Thursday, January 31, 2013

Quote of the week: the Big 4 accountancy firms

From Margaret Hodge, chair of the UK's House of Commons public accounts committee, talking to officials from PwC, Deloitte, Ernst & Young and KPMG, noting that their skills ought to be directed to nobler ends than minimising tax bills for big business. Quoted in the FT:
"What really depresses me is you could contribute so much to society and the public good and you all choose to focus on working in an area which reduces the available resources for us to build schools, hospitals, infrastructure."
Well said. Make that quote of the month. And yet, as The Guardian notes, these four firms earned some £400m from the British state last year, while simultaneously helping to denude this same state of the tax that pays them.
"When the burglar is unscrewing your window locks, would you pay him a fat fee to clean your windows while he's at it?"
That would be another quote-of-the-day candidate. Hodge added:
“I don’t think people who give advice to cut the tax payable should be getting government business. Quite simple.”
 Yes, absolutely. 

0 comments links to this post

Links Jan 31

Corporate Tax 2.0: Why France and the World Need a New Tax System for the Digital Age Forbes
By Nicolas Colin, author of a controversial new report commissioned by the French Government about the tax system and the digital economy.

Zurich Looking At Multinational Tax Tax-News

Tax authorities in the Swiss canton of Zurich are said to be in negotiations with Google, demanding that the US Internet giant pay more in tax, suggesting that Switzerland, like other European countries, is rethinking the way in which multinationals are taxed.

Nokia suspected of flouting transfer pricing rules too The Hindu Business Line

Italy Scours Deals Abroad for Elusive Tax Revenue The Wall Street Journal

Dutch tax haven has 20,000 letter-box companies including U2's FinFacts


Cyprus Rejects Calls for More Action on Money Laundering Bloomberg

Hong Kong needs increased vigilance over money laundering South China Morning Post


Charles Abugre: My image of Africa Socialist Worker

UK: MPs press accountants on tax avoidance Reuters
MPs grilled senior tax officials from leading accounting firms on Thursday over their role in helping big companies avoid tax, and said they could be banned from government contracts because of their tax work.

UK: David Cameron accused of double standards by keeping Google head as adviser despite corporate tax avoidance allegations levelled at the company The Independent

Association of Chartered Certified Accountants (ACCA) Slams UK Anti-Avoidance Plans Tax-News


U.S.:Senate crusader seeks allies in war against corporate tax loopholes Reuters

U.S. Is Preparing More Tax-Evasion Cases The Wall Street Journal

New SEC Chief Mary Jo White Thinks the Government Should Bring Cases – 'To A Point' Rolling Stone/Taibblog

Operation Caymans
Video - Two comedians go to the Caymans to investigate offshore tax shelter accounts like Mitt Romney's.

0 comments links to this post

Money on an Island: new video

From the Apocalyptics: Money on an Island.



The lyrics are available here.

0 comments links to this post

Wednesday, January 30, 2013

Links Jan 30

End In Sight For Vodafone's Indian Tax Dispute Tax-News

Hartnett’s back – at HSBC Tax Research UK

Following the bank’s $1.9bn settlement of money-laundering allegations late last year, Dave Hartnett, former head of Her Majesty’s Revenue & Customs (HMRC), appointed to a group that will head a new financial crime committee.

Jersey agrees that a new European Union Savings Tax Directive is inevitable – and it will have to comply Tax Research UK

Switzerland Nutures Tax Relations At World Economic Forum Tax-News


Swiss government pays HMRC £340million in tax deal The Telegraph
However, see List of killer loopholes in the Swiss "Rubik" agreements

Google will not oppose clampdown on tax avoidance, chairman says Guardian

Dutch tax haven has 20,000 letter-box companies including U2's FinFacts
Hat tip: Offshore Watch

Belgian monarchy rocked by Queen’s tax avoidance plans National Secular Society

Tax tricks as an exclusion criterion for sustainable investments ecoreporter
(In German & subscription required)
On how sustainability-oriented investors and sustainability analysts now include tax avoidance as unethical behaviour within criteria for selection of investments.

Use of tax havens by U.S. global companies on the rise: report Reuters

More on a report by The Congressional Research Service (linked yesterday).

Who Pays? Institute on Taxation and Economic Policy
A new report on regressive U.S. taxes.

Obama Administration Fails to Prosecute Banking Fraud to "Save the System" The Real News
Interview with James S. Henry, author of TJN's report The Price of Offshore, Revisited.

The Untouchables Frontline - PBS
An investigation into why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages.

Who Runs The World? Solid Proof It's A Core Group Of Wealthy Elitists Investing.com


0 comments links to this post

Automatic information exchange coming sooner than we thought?

We have fought in the wilderness for years on the issue of automatic information exchange, with the OECD leading the charge in saying that its next-to-useless standard of 'on request' information exchange was the 'internationally agreed standard." Well, the OECD sort of threw in the towel a few months back, and now we see something that we discussed recently: in a complex chess game involving the U.S., the E.U., and various tax havens, many jurisdictions will have no choice but to accept automatic information exchange.

Tax Research notes a debate in Jersey, which explains the issue well. Important progress, confirming that our earlier analysis was right on the money.

To see why automatic information exchange is the superior form of transparency, see here or here.
 

0 comments links to this post

Tuesday, January 29, 2013

Links Jan 29

The price for helping Cyprus European Voice
Op Ed by Global Witness: "There should be no bail-out for Cyprus until it stops its companies being used to launder money."

Norway to Give Grant to Cyprus to Help Fight Money Laundering Bloomberg

Austria to resist EU Commission coercion to drop secrecy. EU Savings Tax Directive Amendments

Commentary in English on a Der Standard article linked yesterday, on Austria and Luxembourg blocking automatic information exchange.

UBS told to give IRS data on Wegelin accounts swissinfo


Italians Have a New Tool to Unearth Tax Cheats The New York Times

Dell's Multiple Restructurings Aid It in Tax Avoidance Tax Analysts
Great explanation by David Cay Johnston. See commentary from Richard Murphy at Tax Research UK.

Software Firms Find Tax Advantages The Wall Street Journal

UK: Church leaders call on MPs and MEPs to tackle tax justice Ekklesia


Stop accusing firms of tax-dodging, says Ernst & Young Management Today

U.S.: Choice of Mary Jo White to Head SEC Puts Fox In Charge of Hen House Taibblog

Ex-compliance officer: 'I had to tell the trader what to do – I had two minutes' Guardian

Hat tip: Offshore Watch

0 comments links to this post

How ‘citizens of nowhere’ get away with tax secrecy

A letter in the Financial Times today:
From Mr James S. Henry.
Sir, As a member of the global board of Tax Justice Network, I was delighted to see your editorial “Cameron’s taxing question for G8” (January 25) commending David Cameron for his latter-day conversion to the long overdue cause of cleaning up corporate tax dodging.

But I do take exception to one sentence in your editorial, in which you remarked that “countries such as Britain and the US, while not themselves tax havens, can do much to improve transparency”.
In fact, of course, the US and the UK have for decades been the two largest “tax havens” in the world, especially for the wealthy elites of developing countries.

