36 M and create shell companies infobae (In Spanish)
Hat tip: Jorge Gaggero

Multinational CEOs tell UK Prime Minister David Cameron to rein in tax avoidance rhetoric Guardian

U.S.: Pritzker-as-Romney Reverses Parties on Offshore Havens: Taxes Bloomberg Businessweek
"Republicans defended Mitt Romney against criticism from Democrats that he avoided taxes by keeping money stashed overseas. Those roles are now reversed with the disclosure that President Barack Obama’s pick to run the Commerce Department does the same thing."

Banks Win Big as Regulators Refuse to Rein in $700 Trillion Derivatives Market The Real News
Bill Black: Weakness of financial regulators shows you can not "tame the scorpion"

“Who Is Too Big to Fail: Are Large Financial Institutions Immune from Federal Prosecution?”  United States House of Representatives, Committee on Financial Services
Committee Memorandum for the Hearing on Wed 22 May

Transparency International: EU leaders must end financial secrecy

Transparency International EU have issued an important statement:

EU leaders must end financial secrecy

In three steps, the European Council can end financial secrecy and take decisive action on corruption and tax evasio

Brussels, 21 May 2013 – EU leaders meeting tomorrow have an opportunity to end the financial secrecy that facilitates corruption and tax evasion. As many cases of proven corruption have shown, anonymous shell companies and other opaque legal structures based in secrecy jurisdictions are the favoured vehicles to hide illicit financial gain. Finding out who ultimately profits from these legal structures - the question of beneficial ownership - is central to efforts to close down this avenue for ill-gotten gain.

Building on recent international developments, EU Member States can help stop the flow of corrupt funds with three simple steps:

• Unanimously agree to the proposed reforms of the EU Savings Tax Directive [1]. The proposed reforms would address major loopholes in the legislation, for example by obliging trustees and directors of shell companies to collect and transmit information on the beneficial owners of these legal entities. 

• Agree that automatic exchange of financial information should be the global ‘gold standard’. Corruption and tax evasion are not just problems in the EU. Developing countries suffered $586 billion per year in illicit outflows in the first decade of this century [2]. EU leaders should recognise their obligations to citizens in the developing world by committing to a global, multilateral system for the automatic exchange of financial information, based on the model that 10 EU countries have agreed to pilot [3]. EU legislation should also reflect this commitment. 

• Agree to mandatory public registers of beneficial owners. To help banks and other financial institutions do their work properly, EU leaders should agree to revisions of EU anti-money laundering legislation that would require Member States to establish and update public registers of beneficial owners of companies and other legal entities. Today, information on beneficial ownership is provided by business registers in only four EU Member States (Estonia, Italy, Romania & Slovenia).

“At a time when citizens are going through the toughest economic crisis in years, EU leaders have an opportunity to clamp down on illicit financial flows”, said Carl Dolan, Senior EU Policy Officer at the Transparency International EU Office. “Effective action has been prevented before by Member States putting narrow national interests before doing the right thing. It is time to end the squabbling over perceived competitive advantage and recognise that by facilitating corruption everyone loses”.

Transparency International has also demanded action from G8 and G20 governments against financial secrecy in order to prevent corruption and illicit financial flows.

[end]
 
Notes to editors:
[1] The 2003 Savings Tax Directive requires EU Member States (as well as Andorra, Liechtenstein, Monaco, San Marino and Switzerland) to automatically exchange information on bank accounts held by residents of these countries. Exemptions were granted to Belgium, Luxembourg and Austria. Proposed amendments to the Directive would require banks and other financial institutions to establish whether the beneficial owner of certain entities or legal arrangements established in secrecy jurisdictions are EU residents or residents of the participating countries. It would also require legal entities such as companies and trusts to automatically transmit information about their beneficial owners to competent authorities in EU member states. The amendments also address loopholes relating to the beneficial owners of certain financial instruments such as investment funds.

[2] A report by Global Financial Integrity has estimated that developing countries lost at least $586 billion per year in illicit outflows between 2001 and 2010.

[3] In April 2013, Belgium, Czech Republic, France, Germany, Italy, Netherlands, Poland, Romania, Spain and UK agreed to a pilot multinational initiative for reciprocal exchange of tax information. The pilot initiative will be based on a model agreed with the U.S. government following the passage of the Foreign Account Tax Compliance Act (FATCA). FATCA requires non-US financial institutions to report directly to the Inland Revenue Service (IRS) information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.



Media Contacts:

Carl Dolan, Senior EU Policy Officer (Private Sector Policies)
T: +32 (0)2 23 58 603
M: +32 (0)488 563 435
E: Brussels@transparency.org

Benjamin NorsworthyEU Policy Officer (Anti-Money Laundering)
T: +32 (0) 2 23 58 645
E: bnorsworthy@transparency.org

Stand with Kenyans for tax justice

Kenya’s poorest are about to be hit with a staggering 16% tax increase on basic goods, while large corporations enjoy huge tax breaks that only benefit the richest.

