Tax Research on tackling offshore

The Tax Research blog is rolling out a series of posts on tackling offshore. This TJN blog will provide future updates to create a longer list. The first three posts are below, with very brief summaries:

Setting the scene
1. Starting reform at home
2. Reform in secrecy jurisdictions.
3. Tackle issues in the international arena.
4. Philosophy needs to change.
5. Help developing countries get the information they need.

Tackling offshore begins at home
Three goals:
1. The first is to make sure there is information on public record to ensure that the users of limited liability entities, trusts and other related entities are accountable for what they do.
2. I’d want governments held to account.
3. TIEAs and DTAs to be offered to whomsoever wants them, subject only to human rights limitations.

Tackling offshore requires effective information exchange from secrecy jurisdictions
Not Tax Information Exchange Agreements, which do not and cannot work, but real information exchange. It points to a 2009 report here. On the subject of information exchange, note our fairly recently created information exchange page, with regular updates, here.

Tackling offshore internationally
1. Country-by-country reporting is an essential part of this - see a summary here.
2. Tax evasion must be made a predicate offence for things like money-laundering.
3. Unitary taxation with formulary apportionment is essential to tackle the giant problem of transfer pricing abuse (see TJN's web section on all this here.)
4. Monitor regulation properly, rather than simply check whether the right boxes are ticked.
5. Sanctions against nation states that do not comply. These should be tax-focused sanctions.

Tackling offshore – by changing the philosophy of opacity
Two principal concerns: we have forgotten why we allowed the incorporation of companies, and we have forgotten why it was we allowed trusts to come into existence.

Tackling offshore – with a bias to developing countries
1. These countries must be supplied with the direct aid they need to create viable tax systems.
2. These countries must be specifically encouraged to recover information from secrecy jurisdictions on the structures maintained by their citizens in those places, and be provided with all the technical assistance required to ensure that this data van be handled and used.
3. These countries must be allowed to develop tax systems that suit their particular needs.

For the details on all these proposals, click on the links.