Both countries have carefully designed their tax codes and banking laws so that if, say, you happen to be a super-rich “non-resident alien” or “non-dom” from a country such as Mexico, Brazil, the Philippines or Nigeria, you and your entire family can live virtually free of all income and estate taxes – in the US case for at least half the year, in the case of the UK all year round.

In the US case, even when the half-year is up, you can then rotate over to your villa or yacht in any number of other residential havens. And if you simply want to maintain your investments here, by way of Delaware or Nevada corporations and trusts, whose secrecy rivals those of the very best “offshore” jurisdictions, that is even easier.

At the same time, since the US, the UK, and indeed most OECD countries have very spotty “automatic information exchanges” with developing countries, unless you are extraordinarily generous, your home-country tax authorities are unlikely to ever hear about all your first-world income and wealth.

So you can easily become a transnational “citizen of nowhere” for tax purposes. As such, you will have added your pile to what TJN estimates is now at least $21tn-$32tn of cross-border private wealth that is owned by the new private global elite – much of it invested by way of the US or UK “spider net” of secrecy jurisdictions.

Probably with the help of able US and UK private bankers and haven lawyers, you will have managed to achieve, for yourself and your family dynasty, across borders and time, that wonderfully anti-democratic ideal combination: political representation plus minimal taxation.

James S. Henry, Sag Harbor, NY, US, Senior Advisor and Global Board Member, Tax Justice Network
Henry, a former chief economist of McKinsey's and a veteran investigator of the offshore phenomenon, has more experience than almost anyone in the world of the blood and guts of the private banking industry and its offshore locales. (We hope that the FT doesn't mind our reproducing this letter, given that it comes from us originally.)

0 comments links to this post

Guest blog: "Parallel Meetings" at the G-20: a note of alarm

A guest blog by Jorge Gaggero, an economist, member of TJN, also associated with RJF-América Latina, and CEFID-AR - Argentina

This is a short note of alarm about the "clear rules and fair procedures" that are needed, in my opinion, for the G20 parallel sessions (known as T-20; B-20 and S-20), to function properly. These proposals are based on my analysis of the experiences of these meetings in Los Cabos, Mexico, in February/March 2012 and in Moscow, Russia, last December.  I am an Argentine economist and a member of the Tax Justice Network, and I attended the T-20 Meeting in Moscow representing an Argentine think tank called CEFID-AR (Centro de Economía y Finanzas para el Desarrollo de la Argentina).

We were invited a year ago by Argentina’s authorities to participate at the Los Cabos T-20 Meeting but we decided not to attend because of the bias we noticed in the selection of the think-tanks invited by the Mexican organizers. We were concerned about both the number and the orientation of the “Northern” think-tanks: double the number of “Southern” ones. This asymmetry was subsequently reflected in the resulting “Report to G20 Sherpas” in March 2012, which was drawn up by the Mexican organisers without any consultation with, or approval by, the participants.

At Moscow we see that some worrying practices put in place by the organisers of the Mexican G20 Summit are being repeated. The principal ones are:

      (a) A bias in the selection of the participants of the Think20 - particularly the ‘chairs,’ but also many ‘speakers.’ (We see a heavy orientation to neoliberal approaches and recommendations; and also, in some cases, de facto lobbying efforts, which are incompatible with academic approaches.)

      (b) Ideological and biased presentations with poorly- (or un-) justified recommendations: for example in opposition to trade regulations; in favor of “unrestricted” movement of capital flows and multinational corporations’ activities; and promoting “multilateral investment treaties”.

      (c) Improper manipulation by the ‘chairs’ of the process of elaborating the minutes of meetings, which ended up not reflecting participants’ positions and discussions. These minutes were provided to the Sherpas and published on the G20 website but without consultation with the participants; apparently in order to ensure final recommendations in line with the organisers’ ex ante definitions (of neoliberal or “interested” orientation). They introduced new issues into the G-20 agenda without consensus at the meeting, they did not inform the Sherpas about important discussions that took place during the sessions, and they eliminated “controversial” matters (for example, a proposal to reintroduce into the agenda the critical problem of “illicit capital flight” and “secrecy jurisdictions / tax havens.”)

I was informed by participants at a “Civil-20” meeting that the people put in charge in Moscow had adopted a similar approach.

Finally, I sent a letter to the “Russia G20 Sherpa Office” (January 10th 2013) to inform them about these problems: “serious failures that are affecting the open, pluralist and democratic discussion on economic global affairs that is necessary today”. 

Jorge Gaggero

Letter below, dated January 10
Mr Pavel Komarov
Russian G20 Sherpa Office
Counsellor
 


Dear Pavel:

Remembering your cordial and effective assistance during my participation at Moscow T-20 Meeting, I must inform you (see under this lines) about some serious failures that are affecting the open, pluralist and democratic discussion on economic global affairs that is necessary today. Best regards
                                                                                                                                                                                                                                                                      Jorge Gaggero
                                                                                                                                                                                                                                                                           CEFID-AR
                                                                                                                                                                                                                                                               Buenos Aires, Argentina 

0 comments links to this post

Monday, January 28, 2013

Links Jan 28

UK government made millions in profit from funding an aluminium factory in Mozambique that only pays 1% tax Jubilee Debt Campaign
See the report "Whose development is it?"

Liechtenstein, Austria Conclude Tax Treaty Talks Tax-News

Austria/Liechtenstein tax treaty excludes trusts, providing loophole Attac Austria (In German)

EU threatens Austria on bank secrecy Der Standard (In German)
EU tax commissioner Algirdas Šemeta criticises Austria and Luxembourg for blocking the EU Savings Tax Directive, noting that if an EU country provides better information exchange to a non EU country than to other EU countries - referring to the U.S. and FATCA - then that is a violation which might lead to an action by the EU Commission.

Australia & New Zealand: Coca Cola named in multi million dollar tax haven scam Investigate Daily
On an invoicing scam using the Cook Islands, which receives nearly NZ$25 million in taxpayer-funded aid money from Australia and New Zealand.

Update: Coca Cola sent these comments on the allegations to Mark Zirnsak, a TJN member:
We refer to your enquiry and advise as follows:
As we have previously advised CCA NZ was unaware of the investigation by the Cook Islands Audit office undertaken in 2011 and its findings.  We contacted the Cook Islands Audit Office on 16th January 2013 and have now heard back from them.

On the matter of CCANZ being contacted and not responding: The Audit office claim they sent an email to our call centre generic email address in mid-2011 but have no record of that email being sent. We have no record of receiving that email. The Audit office has confirmed to us that they have not phoned or contacted us at any other time about this or any other matter.

The Audit office confirm as regards the investigation into import duties and I quote their email today to us - “Our report highlights that the arrangement was not illegal and there was no wrongdoing, except poor decision making by Government officials at the time. “

The Audit office have also confirmed that to their knowledge CITC have not admitted they were guilty of criminal activity, as you had indicated in one of your emails.

We followed this up with another statement several days later:
Re:        Enquiry to CCANZ regarding the Cook Islands Audit Office Repor

We refer to our statement dated 17 January 2013 regarding the above matter and to your subsequent email enquiry.

