Tuesday, May 27, 2008

International News - May 27

** Also see our permanent list of past story summaries; and Offshore Watch for more stories. **

Top EU politicians: under-regulation, inadequate supervision, an undersupply of public goods
May 27 (TJN) - Thomson-Reuters has reported on a new letter sent by top European politicians and notables about the financial crisis and their frustration that the European Commission has largely opted for industry-led solutions to rectify flaws highlighted by market turbulence." The signatories include some of the biggest names in European political life of recent years.

Bono, Baker and the snow globe
We would like to highlight a new documentary film about tax havens. Featuring TJN's John Christensen, Raymond Baker of Global Financial Integrity, Richard Murphy, and many more, it was broadcast recently on France 2 television, and gained a large audience and generated significant debate in France. It shows the Irish singer Bono being presented with a snow globe - representing a tax haven. In French.

Tax competition: TJN in FT Economists' forum
May 26 (TJN) - TJN’s John Christensen writes a comment piece about tax competi
tion and co-operation in the Financial Times’ prestigious Economists’ forum, responding primarily to an article written by the FT’s chief economics commentator Martin Wolf.

Switzerland: attacking our democracies
May 26 (TJN) – Looking at a telling quote from a Swiss banker: a perfect example of how tax havens justify their barbed intervention into other nations’ democratic processes.

Regulators now need to think globally
May 25 (FT) – A review of Global Financial Regulation: The Essential Guide. It is only a matter of time before we confront a serious crisis in an institution with complex cross-border ramifications. Howard Davies and David Green offer a superb account of the international regulatory system, together with a set of proposals for its reform that are highly relevant.

US will crack down on corrupt mining firms
May 25 (Observer UK) - US quoted mining firms will be forced to disclose every payment over $100,000 in a measure to be brought before US legislators next month. The move has been hailed as one of the most significant developments in the drive to ensure transparency and thwart corruption in the extractive industries.

Ramos Horta calls for Timor to be tax free
May 23 (Radio Australia) - East Timor's President has again declared his desire to see the fledgling nation become a tax-free state. But Jose Ramos Horta is now saying he would like to see it happen before the end of the year. But the Minister for Economy and Development, Joao Gonsalves, thinks otherwise. Even the opposition agrees with the Minister.

Transnational tax: this time Darling shouldn't back down
May 25 (The UK Independent) – A think piece about the tax woes of the embattled UK Prime Minister and Labour Party. Another tax, another retreat. That seems to be par for the course with the Government's fiscal policy. Last week Chancellor Alistair Darling signalled that the Treasury, faced with an exodus from Britain of multinational companies, would backdown on plans to tax earnings from foreign subsidiaries.

THE TAX JUSTICE DIALOGUE
May 22 (Tax Research) - It was good to be in the Netherlands yesterday at the conference of the Tax Justice Network in that country. The event did not just attract TJN people or development agencies (although it was good t
o see them). PWC were also there in force, and contributing. So too were academics from several Dutch universities, and as welcome, the Dutch finance and foreign ministries.

Fuel-Tax Cheating Multiplies in U.S. as Bootlegging Pays Off
May 23 (Bloomberg) -- Presidential candidates John McCain, Hillary Clinton and Barack Obama are bickering over whether to suspend the 18.4-cent-a-gallon federal gasoline tax to ease the impact of rising prices. Some people are increasingly taking matters into their own hands.

Denmark–a tax haven until 2010?
May 21 (AINonline) - Value Added Tax (VAT) and import duties for aircraft currently stand at zero percent in Denmark. This allows international operators to escape tax by basing their aircraft in Denm
ark. However, zero-rated VAT is in contradiction with European law and pressure is mounting on Danish legislators to adjust their taxes upward.

Surging inflation will stoke riots and conflict between nations, says report
May 23 (Guardian UK) - Riots, protests and political unrest could multiply in the developing world as soaring inflation widens the gap between the "haves" and the "have nots", Merrill Lynch predicted yesterday. Merrill's chief international economist said this could be the tip of the iceberg, warning of more trouble "between nations and within nations" as people struggle to pay for everyday goods

Grenada amending offshore laws
May 26 (AP) — Grenada is relaunching its offshore sector after a six-year hiatus that was prompted by a multimillion-dollar (euro) fraud scheme when the First International Bank of Grenada collapsed and investors were cheated out of US$170 million (euro108 million).

