Thursday, May 08, 2008

International News Links

A selection of stories from the last few days. A longer history of news links is available here.
Also see Offshore Watch

Charles Taylor again, and Citibank
May 8 (TJN) - We bring you an update on investigations into the financial affairs of the former Liberian strongman Charles Taylor. The Special Court's chief prosecutor, Stephen Rapp, said a London law firm working with the court had found records of two bank accounts in Taylor's name at Citibank in New York.
(and )

France and Germany to step up drive against evasion
May 8 (FT) - France and Germany want G7 finance ministers to mandate the Organisation for Economic Co-operation and Development to revisit its blacklist of tax havens, in an effort to step up the momentum against tax evasion in the wake of Germany's big Liechtenstein tax investigation this year.

Private banks face tax evasion crackdown
May 8 (FT) - The world’s leading private banks could be facing an international government crackdown on tax evasion. Matters could escalate this month, when European Union finance ministers review arrangements allowing private banking centres, such as Switzerland and Liechtenstein, to retain client confidentiality in return for taxing foreigners’ savings.

Visitors prefer banks in secluded valley
May 8 (FT) - Kleinwalsertal, a picturesque blind valley nestling amid Austria’s western Alps. For more than 100 years, the narrow valley in the Vorarlberg region has enjoyed special status. The valley was ceded to Berlin for customs purposes while retaining Austrian sovereignty. The valley has exploited its special status to develop an additional asset – private banking for foreigners.

AP IMPACT: An islands tax haven for US defense contractor
May 8 – AP - When the Pentagon announced an obscure California company had won a lucrative military contract, no one mentioned any plans for a Caribbean outpost — a tropical shell the company quickly created that allowed it to duck millions in taxes and deflect U.S. lawsuits.

Amendment would prohibit contracting with firms in tax havens
May 7 (Federal Times) - Sen. Byron Dorgan, D-N.D., said May 7 he will offer an amendment to the fiscal 2008 emergency Defense Department supplemental to restrict any of the supplemental funds from going to firms that set up offshore subsidiaries to avoid paying U.S. taxes.

Old Mutual mulls joining the list of companies looking for a foreign tax haven
May 8 – Times (UK) - British American Tobacco, Britain’s twelfth-largest company, paid no UK tax last year. On pre-tax profits of £3.08 billion, the company faced a UK tax charge of £977 million, but this was cancelled out by foreign tax credits, adjustments and deferred charges. A spokeswoman for BAT confirmed that the company paid no corporation tax in the UK during 2007. Building on work by TJN’s Richard Murphy.

West Indies tax havens attract Canadian cash
May 7 (Globe and Mail) - Several of the top 10 destinations for Canadian direct investment abroad in 2007 are known for their favourable tax treatment of foreign money. These include Barbados, the Bahamas, Bermuda and the Cayman Islands, which accounted for 16.5 per cent of total Canadian foreign direct investment last year, up sharply from 5.4 per cent a decade earlier, Statistics Canada said in a report.

Value-Added Taxes: Lessons Learned from Other Countries on Compliance Risks, Administrative Costs, Compliance Burden, and Transition. GAO-08-566, April 4
Highlights -
United States Government Accountability Office, Report to Congressional Requesters (April 2008) Dissatisfaction with the federal tax system has led to a debate about U.S. tax reform, including proposals for a national consumption tax. One type of proposed consumption tax is a value-added tax (VAT), widely used around the world.

Il Corriere della Sera.
Two Sicilian businessmen have been arrested together with a Swiss banker for illegaly exporting capital out of Italy in a "mafia" linked case. The Swiss banker is the co-director of the Arner Bank, in Lugano, and a member of a Swiss banking association. In Italian.

The Copenhagen Consensus
April (Foreign Affairs) The Danes are passionate free traders. The World Economic Forum's Global Competitiveness Index ranks Denmark third, just behind the United States and Switzerland. Denmark's financial markets are clean and transparent, its barriers to imports minimal, its labor markets the most flexible in Europe, its multinational corporations dynamic and largely unmolested by industrial policies, and its unemployment rate of 2.8 percent the second lowest in the OECD. On the other hand, Denmark spends about 50 percent of its GDP on public outlays and has the world's second-highest tax rate, after Sweden; strong trade unions; and one of the world's most equal income distributions.