As set out in our statement, prior to this week CCA NZ was not aware of any investigation by the CI Customs Department in 2011, or its findings in relation to the arrangement between CITC and the CI Customs Department.

Upon becoming aware of the report, CCA NZ promptly contacted the Audit Office to clarify the position.  Consistent with the findings of the CI Audit Report, the Audit Office has confirmed to CCA that the arrangement between CITC and the CI Customs Department was not illegal.   
Congressional Research Service Finds Evidence of Massive Tax Avoidance by U.S. Corporations Using Tax Havens Citizens for Tax Justice

To stop firms gaming the tax system, make them admit what they're doing Guardian


Amazon expected to reveal cash pile of up to $9bn after record Christmas Guardian
Analysts say online retailer's reserves have swollen as row rages over tax contributions

Apple shelters almost $1bn a week from US tax man The Telegraph


Starbucks threatens Cameron after 'unfair' tax attacks The Telegraph
Starbucks has threatened to suspend millions of pounds of investment in Britain after what it described as constant and unfair attacks over its tax affairs by the Prime Minister and the Government.

Goldman Sachs chief attacks David Cameron on tax avoidance The Telegraph

We can help poorer countries by tackling tax evasion and avoidance The Independent

Bill Nighy: tackle tax avoidance to put an end to world hunger The Independent

India Considering New Wealth Taxes Tax-News

Can't KPMG Find Enough Tax Loopholes to Make Phil Mickelson Stay in the United States? Citizens for Tax Justice

Switzerland awash with money laundering cases swissinfo

Something Sinister About the Lack of Prosecutions at Lehman Brothers Ian Fraser

0 comments links to this post

Friday, January 25, 2013

Links Jan 25

Oxfam says world's rich could end poverty Al Jazeera
The world's 100 richest people earned enough money last year to end world extreme poverty four times over, according to new report The cost of inequality: how wealth and income extremes hurt us all

City of London Corporation reveals its secret £1.3bn bank account The Bureau of Investigative Journalism

Multinational firms avoid paying tax View and News from Norway

"Norwegian politicians are calling for tighter rules and a revision of tax laws to plug the holes."

As Foreign Profits Rise, Corporate Tax Rates Fall Bloomberg


How Yahoo Used Tax Havens To Cut Its Taxes By $42.8 Million ThinkProgress


Enda Kenny denies Ireland a magnet for corporate tax dodging Independent.ie


More criminal prosecutions planned for tax evasion: investors beware, there is no ‘fuzzy line’ Lexology

Obeids' trust is the best ad for tax reform Sydney Morning Herald
On the scandal of a former Australian MP and his family, dodging taxes and other obligations via an opaque trust structure.

Millionaires' Flight from Taxes Accelerates Baron's

Former French President Plans To Abandon Country To Dodge Taxes, Corruption Charges ThinkProgress
See also: Gérard Depardieu's French Tax Evasion Trend May Continue with Country's “Richest Man” and Nicolas Sarkozy Vanity Fair

Russian Tax Fraud Funneled Via Estonia’s Banks Bloomberg

India: Taxes: Why do the super-rich crib so much? FirstPost
A discussion of the inheritance issue.

Italy police catch 56 bn euros in tax evasion in 2012  France 24/AFP

Offshore Targets In Sight For British FATCA iExpat

"Dubbed ‘Son of FATCA’ after the US Foreign Account Tax Compliance Act (FATCA), the British law will require financial institutions in offshore centres  like the Channel Islands, Bermuda, the Isle of Man, British Virgin Islands, Caymans Islands and Gibraltar to hand over financial information about UK taxpayers."

Staying in Tune With the Tax Spirit of the Times NY Times

Mauritius grows tax income, takes aim at money laundering Africa Review

Large banks seen dodging EU financial tax bullet Reuters

Call It Corruption, Not Ideology Huffington Post

0 comments links to this post

Thursday, January 24, 2013

Links Jan 24

Australian Tax Office approved tech companies' tax avoidance tactics zdnet

Austria To Wait For Revenues From Swiss Tax Deal Tax-News
Which would also give extra time, perhaps, for accounts to be moved or restructured.

UK Supreme Court Blocks Tax Advisers' Legal Privilege Tax-News

U.S.: Court Holds IRS Can Get Key Tax Records Even Held by Your Lawyer Forbes

Spain’s Leader Faces Political Storm Over Corruption CNBC

"Spanish Prime Minister Mariano Rajoy is facing an escalating political storm after his former party treasurer was accused of tax evasion and fraud linked to a 22 million euro fortune hidden in Swiss bank accounts."

Gimme Shelter (From Taxes) BloombergBusinessweek


U.S.: When Tax Cuts Were a Tough Sell NY Times
Speaking of when Republicans said, of President John F. Kennedy's plan for large tax cuts: "“It is morally and fiscally wrong, and will do irreparable damage to the Republic.”

Responses to post-2015 proposal: (i) Ambition Uncounted
On Save the Children's Ending Poverty in our Generationwhich sets out a vision of how the successor to the Millennium Development Goals could look.

Life in the ‘Alpha Territory’: investigating London’s ‘Super-Rich’ Neighbourhoods LSE


Central bankers should be brought to heel by elected parliaments The Telegraph

New insights into the costs of the offshore system - now in German, from the recently released report
The Price of Offshore Revisited

See also: links from the TJN Germany Blog

0 comments links to this post

The Job-Creation Shell Game: the economic warfare between U.S. states

From Good Jobs First:

Study: U.S. States Waste Billions Luring Jobs from Each Otherby Greg LeRoy, Kasia Tarczynska, Leigh McIlvaine, Thomas Cafcas and Philip Mattera

Washington, DC, January 24, 2013--State and local governments waste billions of dollars each year on economic development subsidies given to companies for moving existing jobs from one state to another rather than focusing on the creation of truly new positions, according to a study released today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC. The report, entitled The Job-Creation Shell Game, is available at www.goodjobsfirst.org/shellgame.

"What was long ago dubbed a Second War Between the States is, unfortunately, raging again in many parts of the country," said Greg LeRoy, executive director of Good Jobs First and principal author of the report. "The result is a vast waste of taxpayer funds, paying for the geographic reshuffling of existing jobs rather than new business activity. By pretending that these jobs are new, public officials and the recipient companies engage in what amounts to interstate job fraud."

Interstate job piracy is not a fruitful strategy for economic growth, LeRoy noted: "The costs are high and the benefits are low, since a tiny number of companies get huge subsidies for moving what amounts to an insignificant number of jobs." LeRoy added: "The flip side is job blackmail: the availability of relocation subsidies makes it possible for companies that have no intention of moving to extract payoffs from their home states to stay put."