Kenya loses over US$ 1.1 billion a year from tax incentives, avoidance and exemptions,^[1] more than the total budget for health and sanitation. But rather than crack down on corporate tax cheats, the government is proposing this huge increase tax on basic commodities like maize flour (Unga), bread and milk.
To make matters worse, talks have recently come to light between the City of London and the government, aimed at modelling Kenya’s financial system on the City: Tax Haven Capital of the World ^[2]. This is a worrying signal of the future direction of the country. People in Kenya know this, and are mobilising to reject the ‘Unga tax’ and demand a fairer, transparent tax system that drives development for everyone. They need your support.

Will you sign now and help stop the attack on Kenya’s poorest?

Thousands of people in Kenya are coming together to protest this outrageous new tax. Stand with us in solidarity by signing this petition. The petition will be delivered to the Kenyan government.
Everyone in Kenya wants the country to develop as fast as it can; inequality and poverty are far too high. But if the new Kenyan government does this by copying the values and model of the Tax Haven Capital of the World, they will be handing over power, and the country’s future prosperity, to the global financial elite. Even the IMF says tax havens, and the system of tax avoidance and theft undermine development ^[3]. Kenya’s future can be built on the strengths and ingenuity of all of its people, not the secrecy and greed of the City of London.
Call on Kenya’s parliament to make Kenya truly the pride of Africa, setting an example of tax justice, rather than financial greed.

Stand with Kenyan citizens to fight for tax justice.  

In hope,

/The Rules Team

Notes:

[1]http://www.gfintegrity.org/index.php?option=com_content&task=view&id=149&Itemid=70

[2] http://allafrica.com/stories/201303080621.html?page=2

[3] IMF (2006): ‘Kenya, Uganda and the United Republic of Tanzania: Selected Issues’, 1, p.11

Big 4 accountancy firms: a truly shocking statistic

From Prem Sikka:

Anyone looking at the websites of accountancy firms will see claims of ethics, integrity, and a burning desire to serve the public interest and uphold the law. Yet, following a briefing from a former PwC insider the PAC chairperson said (see page Ev4) that the firm “will approve a tax product if there is a 25% chance – a one-in-four chance – of it being upheld. That means that you are offering schemes to your clients where you have judged there is a 75% risk of it then being deemed unlawful”.

Our emphasis added.

That is quite appalling.

Partners from other firms claimed their threshholds were 50%, which is almost as bad.

"The firms know that in the age of austerity the tax authorities will never have sufficient resources to challenge them."

In the United States, Ernst & Young paid a fine of $123 million to the US tax authorities to resolve allegations of tax fraud; KPMG paid a fine of $456 million after admitting “criminal wrongdoing” over the sale of avoidance schemes and a number of its former personnel also received prison sentences. But in Britain:

"A large number of tax avoidance schemes have been declared illegal by the UK courts. The UK Ministers have referred to the schemes marketed by the big accountancy firms as “blatantly abusive avoidance scams”, but this has not been followed up with any investigation, inquiry, prosecutions or fines. No accountancy firms has ever been fined or disciplined by its professional body for selling unlawful tax avoidance schemes. In fact, there are no negative consequences for the designers of such schemes."

The rule of law, and the economy, is being progressively undermined and subverted by some of the best-paid people in the country. It's time to throw the book at them.

Links May 20

Fury at corporate tax avoidance leads to call for a global response The Guardian

Tax avoidance: how to change corporate behaviour The Guardian

UK: Cameron Urges On Crown Dependencies Over Tax Info Exchange Tax-News
"There is no point in dealing with tax evasion in one country if the problem is simply displaced to another," David Cameron has claimed in a letter. Which, as we just noted, is an unfortunate choice of words.

High Marginal Tax Rates are Associated with High GDP Growth, Angry Bear Blog

U.S.: Apple, Senate Panel Gear Up for an Offshore Tax Showdown Industry Week

Report: Tranparency and Accountability in Africa's Extractive Industries - The Role of the Legislature  National Democratic Institute


East Africa’s mineral paradox: Want among plenty The East African

Luxembourg vs: Ireland: competing to be more rotten than each other Treasure Islands

Nigeria: Federal Government Decries Tax Evasion By Companies allAfrica
Business in the Democratic Republic of Congo: Murky minerals The Economist

Argentina mulls opening its banks to money launderers Quartz

Monaco go to French courts to contest ruling forcing them to pay tax The Guardian

Swiss Minister says end to US tax dispute in sight Swissinfo.

Senior Venezuelan bank official stole funds via Swiss acounts: FBI The Local

Swiss banks are not suspicious enough Le Temps (In French - subscription)

Is EVERY market rigged? The Big Picture

UK Prime Minister writes to British tax havens. How serious is he?

Today Britain's Prime Minister wrote to the UK's Crown Dependencies and Overseas Territories, reading them the riot act - sort of.

Headline summary from us: this contains much that is positive. But the devil and devilry will lie in the detail. This follows on from a blog we wrote recently entitled Will the UK's tax haven agreements be an exercise in missing the point?

Here are a few take-outs from the letter, dealt with in order.

"I respect your right to be lower tax jurisdictions. I believe passionately in lower taxes as a vital driver of growth and prosperity for all."

This raises several questions. First, whatever happens on transparency, these jurisdictions' zero-tax status create gigantic opportunities for global abuse, from transfer pricing shenanigans to offshore trusts. So there is a massive lack of coherence here, right from the get-go. Second, Cameron believes in lower taxes. But lower than what? In the case of the tax havens, he cannot mean lower than zero. So what is he talking about here? Second, why does he think that 'lower taxes' are a driver of growth and prosperity. Where, exactly, is the evidence?