May 7 (Tax Research) – Richard Murphy unpicks a CEO’s remuneration package to look at one of the real reasons why a company is relocating to a tax raider haven. Follows a series of Murphy investigations into companies that claim to be relocating because of UK tax law.

In Europe, New Scrutiny of Ethical Standards
May 7 (NYT) - A series of bribery investigations at leading European companies has helped to accelerate compliance with global anticorruption standards as managers recognize the risk to their brands and reputations, legal analysts and international regulators say.

Top UBS banker detained by US
May 7 (FT) - One of the most senior private bankers at UBS, the world’s leading wealth manager, has been detained by authorities in the US investigating whether the Swiss bank helped its American clients evade tax.

UBS Announces $10.9 Billion Loss, Job Cuts, and Tax Probe
May 7 (NYTimes) - The Swiss ban UBS said Tuesday it had sold $15 billion of subprime mortgage debt and would cut 5,500 jobs as part of its cleanup. But the bank already faces new challenges elsewhere. Customers are withdrawing money from its asset- and wealth-management business and it is still looking for a long-term strategy for its investment banking unit.

End-of-the-World Trade
LRB ( May) – A profound, fascinating and intensely readable exploration of the worlds of risk, credit and international finance.

Knowing me, knowing you
May 6 (Guardian UK) In Norway, you can look up anyone's income and tax payments on the internet. And why not? Norway makes these figures available to increase transparency in society. The idea is that when everyone knows what everyone else is earning the risks of personal corruption are less.

Seven habits finance regulators must acquire
May 6 (FT) by Martin Wolf“Simply stated, the bright new financial system – for all its talented participants, for all its rich rewards – has failed the test of the market place.” Paul Volcker, April 8 2008 Tighter regulation is desirable in the longer-run interests of the industry itself, let alone the public’s. I would like to analyse what I see as the fundamental issues. I am influenced in doing so by an excellent recent paper* from Nouriel Roubini of New York University’s Stern Business School.

A strategy to promote healthy globalisation
May (FT) – By Lawrence Summers - The US should take the lead in promoting global co-operation in the international tax arena. There has been a race to the bottom in the taxation of corporate income as nations lower their rates to entice business to issue more debt and invest in their jurisdictions. Closely related is the problem of tax havens that seek to lure wealthy citizens with promises that they can avoid paying taxes altogether on large parts of their fortunes. It might be inevitable that globalisation leads to some increases in inequality; it is not necessary that it also compromise the possibility of progressive taxation.

Prem Sikka on the tax avoidance scam operated by some PFI companies
May (Chartist) - The operation of the Private Finance Initiative (PFI) provides illustration of the ways in which corporations feed off the taxpayer and then develop strategies for eroding the tax base.

French Firm Scrutinized In Global Bribe Probe
May 6 (WSJ) - French and Swiss authorities are investigating whether Alstom SA, a Paris-based engineering giant, paid hundreds of millions of dollars in bribes to win contracts in Asia and South America between 1995 and 2003, people involved in the matter say.

Swiss banks refuse blame for foreign clients' tax evasion
May 5 (AP) - Swiss banks cannot be expected to police foreign clients' tax affairs, one of the country's top banking officials said Monday, rejecting German demands for greater cooperation to catch tax evaders.

The world needs a workable air travel tax
May 5 (FT) – An exploration of the possibilities and pitfalls in an air travel tax.

Vanuatu to ditch tax haven
May 6 – The Australian - Vanuatu Government will scrap its secretive company law provisions within months as part of a legal overhaul aimed at abolishing the Pacific nation's reputation as an international tax haven.

Vanuatu political split over tax-haven status
May 7 (The Australian) - Australian Federal Police's $100 million money laundering sting in Vanuatu has caused a political rift in the Pacific nation, with its finance minister chastising the corporate regulator over its plan to abolish the country's tax haven status.


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