Summarizing studies demonstrating that interstate job relocations have microscopic effects on state economies, the report reviews the history of economic competition among the states and presents eight case studies of those areas of the country where job piracy is currently most pronounced. Highlights include:
  • In the Kansas City metro area, companies have been getting eight-figure subsidy packages to move from the Missouri side to Kansas, or vice versa.    
  • In Texas, the "deal-closing" Texas Enterprise Fund as well as a privately financed marketing group called TexasOne are used to brazenly lure companies from many states, including California.    
  • New Jersey has doubled down on both job piracy and job blackmail payoffs, continuing to lure firms from New York City-many of them Wall Street firms that were likely to come anyway.    
  • Georgia, which we rename the Poach State, stunned officials in Ohio when it successfully lured the headquarters of NCR from Dayton, where the company had been based for 125 years.    
  • Tennessee embodies all the policy contradictions. Its largest city, Memphis, is frequently the victim of poaching by bordering Mississippi, yet Tennessee created a whole new subsidy program to lure the North American headquarters of Nissan from southern California.
  • The booming Charlotte region has job growth most states would die for. Yet instead of managing their growth, the 16 counties in North Carolina and South Carolina routinely poach jobs from each other, using both state and local subsidies.    
  • Rhode Island has long pirated jobs from Massachusetts, but when it gave a very large package to lure video game maker 38 Studios, founded by retired Boston Red Sox star Curt Schilling, the deal soon blew up and criminal prosecutions are now under way.
Huge job blackmail subsidies have left many taxpayers bitter in states such as Illinois and Ohio, and Sears Holding Corp. has continued to shed jobs despite getting a second nine-figure retention deal from Illinois.

To cool these job wars, the report recommends that states demonetize interstate job fraud. That is, the states should stop subsidizing companies for existing jobs that are treated as "new" simply because their location has changed.

The study reveals that the vast majority of states already know how to do this: four-fifths of the states already refuse to pay for intrastate job relocations. For at least one and sometimes most of their major incentive programs, 40 states disallow subsidies for existing jobs that are merely being moved within their own borders.  

The report also recommends that states end their business recruitment activities that are explicitly designed to pirate existing jobs from other states. It also suggests a modest role for the federal government: reserving a small portion of its economic development aid for those states that amend their incentive codes to make existing jobs ineligible for subsidies and certify that they no longer engage in raiding.

Read the report here.

0 comments links to this post

Britain's Prime Minister now sings to a TJN tune

We were going to write on this separately, but Richard Murphy has done it for us already, so we'll cut and paste from his blog.
David Cameron spoke in Davos this morning. There was, of course, stuff in his speech with which I disagreed. But he also spoke extensively on tax and transparency. And there he sang to the tune that has been created over the last decade by the Tax Justice Network and this blog. For the record I’m going to quote big chunks of the speech here to show just how much he’s now talking our language and I’ll do analysis later:
Prime Minister David Cameron's speech to the World Economic Forum in Davos
(edited highlights)
My argument today – and the idea that drives the G8 this year – is that competing in the global race isn’t just about what we do at home.

It’s about the wider economy we all operate in, the rules that shape it, the fairness and openness that characterise it.

We need more free trade.

We need fairer tax systems.

We need more transparency on how governments – and yes, companies – operate.

Let me tell you why.

It’s the oldest observation of the modern age that we are all inter-connected.

Communication is faster than ever.

Finance is more mobile than ever.

And yet the paradox of this open world is that in many ways, it’s still so closed and secretive.

It’s a world where trade is choked off by barriers and bureaucracy.

It’s a world where some companies navigate their way around legitimate tax systems – and even low tax rates – with an army of clever accountants.

It’s a world where – regrettably – corrupt government officials in some countries and some corporations run rings around the letter and spirit of the law to rip off hard-working people and plunder their natural resources.

There’s a long and tragic history of some African countries being stripped of their minerals behind a veil of secrecy.

We can see the results: the government cronies get rich – some beyond their wildest dreams of avarice – while the people stay poor.

So it’s clear how this can be devastating for some developing countries.

But actually, all this matters massively to developed countries too.

When trade isn’t free we all suffer.

When some businesses aren’t seen to pay their taxes that is corrosive to public trust.

When shadowy companies don’t play by the rules that drives more box-ticking and regulation and that makes life harder for other businesses to make a profit.

That’s why I want this year’s G8 to bring a new focus on these issues.
And then:
We want to use the G8 to drive a more serious debate on tax evasion and avoidance.

This is an issue whose time has come.

After years of abuse, people across the planet are calling for more action and most importantly, there is gathering political will to actually do something about it.

Again, let me put my cards on the table.

I know there is a difference between tax evasion and avoidance.

Evasion is illegal.

It can – and should – be subject to the full force of the criminal law.

But what about avoidance?

There’s nothing wrong with sensible tax planning – and there are some things governments want people to do to that reduce tax bills, such as investing in pensions, start-up businesses or charities.

But there are some forms of avoidance have become so aggressive that I think it is right to say – these raise ethical issues – and it’s time to call for more responsibility and for governments to act accordingly.

In the UK we’ve already committed hundreds of millions into this effort – but acting alone has its limits.

Clamp down in one country and the travelling caravan of lawyers, accountants and financial gurus just moves on elsewhere.

So we need to act together at the G8.

If there are difficult questions about whether existing standards are tough enough to tackle avoidance, we need to ask them.

If there are options for more multi-lateral deals on automatic information exchange to catch tax evaders, we need to explore them.

And we want to work with developing countries on this too.

The fact is the poorer the nation, the more they need tax revenues, but often the weaker the capacity they have to collect them.

But we must not let them off the hook – it can be done.

The UK has worked with Ethiopian authorities to help on tax collection and in the last decade the amount of tax collected increased by around seven-fold.

All of this – in developed and developing countries alike – comes down to a simple issue of fairness.

I believe in low taxes.

That’s why my Government is cutting the top rate of income tax.

We’ve cut corporation tax.

Individuals and businesses must pay their fair share.

Any businesses who think that they can carry on dodging that fair share or that they can keep on selling to the UK and setting up ever-more complex tax arrangements abroad to squeeze their tax bill right down. Well, they need to wake up and smell the coffee because the public who buy from them have had enough.

And let’s be clear:

Speaking out on these things is not anti-capitalism. It’s not anti-business.

If you want to keep low tax rates then you’ve got to keep taxes coming in.

Put simply: no tax base – no low tax case.

This is the argument that has been made brilliantly by the economist Paul Collier – and I am delighted he’s been advising my Government on this ahead of the G8.

This is about me and all the other G8 leaders being able to look our people in the eye and say that when they work hard and pay their fair share of taxes, we will make sure that others do as well.
Then he said:
The third big push of our agenda is on transparency, shining a light on company ownership, land ownership and where money flows from and to.

This is critical to developing countries.

Of course aid has played – and will continue to play – an important role in development.

And I’m proud the UK is keeping its aid promises.

I’m also proud we’re leading the fight on global hunger, funding nutrition programmes for 20 million children and pregnant women over the next few years.

But at the same time we need to move the debate on, so we’re not just dealing with the symptoms of poverty but tackling the causes.

I’ve argued for years that there’s a “golden thread” of conditions that enable open economies and open societies to thrive:

The rule of law; the absence of conflict and corruption; the presence of property rights and strong institutions.

Now as co-chair of the UN High Level Panel and with the Presidency of the G8, there is a chance to put turbo-boosters under this agenda and we’re seizing that chance.