Next:

"There is no point in dealing with tax evasion in one country if the problem is simply displaced to another."

On the face of it, this is a nonsense argument. Defenders of the status quo often say that cracking down is like squeezing a balloon: activity is displaced elsewhere, while the volume of the balloon stays unchanged. Cameron's words "there is no point" seem to lie firmly in this belief system. But that isn't at all how things work in the real world. It's more like squeezing a sponge: you squeeze in one place, and you catch some and you lose some. Tax evaders, deprived of the easy options, will go to more exotic, risky and difficult locations. Many won't go to the trouble, and they will instead choose to obey the law. That's imperfect, but it's called progress. Still, Cameron's point that greater international cooperation and coherence here makes it easier for everyone is a good one.

Next:

"We also need to ensure information exchange works effectively for all, particularly the poorest countries in the world. That is why we strongly support the Multilateral Convention on Mutual Assistance in Tax Matters. I know many of you have been considering joining and I ask you all to commit to do so in the run-up to the G8 Summit."

That's good, as far as it goes. As is this one:

"I very much welcome the commitments you have made to automatic tax information exchange, both on a bilateral and multilateral basis."

Yes, and this is good to see. Though one question that this begs is: just how 'multilateral' will this be? Will this only help rich countries, or will it be rolled out to those vulnerable countries that need it most? What will be the position inside Europe on the EU Savings Tax Directive? This is the opportunity to put into place the improvements, the amendments to the Directive, and hopefully this week Luxembourg and Austria will be called to account on this by European leaders. It's too early to tell, but this important recent paper from Itai Grinberg plays a crucial role in addressing these questions.

Next:

"Dealing with tax evasion is not just about exchanging information. It is also about improving the quality and accuracy of that information. Put simply, that means we need to know who really owns and controls each and every company. This goes right to the heart of the ambition of Britain’s G8 to knock down the walls of company secrecy.
. . .
[Tax havens' action plans on beneficial ownership] will need to provide for fully resourced and properly managed centralised registries, that are freely available to law enforcement and tax collectors, and contain full and accurate details on the true ownership and control of every company.

Now that stuff in bold is very good to see. We like it, as far as it goes - but a reminder from Robert Palmer of Global Witness.

"It's only really meaningful if accompanied by transparency eg open registries of beneficial ownership of companies & *trusts*"

Even this does still, however, beg a number of questions.

First, why only companies? These are important, for sure, but what about trusts? These are a gargantuan part of the British offshore system, and there's nothing specific about them. (Very often, trusts are higher up the ownership tree than companies: the companies are typically owned by a trust.) An earlier statement only said information exchange "also includes information on certain accounts held by entities, such as trusts" - which, as we blogged recently, raises all sorts of other questions.

Second, which countries' law enforcement agencies will get access to to these registries? Will it only be those rich countries with sufficient political muscle to be able to intimidate the small tax havens into shaping up? Or will the books be opened to, say, Tanzania's tax authorities? Will it be possible for them to search the registries for evidence of what their citizens are up to, without having to find the evidence first? Or will information from these registries be available only once you have the smoking gun on a particular criminal or taxpayer? Who will police this, and make sure that tax havens don't make a business model out of 'accidentally' failing to do the proper due diligence?

Third, what about 'ownerless' assets - such as those held in discretionary trusts or Liechtenstein foundations? How will they be tackled?

We're not saying that this statement doesn't reflect progress: it does, albeit from a pathetically low base. But we know from long experience that tax havens' core business models involve the creation of loopholes - and how serious is the UK government in ensuring that the loopholes are plugged?

Questions, questions.

Independent Scotland open to Cyprus-style bank risks, says Britain

May 20: updated with further details

From Reuters:

"An independent Scotland would have a vastly oversized financial sector that would leave it vulnerable to a Cyprus-style banking crisis, Britain's finance ministry says.

And from the Wall St. Journal:

"In an analysis paper, the third in a series the U.K. government is releasing ahead of the independence referendum, the treasury estimated that an independent Scotland would have banking assets worth more than 1,250% of Scottish gross domestic product.

The scale of Scotland's banking assets dwarfs those of Iceland and Cyprus, which had banking assets around 880% of GDP and 800% of GDP respectively. Both countries suffered severe financial problems due in part to the disproportionate size of their banking sectors.

"The experience of financial crises shows that countries with a large banking sector compared to the size of their GDP are significantly more vulnerable," the report says."

Wow. To us, that huge 1,250% number screams "tax haven" and, as our recent blogging on Cyprus reminds us, "captured state". We will have a whole lot more on that kind of vulnerability very soon.

And as the example of Luxembourg shows us today, tax havens aren't the kinds of places that tend to be trustworthy when it comes to relying on them to step in when things get out of hand. More from the Reuters Scotland story:

"The Treasury report will say any future bank rescues would place a heavy burden on Scottish taxpayers, and could generate concerns about state finances that might discourage firms from basing their operations there."