Siemens defendant says slush funds ordered
MUNICH, Germany, May 26 - A key defendant accused of enabling corruption at German engineering giant Siemens descibed on Monday how he built a system of slush funds and front firms at the request of his superiors.

New Report from CTJ: Bush Administration Demands that Congress Increase the Deficit with Tax Breaks for Business
May (CTJ) - A new report from Citizens for Tax Justice examines the $54 billion tax cut bill that the President is threatening to veto because it includes revenue-raising provisions to offset the costs. The President's stance threatens a needed improvement in the Child Tax Credit for poor families with children, as well as several other tax changes sought by lawmakers.

Exemptions for Charities Face New Challenges
May 26 (NY Times) - Authorities from the local tax assessor to members of Congress are increasingly challenging the tax-exempt status of nonprofit institutions — ranging from small group homes to wealthy universities — questioning whether they deserve special treatment.

Nigeria hands big tax bill to Shell and Exxon
May 23 (FT) - Nigeria is demanding Shell and ExxonMobil pay a combined total of almost $2bn in unpaid taxes and revenues after a review of contracts covering giant offshore oilfields signed in the early 1990s. The committee concluded that Shell and ExxonMobil owe the government a total of $1.9bn after reviewing the way tax breaks were implemented under the agreements, and the pricing system for gas sold by Shell.

The Coming Tax Hike
document link: http://www.cbo.gov/ftpdocs/92xx/doc9216/LongtermBudget_Letter-to-Ryan.pdf
May 19 (Mankiw blog) - CBO writes to Congressman Paul Ryan: “The Congressional Budget Office (CBO) has prepared the attached analysis of the potential economic effects of...using higher income tax rates alone to finance the increases in spending… With no economic feedbacks taken into account and under an assumption that raising marginal tax rates was the only mechanism used to balance the budget, tax rates would have to more than double.

Spanish steps
May 15 (The Economist) - Following the Northern Rock affair, the reputation of Britain's Financial Services Authority (FSA) has taken the biggest knock of all the regulators. In Madrid, by contrast, a sense of quiet satisfaction prevails, thanks to two distinctive policies. One helped Spanish banks to avoid the worst of the subprime fallout and the other to prepare for the downside of an economic cycle.

Offshore-Account Holders Bite Their Nails
May 21 (WS Journal) - As government officials intensify a multinational crackdown on offshore bank accounts, many wealthy Americans who use them to illegally shield income are facing a difficult decision: whether to turn themselves in -- and if so, how.

Three big challenges for Berlusconi’s cabinet
May 21 (FT) - It would be suicide for the new government to trash the remarkable results achieved by the Prodi government in cutting tax evasion. It is estimated that up to €20bn ($31bn) was raised by widening the tax base. The tradition of Mr Berlusconi’s cabinets, by contrast, has been one of declining tax revenues even when it left tax rates unchanged. The first steps of the new government are not encouraging.

Taking on the free trade bogeyman
May 19 (FT) - It is time to worry when both US Democratic presidential hopefuls say too much free trade is a bad thing. There are alternatives to protectionism. The US could take the lead in global co-operation to ensure the rich pay taxes.

How to survive a transfer pricing audit in India
May 22, (TP Week) - The Indian Transfer Pricing Regulations came into force in 2001 with the transfer pricing audits effectively beginning from 2003. The Central Board of Taxes in India introduced a special cell of trained officers which is responsible for all transfer pricing audits. Over the past four years, there has been a significant increase in the number of transfer pricing audit officers (TPOs).

Tax Evasion: Contracts
May 19 (UK parliament) - UK Parliamentary questions on tax evasion, tax co-operation re tax havens, tax relief on pensions, membership of and criteria of membership for the Business-Government forum on tax, and more.



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