I want this G8 to lead a big push for transparency across the developing world.

To illustrate why, let me give you one example.

A few years back a transparency initiative exposed a huge black hole in Nigeria’s finances – an $800 million discrepancy between companies’ payments and government’s receipts for oil.

This is leading to new regulation of Nigeria’s oil sector – so the richness of the earth can actually enrich the people of that country.

And the potential is staggering.

Last year Nigerian oil exports were worth almost $100 billion, more than total net aid to the whole of sub-Saharan Africa.

Put simply, unleashing the natural resources in these countries dwarfs anything aid can achieve – and transparency is critical to that.

So we’re going to push for more transparency on who owns companies, on who’s buying up land and for what purpose, on how governments spend their money, on how gas, oil and mining companies operate, on who is hiding stolen assets and how we recover and return them.

Like everything else in this G8, the ambitions are big – and I make no apology for that.
 And he concluded:
Let me end today by saying this.

I know some people might be thinking: he’s talking about cracking down on tax avoidance, making companies be more transparent – doesn’t this sound like an old-fashioned, anti-business, bash the rich, tax success agenda?

Absolutely not.

This is a resolutely pro-business agenda.

I am about the most pro-business leader you can find.

I yield to no-one in my enthusiasm for capitalism.

It’s an economic system that has generated more wealth, unleashed more human potential, and reduced more grinding poverty than any in history.

I do not believe that one person’s wealth, fairly gained through free exchange in an open market, is the cause of another person’s poverty.

I will have no truck with those who want to demonise the successful, to level-down rather than to build up, or those who continually seek to turn ‘profit’ into a dirty word.

But I also passionately believe that if you want open economies, low taxes and free enterprise then you need to lay down the rules of the game – and be prepared to enforce them.

Poor business practice doesn’t operate in a vacuum; it hurts the good.

When one company doesn’t pay the taxes they owe, then other companies end up paying more.

When some cowboys play the system all businesses suffer the fall-out to their reputation.

That’s why it’s not just those in the NGOs who have been lobbying my government on these issues, it’s those in the high-rises of the City of London – bankers, lawyers, senior figures in finance.

They’ve told us to pursue this agenda hard – and that’s what we’re going to do.

This is a vision of proper companies; proper taxes; proper rules, a vision of open societies, open economies, and open government and we are going to work with our partners at the G8 to achieve it.
TJN: in themselves these are fine, welcome words, and we're delighted to hear them, and to have been right in the vanguard of all this. We'll quote these words back to him in years to come.

For now, congratulations to Cameron.

We'll leave comments about forked tongues for later.

0 comments links to this post

Rumpelstiltskin's trick: more on those offshore corporate cash piles

We've written plenty about multinational corporations sitting on huge untapped offshore cash piles. Now, from the Wall Street Journal:
"There's a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas: A lot of it is actually sitting right here at home. . . . held in U.S. dollars or parked in U.S. government and corporate securities. . . .  Sizable U.S.-dollar accounts are often owned by U.S. companies' foreign subsidiaries in tax havens like Ireland, the Cayman Islands and Singapore. But the accounts ultimately are U.S. accounts, regardless of where they are opened; a foreign bank typically will hold dollar deposits in a so-called correspondent bank in the U.S.

In the eyes of the law, the Internal Revenue Service and company executives, however, this money is overseas. As long as it doesn't flow back to the U.S. parent company, the U.S. doesn't tax it.

In accounting terms, the location of the funds may be just a technicality. But for people on both sides of the contentious debate over corporate-tax reform, the situation highlights what they see as the absurdity of rules that encourage companies to engage in semantic games, legal gymnastics and inefficient corporate-financing methods to shield profits from U.S. taxes.

The fact that much of the money already is in the U.S. also undermines a central argument made by companies seeking tax relief to bring home money they have earned abroad, tax experts and lawmakers say: That the cash is languishing overseas when it could be invested to the benefit of the U.S. economy.

Edward Kleinbard, a professor at the University of Southern California's Gould School of Law and a former chief of staff for Congress's Joint Committee on Taxation, said there is a misperception that companies' excess cash is inaccessible, "somehow held in gold coins and guarded by Rumpelstiltskin."
Just another thing to bear in mind in this long-running debate.

0 comments links to this post

Davos: Swiss president wilfully misunderstands his own country

Swiss President Ueli Maurer has made a speech at the World Economic Forum Annual Meeting in Davos, to a lot of very important people. Unfortunately, his grasp of basic political economics is woeful. Here's a taster.
"Switzerland is a federal state with twenty-six cantons."
OK, good. And a fine country it is too, in so many excellent ways. Now, though, Maurer says:
"Locational competition exists within our own borders. This leads to good infrastructure, to restraint in creating red tape and to low taxes. And individuals benefit just as much from all of this as businesses."
It sounds so reasonable, doesn't it?  The only snag is that this statement reflects economic illiteracy.

Swiss cantons, and the Swiss financial sector itself, get rich through stealing the wealth of other nations, though secrecy, tax loopholes and the like. That's the essence of their model. It's nothing to do with race-to-the-bottom competition within Switzerland. This line of thinking dates back to a fanciful 1956 paper by the economist Charles Tiebout, which rests on ridiculous assumptions (see more on that here.) Maurer continues:
"Diversity stimulates competition. That is not only the case in business, but also in politics."
Hogwash. This is the great fallacy, widely claimed by Maurer and many other proponents of tax competition: that market competition is good - so, hey, all forms of competition, including tax competition, must be good, right?

Dead wrong. As the FT's chief economics commentator Martin Wolf has noted,"the competitiveness of countries, on the model of the competitiveness of companies, is nonsense." These are two completely, utterly different beasts.

The confusion - which ultimately is a result of these two different things sharing the same word - stems from a deep confusion between two forms of competition: the healthy kind, and the unhealthy kind. Competition between companies in well-run markets is an example of the healthy kind: it helps stimulate innovation, improve productivity and efficiency, and lowers prices (and prevent companies from colluding to fix prices).

But competition between countries (or sub-national jurisdictions such as Swiss cantons) is another matter entirely. Countries can compete by, for example, offering laxer financial regulation or stronger secrecy -- a Swiss specialty for decades -- providing better shelter for tax evaders and other criminals. This is a race to the bottom, and it's hardly surprising that the European Union is so keen to crack down on this abuse. To illustrate this point, think about it this way: when a company cannot compete, it goes bankrupt and another (hopefully better) one, takes its place. For all the pain involved, this process of 'creative destruction' weeds out bad firms and keeps others on their toes and is a source of capitalism’s dynamism. But what does 'creative destruction' mean in the context of a country? A failed state?

Really. Maurer again:
"It is somewhat worrying when powerful states exert pressure on small but successful competitors. The result is that competition, the catalyst of progress, is stifled. Ultimately, everyone suffers a decline in prosperity."
No. When states co-operate to stamp out tax competition -- which has the end result of forcing down tax rates on the wealthy, and consequently forcing tax rises on everyone else. What you mean to say, Mr. Maurer, is that the world's wealthiest citizens suffer a decline in prosperity, as they are finally required to pay the taxes that their democratic electorates have demanded. Others pay more as a result.