Now, from the UK Treasury, we can provide an update with more details, including the following:

• the total support provided to RBS in 2008 would have been the equivalent of 211 per cent of Scotland’s GDP.
• The Scottish banking sector would be extremely large in the event of independence. It currently stands at around 1254 per cent of Scotland’s GDP
• "Overall, the experience of financial crises shows that countries with a large banking sector compared to the size of their GDP are significantly more vulnerable."

Indeed. We don't take a particular general view on whether Scotland should become independent - that's a matter for voters to decide - but we do definitely take a view on countries that have disproportionately large financial sectors: they always end up adopting the 'captured state' and 'tax haven' model of development. And so we take this particular Treasury report quite seriously.  

Tax and the Civilised Society: Action Day in London, June 8

Tax and the Civilised Society
Saturday 8th June, London, 10.30am-5.30pm

The Tax Justice Network and Tipping Point Film Fund are jointly organising a day of activity in London on Saturday 8th June designed to engage all those – public and campaigners alike – who would like to know more about why tax matters to society and therefore the need  to intensify the spotlight on tax avoidance. The day will include two film screenings with panel discussions, a ‘revelatory’ walking tour of the City of London and a great list of contributors to the day’s events.

PROGRAMME OF EVENTS – SATURDAY 8TH JUNE

10.30am-12.20pm St Ethelberga’s Centre, 78 Bishopsgate, London EC2N 4AG
Tax and the Global Good

Film: ‘We’re Not Broke’. (80 mins)
Award-winning director-producer team Karin Hayes and Victoria Bruce tell the story of how U.S. corporations have been able to hide over a trillion dollars from Uncle Sam, and how seven fed-up Americans from across the country, take their frustration to the streets [Screening in the beautiful Nave of the Church].   Trailer here

Panel Discussion: tax avoidance, evasion and impact on global south.

Speakers: Nick Dearden, Jubilee Debt Campaign; Liz Nelson, Tax Justice Network, Pablo Navarette, film-maker and founder of Alborada, a website covering Latin America related issues; and Tom Pursey, activist and founder member of UK Uncut. Chaired by TPFF

Special Thanks to St Ethelberga’s Centre for their hosting of this event

12.45-2.15pm The City of London (as you’ve never seen it): A walking tour into the financial heart of darkness [Please arrive 12.30 for 12.45 start. Come to Bank Station, Exit 3 and cross to our meeting place: The Royal Exchange]

Locations: Bank of England, Mansion House,  HSBC Corporate Banking Centre, Goldman Sachs and TheCityUK (advocates for UK financial services industry).

Speakers: John Christensen (Tax Justice Network), Nick Mathiason (investigative journalist), Robert Palmer (Global Witness); John Hilary (War on Want) . Learn some interesting, perhaps less well known, facts and information about the operations and activities of these major players.

3pm-5.30pm Ken Loach’s ‘Spirit of 45′ & panel discussion at the Barbican

Film: Ken Loach’s ‘Spirit of 45’ shows how the post-war Attlee government undertook the most extensive and radical overhaul of industry and public services, despite the economy being in dire straits. The ‘Spirit of 45’ legacy lives on in the NHS, but it and many other public services are under attack;  the divide between the rich and the rest, has become greater; and the nation’s political and financial power resides again, within a very small circle of decision-makers.   So what stands in the way of reviving the ‘common good?’ And how do we pay for it?  Trailer here http://www.thespiritof45.com/Watch-The-Trailer

Panel Discussion: The ‘Spirit of 45’ – reviving the ‘common good’ and how to pay for

Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim’. Clement Attlee, 1920.

The ever growing public awareness of the tax avoidance and evasion issue is central to how we put ‘austerity’ in context and challenge the prevailing orthodoxy that there is ‘no money’ available to protect public services and the most vulnerable in our society.  Can we achieve a more equitable society without tax ‘justice’?

Speakers: John Hilary, War on Want (Chair); John Christensen (Tax Justice Network); Polly Courtney (author Golden Handcuffs, a biting semi-autobiographical exposé on life in the Square Mile and a regular commentator in the press as well the BBC and Channel 4 News); Jeremy Hardy (TBC)

Special thanks to Dogwoof and the Barbican.

We hope there is something here to whet your appetite and that we’ll see you at one or more of the events on the day!

Booking Information:

1. The morning film & discussion ‘We’re Not Broke’ at St Ethelberga’s is free of charge.
To reserve, please email info@tippingpointfilmfund.com Email subject:  RSVP St Ethelbergas

2. The lunchtime walk in the City of London is free of charge.
To reserve, please email info@tippingpointfilmfund.com Email subject  RSVP City Walk

3. The afternoon screening & panel discussion, Ken Loach’s Spirit of 45 at the Barbican is ticketed and can be booked directly at the Barbican Box Office.

Do feel free to join us for one, two or all three events!
Best wishes,

TPFF and TJN

For more information please email either:
Deborah@tippingpointfilmfund.com
Liz@taxjustice.net

www.tippingpointfilmfund.com
www.taxjustice.net

Links May 17

Tax evasion declaration backed The Guernsey Press
'Finance ministers from 17 EU countries have backed a declaration calling for global action to counter tax evasion. They signed a joint statement at talks in Brussels warning that only a comprehensive worldwide system of exchanging tax information between national authorities will beat corporate tax dodgers. “Tax evasion is a global problem and we should look for a global solution, otherwise the problem is simply displaced,” said the statement.'