It is not clear what Maurer learnt while serving as president of the Zürich Farmers' Association (1994-2008,) or as a key anti-immigration figure in the right-wing Swiss People's Party (SVP, with a record of saying things such as ("as long as I talk of negroes, the camera stays on me".)

Whatever it was he learned, it sure wasn't economics.

Or perhaps in Davos World, Maurer can only see wealthy people - so he thinks they qualify as 'everyone'.
 
We have a longer document, currently only in rough draft form, which we will publish in the coming weeks, which we will use to shred this kind of nonsense again and again.

Watch this space. (And if you can't wait that long, take a look at Treasure Islands, (p195 in the UK edition,) for a short, sharp dose of reality.)

0 comments links to this post

January Taxcast: extended edition

In January 2013's Taxcast: A significant ruling against Dell in Spain, India shelves rules that would have tackled corporate tax abuse until 2016, the EU threatens to blacklist Switzerland and we take a look at 'Google Capitalism.' (An extended edition to kick off 2013 - just under 20 mins).

Listen below, or download it to your phone here.

Update: For latest and previous Taxcasts, see here.



0 comments links to this post

Wednesday, January 23, 2013

Enough food for Everyone: Four Big Ifs

From a coalition of 100 major charities, a new campaign. For example, a release from Christian Aid:

Hunger is the world's most shocking problem and our toughest challenge. One in eight people on this planet lives with the pain of hunger. And yet our planet provides enough food for everyone. It's unfair, it's unjust, and - it's totally preventable. We can push world leaders to end this injustice by tackling four big IFs .

And the four Ifs are:
  • Tax. We stop big companies dodging taxes in poor countries, so that millions of people can free themselves from hunger.
  • Aid. We make the right investments to stop people dying from hunger, and help the poorest people feed themselves.
  • Land. We stop poor farmers being forced off their land, and use crops to feed people, not fuel cars.
  • Transparency. We force governments and big corporations to be honest and open about their actions that stop people getting enough food.



We are delighted to see this campaign, with TJN's core concerns right at the heart of it. This marks real progress. 100 major charities and an assortment of many people, including Bishop Desmond Tutu of South Africa, are supporting this campaign.

0 comments links to this post

Dutch lawmakers fed up about Netherlands role as a $13 trillion tax haven

Jesse Drucker has another in-depth exposé of the Netherlands' shady role in helping many large multinationals avoid tax, free-riding on the benefits of societies elsewhere and then sticking everyone else with the bill.

It's an excellent story, and it's great to see that quite a lot of people in the Netherlands are ashamed of the role their country is playing.
"The Netherlands’ role as a $13 trillion relay station on the global tax-avoiding network is prompting a backlash. The Dutch Parliament is scheduled to debate the fairness of its tax system today. Lawmakers from several parties, including members of the country’s governing coalition, say they want to remove a stain on the nation’s reputation.

“We should not be a tax haven,” said Ed Groot, a parliament member from the Labour Party, which along with the People’s Party for Freedom and Democracy took power in November. Both ruling parties are “fed up with these so called PO Box companies,” he said. “If they go somewhere else we are not sorry at all because they spoil the name of Holland. Otherwise you can wait for retaliation measures and this we don’t want.
. . .
“Governments around the world have to cut budgets and at the same time multinational companies are avoiding taxes,” said Arnold Merkies, a Dutch parliament member from the Socialist Party. . . . we connect the tax havens here; we have a harmful role in the world and have a responsibility toward the rest of the world.””
Very wise, very accurate, and very welcome, words. The Netherlands is harming developed and developing countries alike with its beggar-my-neighbour tax strategies. Last month, the European Commission declared war on tax avoidance and evasion, which it said costs the EU 1 trillion euros a year and advised member states -- including the Netherlands -- to create tax-haven blacklists and adopt anti-abuse rules.

The story contains much, more on this topic, among other things looking at Yahoo!'s tax strategies, and noting the purchase of one of these pernicious Dutch tax-dodge trust companies by the New York private equity giant Blackstone. (As if private equity companies aren't already aggressive enough on tax dodging: now they want to help others get in on the game too.)
    
More research on the Netherlands' role as a tax haven can be found here from our Dutch colleagues Somo.

0 comments links to this post

Tuesday, January 22, 2013

Links Jan 22

Switzerland's oldest bank shuts down. Does it mean the end of super-secret banks? Economic Times
Cites Jason Sharman and Swiss whistleblower Ruedi Elmer. Hat tip: Hans-Rudolf Scheller.

How the Vatican built a secret property empire using Mussolini's millions Guardian
"Papacy used offshore tax havens to create £500m international portfolio, featuring real estate in UK, France and Switzerland."

242 Billion USD Have Been Transferred From Hungary To Offshore Tax Havens xpatloop

United Daily News: FATCA, Starbucks and Morris Chang's call Focus Taiwan

Ethical investors step up focus on tax avoidance Reuters

The University must come clean on “tax haven” dealings Nouse - The University of York's student newspaper

Nouse is also writing on What is the difference between tax evasion and tax avoidance?

Dell Leveraged Buyout May Hinge on Cash Hoard Outside U.S. Bloomberg
"They have systematically played the global tax avoidance game, and now find themselves with cash just beyond their reach, at least without taking a big tax and financial accounting hit."

With Tax Advantages Looking Shaky, Private Equity Seeks a New Path Dealb%k

As Companies Seek Tax Deals, Governments Pay High Price New York Times
See also: Summing Subsidies clawback

UK: Taxman sees increased avoidance by big business Reuters

UK: MPs to quiz big four accountants on tax avoidance Reuters

United, American Airlines Accused of Tax Avoidance
AIN Online
Airlines accused of running “sham” business operations.

Goldman bankers get rich betting on food prices as millions starve The Independent

0 comments links to this post

How multinationals help themselves and everyone else evade tax

Lee Sheppard of Tax Analysts is on blistering form, in a new article entitled Will U.S. Hypocrisy on Information Sharing Continue?
"Multinationals are an obstacle to the tax evasion discussion, not merely because they minimize their own taxes — which separate company accounting gives them license to do — but also because they lend legitimacy to tax havens and enablers.

Multinationals keep tax havens in the bank clearing system and keep enablers like Ireland and the Netherlands in the U.S. treaty system. For good measure, they resist information sharing because it would interfere with their ability to tell different stories to different governments."
In other words, by using tax havens for tax avoidance, they give these havens massive credibility and backing - and this enables havens to get on with the core business of assisting tax evasion and other crimes. (And for the record: a lot of the transfer pricing games that multinationals play constitute tax evasion, rather than avoidance, though much of it is in a grey area between the two.)

This is not exactly the main focus of Sheppard's article, which is subscription-only and covers a fascinating theme. We have been sent some of it, and will blog the rest of it if and when we get access to the full article.