Communiqué from 8th Meeting of the Forum on Tax Administration, 16-17 May 2013, Moscow OECD
Disappointingly, calls for automatic information exchange within existing treaties instead of demanding a multilateral platform.

EU finance ministers talk tough on tax evasion, but agree on little Eurodad

ECOFIN Agrees On Savings Tax Directive Tax-News

Liechtenstein open to bank data exchange talks with EU Reuters
"We have signalled that we are ready for talks although we can't conceal that automatic exchange of information is not our favourite solution," Liechtenstein's new Prime Minister Adrian Hasler told Reuters in an interview in the capital Vaduz.

Luxembourg PM downplays swift tax evasion deal BloombergBusinessweek

Tax Haven Germany TJN Germany Blog

Massive failure by Cypriot banks on ‘dirty money’ Cyprus Mail
Deloitte said that 70 per cent of “the most complex ownership structures” have nominee shareholders and an average of three layers between the customer and beneficial owner.

Inter-American Development Bank: Latin American Tax Reform Needed The Latin Times

UK, U.S. and Australia investigating tax evaders from the 'offshore leaks' scandal TJN Latin America and Caribbean (In Spanish)

The great tax charade: Amazon plays the system while businesses like ours suffer The Independent
UK Independent bookstore owners write about their campaign against Amazon.

After Google, Amazon to be grilled on UK tax presence Reuters

Apple CEO Tim Cook to propose tax overhaul The Washington Post

Stash your cash in Switzerland? US and Europe push to make it harder. Yahoo News
Includes an overview of the Falciani affair.

Vatican Bank To Begin Publishing Annual Financial Reports Economy Watch

U.S.: Senator Rand Paul's Fight for Offshore Tax Havens Citizens for Tax Justice

Resource Governance Index Revenue Watch Institute
80% of countries fail to achieve good governance in their extractive sectors. Note remarks on the way forward.

Bitcoin exchange shut in online money-laundering crackdown Independent

Bermuda moves up to second in offshore deal volume The Royal Gazette

Austerity and growth: how is it going? Treasure Islands

Lloyds banking group to pull out of tax havens

This one has a wow factor. From The Guardian:

"The boss of Lloyds Banking Group pledged to pull out of tax havens where the bank is not conducting genuine business at its annual meeting on Thursday where investors hit out against its "cosy' boardroom and "appallingly high" bonuses.

Chief executive António Horta-Osório said the 39%-taxpayer owned bank had embarked on a systematic review of "so-called tax havens" after a shareholder demanded to know why the bank was the seventh biggest user of such facilities."

The devil will be in the detail, of course, but this is a hugely welcome step. And this bit in bold is also pretty remarkable:

Shareholder Anne Edmonds said: "I want to know when this will be stopped. Tax avoidance is legal and what Lloyds is doing is legal. But to me there is little difference between tax avoidance, which is legal, and tax evasion, which is illegal."

This was "very wrong", she said. "That money should be kept in the UK for the benefit of the UK." Horta-Osório agreed with her comments. "In 2012 alone we have closed 60 of those companies and that is more than 20% of the total. We are going to close all of them unless there are strong business reasons for our customers to keep them there," he said at the meeting in Edinburgh. He later clarified that "business reasons" did not mean "tax reasons".

As we just said: wow.

Links May 16

Report: Corruption, mismanagement plagues energy-rich nations The Hill
Reporting on Revenue Watch Institute’s  “Resource Governance Index”

How we can help African nations to extract fair value Financial Times
The west has a duty to ensure the region benefits from its resources, writes Paul Collier

Africa Progress Panel lauds Kenya’s decision to introduce mining taxes Business Daily

Tanzania: Govt Wants More Cash From Mining Firms AllAfrica

Argentine tax amnesty plan: A lifeline for a shaky peso or a magnet for organized crime Washington Post

BVI tax haven picks Hong Kong for drive into Asia South China Morning Post
British Virgin Islands gets city's help in opening Asia-Pacific HQ to deal with central banks and regulators from Singapore to Japan

Offshore tax havens like Hong Kong contribute to poverty, says ActionAid South China Morning Post

Havens that are not going away Página 12 (In Spanish)

Hat tip: Jorge Gaggero

Havens Retain Allure For Firms Seeking Flexibility Offshore The Moscow Times
Some very interesting observations, including a quote from an E&Y partner: "You cannot simply take a Cyprus company and replace it like a piece of Lego in Luxembourg. You would need to use several jurisdictions, with several layers of holding companies in order to achieve a cascading system of tax distributions."

Austria and Luxembourg hold out against tougher tax rules European Voice

Sven Giegold, a German Green MEP, called the outcome “shameless obstructionism” by Luxembourg and Austria.

Australia: Big banks enjoying hefty offshore deductions Sydney Morning Herald

U.S.: What the IRS should be scrutinizing Reuters
Why, for example, has the IRS been so indulgent of big, flagrantly partisan tax-exempt groups that have spent hundreds of millions of tax-exempt dollars to influence the last two elections, in clear violation of IRS rules?