An update: we now have the full article, but not yet the time to blog it properly. Still, here's another typically feisty snippet:
"The United States maintains the ancient British common law revenue rule, which says that one country will not assist another country in the en- forcement of its tax laws in the first country’s territory. The revenue rule originally allowed the British to function as pirates and Britain as a tax haven."
And she goes on to explain how the Revenue Rule is starting to break down . . .  

0 comments links to this post

Tax incidence: is the corporate income tax progressive?

We missed this, last September. From the nonpartisan Urban-Brookings in the U.S., a study of the 'incidence' of corporate taxes.



Their conclusion? They have somewhat reduced their earlier estimate of the progressivity of the tax, estimating now that 20 percent of the corporate income tax burden as falling on labor, 20 percent on the normal return to all capital, and 60 percent on the supernormal returns to corporate equity (shareholders.) Overall:
"The corporate income tax remains a very progressive component of the federal tax system."
Which shouldn't really surprise anyone. Tax corporations, and you are effectively taxing their mostly wealthy owners (OK, OK, some are pension funds, but ownership as we all know is concentrated at the very top of the wealth and income scales). This table above is of course overly precise, and is modeled only on the United States. Other jurisdictions would face different assumptions and rates and so on. And results are likely to vary, sector by sector, company by company. No wonder there's so much disagreement on this topic.

But this kind of study is important, because it helps rebut the lobbyists' routine claim that "most economists agree that the burden of corporate taxes falls on workers." Which is total nonsense.

More on tax incidence here, here, here, here and here.


0 comments links to this post

The skivers and shirkers are the economic rent extractors

From the UK's Guardian newspaper:
"This is where the debate about workers and shirkers, strivers and skivers should have led. The skivers and shirkers sucking the money out of your pockets are not the recipients of social security demonised by the Daily Mail and the Conservative party, the overwhelming majority of whom are honest claimants. We are being parasitised from above, not below, and the tax system should reflect this."
Although this is a UK-focused story, it has international relevance. As we've noted several times before, Land Value Tax is an essential element of any good tax mix. It's progressive, it doesn't damage productivity, and it curbs the abusive practice of economic rent extraction. The article has a particular opinion:
"It's not really a tax. It's a return to the public of the benefits we have donated to the landlords. When land rises in value, the government and the people deliver a great unearned gift to those who happen to own it."
What's not to like?

Richard Murphy expands on this here.



0 comments links to this post

Monday, January 21, 2013

Links Jan 21

BRICS pledges to check abuse of tax treaties The Statesman

Retro immunity as bad as retro tax Hindu Business Line

"The Government’s decision to not only put off GAAR (General Anti Avoidance Rules) to April 1, 2015, but to make the regime innately pliable deserves condemnation."

Nokia tax probe: PwC says India arm questioned Reuters

Why Corporate Tax Fairness Should Be Part of the CSR Agenda Triple Pundit

Irish EU presidency must tackle tax havens Public Service Europe


British taxpayers funded Ireland's £14bn bail-out The Telegraph


France to pass law on new taxes for web giants by year-end Yahoo News

Amazon takes a tax hit, finally Columbia Journalism Review

New Zealand: Muzzle on Inland Revenue Department over firms' tax affairs may go stuff.co.nz
"The Government may scrap a centuries-old law that prohibits Inland Revenue from discussing the tax affairs of companies."

Swiss advocate voluntary rules for secretive commodities firms Reuters

U.S. "Wall-Street-Bonus" Lew to Replace "Tax-Avoider" Geithner at Treasury Forbes

UK: ‘Buddy’ scheme to give more multinationals access to ministers Treasure Islands/ Guardian

Exposed: The regime of fear inside Barclays – and how the boss lied and shredded the evidence Treasure Islands / Daily Mail

An open letter to Anthony Jenkins at Barclays Bank. Rowans Blog

Stefano Gabbana and Domenico Dolce Become Billionaires As They Face Tax Evasion Charges Fashionista

0 comments links to this post

Call for Papers: Financing Development Through Tax

From TJN-Africa:

CALL FOR PAPERS: Financing development through Taxation: Opportunities and Challenges from Developing countries perspectives.

A TAX JUSTICE NETWORK- AFRICA RESEARCH SEMINAR


Dear All,

Tax Justice Network-Africa (TJN-A) will be holding a Tax Justice Research Seminar on the 25th and 26th of March 2013, in Tunis, Tunisia prior to the World Social Forum (WSF). The research seminar  will bring together researchers, academicians, students, senior scholars, policy staff from civil society and other international organisations, tax practitioners and other interested professionals. The conference presents a platform for the advancement of research supporting the tax justice agenda, focusing on interaction and innovation. The conference hence offers a wide international perspective, audience and atmosphere for interactive and mutual exchange among scholars, activists and practitioners in the tax justice discourse.

TJN-A therefore invites submission of original, unpublished and substantial papers on aspects of Tax Justice, including but not limited to:

·         Domestic Taxation

·         Taxation and Natural Resource Governance

·         Tax Competition and other Harmful Tax Practices

·         Illicit Financial Flows

TJN-A will cater for travel expenses and accommodation for the authors whose papers will be selected for presentation.

Important Dates

Submission of Abstracts: 31 January 2013

Submission of Full Paper:           1 March 2013

Send full papers to: research@taxjustice.net

For more information on the research seminar contact Johannes Chiminya, Research Officer, Tax Justice Network-Africa (TJN-A) on:research@taxjustice.net

Please find attached the full Call for Papers.
Regards


APPEL A COMMUNICATIONS:

Financer le développement par le biais Fiscalité: Opportunités et défis du développement perspectives des pays.

UN SÉMINAIRE D'IMPÔT DE JUSTICE DE RECHERCHE EN RÉSEAU AFRIQUE



Bonjour à tous,

Tax Justice Network-Africa (TJN-A) tiendra un séminaire de recherche sur la justice fiscale. 25 et 26 Mars 2013, à Tunis, en Tunisie avant le Forum social mondial (FSM) Le séminaire de recherche réunissant des chercheurs, des universitaires, des étudiants, des chercheurs de haut niveau, le personnel politique de la société civile et d'autres organisations internationales, les fiscalistes et autres professionnels intéressés. La conférence est une plate-forme pour la promotion de la recherche à l'appui du programme de justice fiscale, en se concentrant sur ​​l'interaction et l'innovation. La conférence offre donc une perspective à l'échelle internationale, le public et l'ambiance d'échange interactif et réciproque entre des universitaires, des militants et des praticiens dans le discours de la justice fiscale.

TJN-A invite donc la soumission de documents inédits, originaux et importants sur certains aspects de la justice fiscale, y compris mais sans s'y limiter:

• la fiscalité nationale

• La fiscalité et la gouvernance des ressources naturelles

• Concurrence fiscale et autres pratiques fiscales dommageables

• les flux financiers illicites

TJN-A pourvoir aux frais de déplacement et d'hébergement pour les auteurs dont les communications seront sélectionnées pour une présentation.

Dates importantes

Soumission des résumés: 31 Janvier 2013

Présentation du Livre complet: 1 Mars 2013

Envoyer communications complètes à: research@taxjustice.net

Pour plus d'informations sur le séminaire de contact de recherche Chiminya Johannes, agente de recherche, Tax Justice Network-Africa (TJN-A): research@taxjustice.net

 S'il vous plaît trouver ci-joint l'appel à communications complet.