Who Hides Money Outside The Country? NPR

Apple target of Senate hearing on offshore taxes Politico

'I think you do evil': MPs confront Google over 'devious', 'calculated' attempt to avoid UK tax - the day after Amazon's own revelations The Independent
Internet giants on back foot after shopping giant admitted it receives more in government grants than it pays in UK corporate tax

Fresh questions for Amazon over pittance it pays in tax The Guardian

Starbucks’ cheque for £20 million is not in the post Tax Research UK

UK Uncut legal case exposes political embarrassment behind Goldman’s tax deal UK Uncut

The UK Gold – a new film on tax avoidance – premiere on 25 June Tax Research UK
See also the write-up in The Telegraph

New book - Transnational Organized Crime

Transnational Organized Crime - Analyses of a Global Challenge to Democracy

Transnational organized crime interferes with the everyday lives of more and more people - and represents a serious threat to democracy. By now, organized crime has become an inherent feature of economic globalization, and the fine line between the legal and illegal operation of business networks is blurred. Additionally, few experts could claim to have comprehensive knowledge and understanding of the laws and regulations governing the international flow of trade, and hence of the borderline towards criminal transactions.

This book offers contributions from 12 countries around the world authored by 25 experts from a wide range of academic disciplines, representatives from civil society organizations and private industry, journalists, as well as activists. Recognizing the complexity of the issue, this publication provides a cross cultural and multi-disciplinary analysis of transnational organized crime including a historical approach from different regional and cultural contexts.

Heinrich-Böll-Stiftung and Regine Schönenberg (eds.)

Transnational Organized Crime
Analyses of a Global Challenge to Democracy

transcript Verlag, Bielefeld 2013, 308 pages, € 24.80

ISBN 978-3-8376-2495-3

Ordering address: Heinrich-Böll-Stiftung, Schumannstr. 8, 10117 Berlin, Tel. 030-285340, Fax: 030-28534109, E-mail: buchversand@boell.de Internet: www.boell.de

Switzerland: time for Independent Commission of Truth and Justice

Switzerland has been fighting hard to attack and undermine long-running transparency efforts in Europe, and in recent days it's been playing a particularly pernicious role. (Christian Aid's new report Swisspoliation adds more: and that's just the charge sheet of the last few days. The case against Switzerland is long, extremely ugly, and goes back decades. Despite some moderate improvements in recent years, the country remains justifiably at the top of TJN's Financial Secrecy Index.

We thought we would now publish a letter circulated to us, originally from Ana Gomes, a Member of the European Parliament. Directed to Herman Van Rompuy, President of the European Council, it speaks for itself, and relates to this Change.Org Petition, which we mentioned before and is entitled The citizens demand actions against corruption and the secrets hidden by Switzerland. The letter is from Monday:

Dear President Van Rompuy,

One of the main problems affecting the EU and several EU Member States in particular is the lack of sufficient financial and fiscal resources to invest in the economies and job creation and to deliver to citizens even the most basic services and infrastructure they expect and deserve. Sadly, tax evasion, tax avoidance and corruption are a reality and they have been protected by Switzerland, Liechtenstein and other tax havens and money laundering financial centres (including EU Member States), undermining governance in the EU by covering up criminal activities.

To put an end to this long running conspiracy to defraud all EU Member States, that undermine all EU economies - with the excuse of financial secrecy - more than 24 thousand EU citizens, including me, have already signed the petition #TruthCH (#VeriteCH-#VerdadCH-#WahrheitCH-#VerdadeCH) demanding to the EU institutions the creation of an Independent Truth and Justice Commission on Switzerland to investigate its role in political corruption and tax evasion.

I hope that you agree that, at this time in European history, it does not matter how many thousands of citizens have signed this urgent demand for action. It is our obligation as representatives of all 500 million Europeans to act, without further  delay,  to stop this unacceptable behaviour, investigate the truth and prosecute all criminally responsible as they are not only undermining our economies with their secret cross border financial services but are also eroding our democracy by hiding corrupt and illegal assets. This has been the case for too many decades.

The ECOFIN meeting taking place tomorrow, 14th of May 2013, under the presidency of Mr Michael Noonan, Minister for Finance of Ireland, will decide on very important EU instruments to tackle tax evasion. I urge you, thus, to bring up the creation of an Independent Truth and Justice Commission on Switzerland in the discussion.

We cannot remain indifferent. I look forward to working with you to build a social and transparent Europe that will fight together against all forms of corruption, tax evasion and avoidance.

You may find the complete text of the petition, along with the weblink, below,

Thank you.

Sincerely,

Ana Gomes
Member of the European Parliament

Hunger: the hidden cost of tax injustice - new Christian Aid report

From Christian Aid, a new report entitled Who pays the price? Hunger: the hidden cost of tax injustice. An email from Christian Aid this morning said the report:

"makes the link between tax dodging, financial secrecy and hunger. It includes three country case studies from Ghana, India and El Salvador, where we identify measures that could be adopted by governments in these countries to increase tax revenues, reduce inequality and tackle hunger.

The report also contains two new pieces of research showing how developing countries lose more than the US50bn the FAO considers are required every year up to 2025 to tackle hunger.

• The first, which I already shared some time ago, focuses on an Orbis-based research conducted on more than 1,500 MNCs operating in India and finds that MNCs with links to tax havens paid over 30 percent less in taxes than MNCs with no such links. See also Christian Aid's Occasional Paper, ‘Multinational corporations and the profit-shifting lure of tax havens,’ by Petr Jansky and Alex Prats.
• The second reveals that developing countries could have lost over 2007-2010 as much as US578bn (that’s our upper estimate) of capital when trading with Switzerland, the country that sits at the top of TJN's 2011 Financial Secrecy Index. See Christian Aid's Occasional Paper ‘Swissploitation? The Swiss role in commodity trade’ by Alex Cobham with Petr Jansky and Alex Prats.

(TJN would add: those who are seriously interested in Switzerland's pernicious role in the global commodities trade are also advised to read the excellent report Switzerland's Most Dangerous Business, by The Berne Declaration of Switzerland. A significant sample of the book is available here.)

You can access a three-page report summarising the main new Christian Aid publication here. It contains startling facts such as this one:

"Had Zambia received for its copper exports in 2010 the same price Switzerland obtained when the copper was resold to other countries by Switzerland-based traders, it could have doubled its GDP."

The Christian Aid report contains this, in the introduction:

"Tax revenues are predictable and sustainable sources of income.They are fundamental to allowing developing-country governments to foster human development. But most poorer countries lack the staff, expertise and access to corporate information to counter activities such as transfer mispricing, in which some MNCs manipulate the profits they make and often hide them offshore.

In this report, Christian Aid provides new evidence of how an end to such practices, coupled with appropriate development policies, could make major progress towards eradicating world hunger. We realise that not all the revenues raised would automatically be channelled to priority areas such as health and nutrition.There are other priorities such as education and infrastructure. There also remain the challenges of corruption and government profligacy; challenges to which Christian Aid and our partners are rising. But without doubt, fairer tax systems and greater tax revenues could lead to increased practical measures to reduce food insecurity."

Now read on . . .

Where there's muck, there's brass plates: on the trail of UK ghost companies

The UK's investigative and satirical magazine Private Eye has produced a major new investigation into corporate crime, handled via the United Kingdom. The subtitle of the piece 'how UK ghost companies made Britain the capital of corporate crime" is quite apt, notwithstanding the best efforts of jurisdictions like New Zealand to outdo the UK.

The article is not online, unfortunately, so if you're in the UK you'll have to go out and buy a copy on the newsstands - it's available now. There's far too much in here to give it full justice, but a couple of paragraphs should give a sense of what's going on here:

“Limited liability partnerships”, of which Vector Aerospace LLP was one, joined the lexi- con of British corporate law only in 2000 as a result of heavy lobbying from Britain’s big accountancy partnerships, which wanted to limit their liability for carrying out dodgy audits without becoming limited companies and so incurring extra taxes. [See Treasure Islands, and the Ratchet chapter, for the extraordinary story of how the accountancy firms got Britain to enact its LLP laws.] The new corporate vehicle allowed them to have it both ways by stipulating that an LLP would have limited liability but would not be a taxable entity itself (see Partnerships in crime).

The new hybrid had great appeal: not just to respectable accountants, but also to those who were up to no good. For if an LLP’s members can also claim that they are not taxable in the UK, there is nothing to trouble the taxman and no inconvenient questions will be asked by the authorities about what the LLP is up to.

This is pure tax haven activity, and Britain is rapidly heading down this road. One last TJN-related section from the story:

"In 2009/10, a study by campaigning accountant [and a TJN Senior Adviser] Richard Murphy found that of the 2.6m companies on the UK companies register, just 69 percent were even asked for a tax return by the authorities and only 45 percent actually submitted one. While it is impossible to measure precisely how many of Britain’s ghost companies are part of interna- tional criminal networks, it is in these helpfully crowded and murky waters that some of the world’s most serious organised crooks swim undetected."

. . . . and much, much more: this is just a taster. You can see the authors, Andrew Bousfeld and Richard Brooks, in a short video clip here. Among other things they watch a postman stuff large quantities of letters through a letterbox, and they're clearly visible through the glass door.

"All these letters have landed face down," Brooks says ruefully: "that's what you call tough sh*t."

The text piece finishes like this:

"Epic levels of money laundering, illicit arms dealing, frauds, counterfeiting and government corruption are the result, all thriving on emasculated British company law and political and official indifference. A clean-up is indeed badly needed. Right here and right now."

Never a truer word written.

Lesser spotted bankers, with Bill Oddie

For those not from the United Kingdom, Bill Oddie is a former comedian who now appears regularly on British television screens, most often as a keen birdwatcher.

Now, in collaboration with our friends at Global Witness, he's produced a really good new video, which is fun - but has an important message too. Enjoy.