 Cordialement

0 comments links to this post

Friday, January 18, 2013

Links Jan 18

Spanish government: New scandal of corruption and dirty money El Mundo
More on a story linked yesterday, reporting that the Popular Party was part financed for years with dirty money by the former party treasurer, routed via a Swiss bank account and a Panama company.

Greece In Tax Evasion Probe Of Ex-Chancellor Sky News
Greece's parliament has voted to launch a criminal investigation into allegations that a former finance minister mishandled the "Lagarde list" of suspected tax cheats, erasing the names of three of his relatives.

The neoliberal resistance Cronista (In Spanish)
On the Think 20 meeting at the G20 December 2012 sessions in Russia - Jorge Gaggero, the Think 20 participant for Argentina, critiques the proceedings and outcomes.

U.S.: Treasury and IRS Issue Final Regulations to Combat Offshore Tax Evasion U.S. Department of the Treasury
On implementing the Foreign Account Tax Compliance Act (FATCA).

South Korea: Customs agency to toughen clampdown on offshore tax evasion Yonhap News Agency

Italy launches data system to combat tax evasion Live Trading News

Channel Islands Collaboration Taking Shape Tax-News

Finland weighs into Cyprus laundering row Famagusta Gazette

US Senate panel to hold anti-money laundering hearing TrustLaw

JPMorgan Said to Face Order to Tighten Money-Laundering Controls Bloomberg Businessweek

The Untouchables PBS Frontline

Coming up on Jan 22, an investigation into why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages.

HSBC Laundering Charges The Colbert Report

"Just to show how sorry they are for funding murder, HSBC decides to partially defer bonus compensation for senior officials."

0 comments links to this post

Switzerland threatened with European tax blacklist

From World Radio Switzerland:


Switzerland has six months to improve its tax practices or it will be blacklisted by the European Commission.
That’s a warning given by a European Commissioner for Taxation and Customs, Algirdas Semeta, to the print media in Switzerland. He says if the EC’s expectations aren’t met some EU countries could adopt “defensive measures.”

The Commission had wanted Switzerland to agree to an automatic exchange of information, similar to the FATCA law it’s signed with the United States. But Switzerland has so far been opposed to such an agreement with the EC."
We don't have more details, other than an analysis from an informed commentator who said:
"The EU Member State will not allow any corporation to deduct an expense for tax purposes if the expense originates in Switzerland. This could even mean cost of good purchased from Switzerland is not tax deduct able, never mind services, labour, etc."
Which, if true, would be strong medicine indeed.

Update: an interview with EU Tax commissioner Algirdas Semeta in Le Temps newspaper. He said there are seven Swiss fiscal regimes - three cantonal and four federal - which are 'problematic' for Europe, he said. He rules out 'cohabitation' of Swiss "Rubik" deals (which TJN has long opposed) with European transparency principles, and promises to "defend the interests of our states."

0 comments links to this post

Caymans Islands promises to increase transparency?

The Financial Times has an interesting report this morning:
The Cayman Islands are poised to break with decades of secrecy by opening thousands of companies and hedge funds domiciled on the offshore Caribbean territory to greater scrutiny.
Interesting, though with all such moves one always has to read the small print, and Cayman will have to do a lot to substantially shift its #2 position on TJN's Financial Secrecy Index: we will see how serious this is. Still, on this evidence it does look promising.  The reforms, the FT says in what appears to be an exclusive report (which isn't covered in local Cayman news so far,) reportedly involve the authorities making public the names of thousands of previously hidden companies and their directors.

In proposals sent to Cayman-based hedge fund businesses and seen by the Financial Times, the Cayman Islands’Monetary Authority (CIMA) has outlined plans to create a public database of funds domiciled on the island for the first time, listing funds’ directors, pending an ongoing consultation process due to close in mid-March. Make no mistake, though: this isn't obviously an end to Cayman's financial secrecy. We see no signs that it is preparing to ditch its Confidential Relationships (Preservation) Law enforcing financial secrecy, for instance.

Pressure for reform on the Caymans has been relentless, not just from the likes of TJN and the U.S. media which last year focused relentlessly on the Cayman-heavy secrecy covering the financial affairs of U.S. presidential candidate Mitt Romney. Earlier, the FT reported on the gigantic scandal of Caymans-based directors sitting on the boards of hundreds of hedge funds each, clearly unable to fulfil their duties of oversight properly. Warnings about this sort of thing had been coming from officials in the Cayman Islands itself, for some time.

The tax haven has been struggling, too, under the weight of massive corruption scandals and fiscal problems. But pressure has come from other quarters too:
Most of the pressure for change, however, was applied by hedge fund investors rather than politicians. Many of the world’s largest pension funds have until now had no way of verifying details of the Cayman funds they invest with or their directors.

“We have been screaming for more transparency for some time now,” said Vincent Vandenbroucke, head of operational due diligence at Hermes BPK, which makes hedge fund investments on behalf of some of the UK’s biggest pension funds. “It’s no longer acceptable for [offshore] directors to act as rubber stamps.”
As with the debates over corporate tax avoidance, TJN finds itself allied with large sections of the business community, against those sections that seek to exploit distortions in markets. This appears, at least on this evidence, to be yet another vindication of our position.

How about some transparency now from the British Virgin Islands?

0 comments links to this post

Thursday, January 17, 2013

Links Jan 17

Semeta Pushes End To Savings Tax Impasse Tax-News
"European Union (EU) Tax Commissioner Algirdas Semeta has reiterated calls for Austria and Luxembourg to give up their blockade of plans for a new Savings Tax Directive."

Banking data debate offers no easy answers swissinfo
On Switzerland, and resistance to automatic exchange of information for tax purposes.

Hungary to tax offshore wealth, ask for Swiss help Reuters

"Hungary will start similar talks with other European countries like Austria and notably off-shore haven Cyprus."

Swiss financial leaders invited to G20 meetings swissinfo

"Switzerland has for the first time been invited to take part in this year’s meetings of the finance ministers and central bank governors of the G20 ... despite not being a member."

Why Switzerland remains trapped in OECD hell Le Temps (In French)
See also: The three points that Switzerland must correct Le Temps

Judge traces millions of Euro held by Luis Bárcenas, former treasurer of ruling party, in Swiss Bank accounts El País (In Spanish)

Government of France: Annual report on the Network of Conventions for Exchange of Information

Limited tax payment disclosure by Shanghai-listed resource companies Global Witness
New research reveals capability and widespread support to strengthen transparency.

Tax ‘theft’ continues as ‘fat cats’ get fatter Zambia Daily Mail

From an article by Nick Mathiason for The Bureau of Investigative Journalism.

Amazon fights $234 million tax liability in Tax Court Reuters

Exposing the lost billions Eurodad / Third World Resurgence

Tax auditors in the spotlight The Jakarta Post

Poorest Three-Fifths of Americans Get Just 18% of the Tax Cuts in the Fiscal Cliff Deal Citizens for Tax Justice

0 comments links to this post