Links May 15

Luxembourg and Austria go out of their way to help tax crime Tax Research UK. What has happened is potentially very serious. The one silver lining is that the parallel and different "Fatca" process is making good running, and that things remain very fluid and unpredictable. Many journalists have misread these European developments in glass-half-full fashion, with headlines such as "EU moves to close tax loopholes." No, this particular glass, and it's a big one, looks rather empty right now. Also see, for instance, EU keeps tax-hunt momentum, even as resistance firms France 24/AFP

Australia to lead G20 corporate tax evasion clampdown Reuters

Extra $68m for Australian Tax Office to tackle trust abuse The Australian

Singapore to Agree With U.S. on Sharing Bank Account Data Bloomberg

Hong Kong in line for surge in illicit fund inflows South China Morning Post
Singapore, EU moves to boost transparency may boost city's allure for global tax cheats

Tax havens yield to pressure for greater transparency la nacion (In Spanish)
Hat tip: Jorge Gaggero

Africa's "lift-off" held back by illicit finance drain: AfDB Reuters

Tax evasion remains a risk, says South African Revenue Service Business Report

Tax evasion in Pakistan: A critical analysis Business Recorder

Latin America tax revenue cut by evasion, write-offs: IADB MSN

Insight: Bank documents portray Cyprus as Russia's favorite haven Reuters

Cayman key target in UK tax evasion investigation Compass Cayman
On the story of Australian, British, and U.S. tax authorities cooperating on investigating a large cache of information on complex offshore structures used to conceal assets.

Release of Offshore Records Draws Worldwide Response ICIJ

Canadian money in tax havens at all-time high NUPGE

Greek Crackdown on Tax Evasion Yields Little Revenue The New York Times

As FATCA spreads globally, ACFCS poll shows compliance duties are all over the map Association of Certified Financial Crime Specialists.

NZ To Address FATCA Compliance Cost Concerns Tax-News

Swiss Neue Privat Bank Cooperating With U.S. Justice Department Probe Bloomberg

The City of London and the Offshore sector - The Enemy Within Rowans-blog

Guernsey publishes tax transparency chart Channel TV
Guernsey's government has unveiled a ten point plan to try and prove it's not a tax haven.

Visualizing The World's Tax Havens zero hedge

Tax Havens and the Return of the Pirates The Washington Spectator

Tax haven tsunami Islands Business
"What may kill offshore banking is the realisation that it does very little to benefit host nations."

A memo to the world’s dictators - Subject: Asset protection and regime change. From: Mirkwood Capital To: High-net-worth rulers The Economist

U.S.: Tax Rates Down, Havens Thriving: Corporations Win, Workers Pay Common Dreams

Top Economists and Financial Experts Say We Must Break Up the Giant Banks The Big Picture

LInks May 14

Who pays the price? Hunger: the hidden cost of tax injustice New report by Christian Aid

FTSE 100's use of tax havens – get the full list The Guardian
See also: UK's top companies condemned for prolific use of tax havens. ActionAid's new research finds that the UK's 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens.

Economic malpractice: time for a moral crusade against tax scams The Guardian

Tax havens are entrenching poverty in developing countries The Guardian

Tax Havens Cost Africa $38 Billion a Year Voice of America

How we can help African nations to extract fair value Financial Times (Subscription)

Interview with Swiss Whisteleblower Ruedi Elmer Association Liberté-info
Update, and comment on recent events.

Before anyone sings Osborne’s praises on information exchange let’s remember he is the only person to sign a Rubik deal with Switzerland Tax Research UK

Singapore steps up international cooperation on tax evasion Reuters

Singapore to eclipse Switzerland as tax haven by 2020 CNN

Luxembourg Abandons 'Unrealistic' Withholding Tax Model Tax-News

Liechtenstein Set For Talks On Automatic Information Exchange Tax-News

Faymann says Austria will agree to EU tax deal Austria

EU Savings Tax Directive amendments: coming soon Available via the-best-of-both-worlds.com

No desks. No staff. No tax. Ireland’s shadow banks The Irish Times

Conference: The Future of taxation of international companies - for a fairer tax policy TJN Germany Blog
Announcing a joint event of DGB, Friedrich Ebert Foundation, the Tax Justice Network and the World Economy, Ecology & Development - WEED on 19 June.

International Finance Corporation and Deutsche Bank bankrolling Vietnamese land grabs in Cambodia and Laos Global Witness

UK naturalist and comedian Bill Oddie evicted from HSBC HQ while protesting against bank’s role in Malaysian rainforest destruction Global Witness
See the video, a light-hearted look at a deadly serious issue.

Tax Justice Focus, Volume 8, number 1 - Mythbusters

The latest edition of Tax Justice Focus explores and explodes some of the most persistent and powerful myths in contemporary economics.

Earlier this year we teamed up with the New Economics Foundation in London to produce a series of essays - Mythbusters - which are currently being published weekly in the Guardian newspaper, and can be found here on the nef website.  In this newsletter we explore how some of these myths survive and are propagated.

In the opening article Daniel Stedman Jones explores how the ideas of Adam Smith have been selectively interpreted by neo-liberals to shape a particular view of the free market which had little or nothing to do with Smith's own interpretation.

Aeron Davis considers why the media are so uncritical in their coverage of the activities of the City of London, promoting the myth that the City's role is too important to be challenged.

William Davies examines the reality behind the much-vaunted enterprise economy, so beloved of neo-liberals, and argues that much of what is termed entrepreneurial activity boils down to little more than rent-seeking.

And finally, Robin Ramsay asks why myths persist for so long in the political discourse. Does it boil down in the end to the awkward fact that most politicians are economically illiterate?

In addition, Krishen Mehta reviews Aaron Schneider's new book on State Building and Tax Regimes in Central America, and we have a round-up of the major tax justice news stories from recent weeks.

You can download Tax Justice Focus - the Mythbuster edition here, and please feel free to circulate to your friends and colleagues.