Links May 26

Cat-and-mouse dance in tax evasion struggle Swissinfo
May 20 - On a story we have been blogging - see here. Switzerland’s bid to rid itself of the tax haven mantle has resulted in a delicate game of strategy with the European Union and individual EU member states. At stake is Swiss banking secrecy, Switzerland’s sovereignty as a bilateral EU partner, countless billions of assets parked in Swiss banks and the multiple millions this wealth should be contributing to the tax coffers of other countries.

U.S.: Stimulus Contactors Who Cheat on Their Taxes: What Happened? U.S. Permanent Subcommittee on Investigations
May 24 - More than $24 billion in stimulus funds went to contractors and grantees who owed the government hundreds of millions of dollars in tax debts, according to a new report from the Government Accountability Office (GAO). GAO identified 3,700 contractors and grantees who received stimulus funds, despite collectively owing the government $757 million in back taxes.

MEPs call for moratorium on public financing of mining projects Eurodad
May 24 - In an open letter addressed to the EU president, the EU presidency and the European commission, 50 MEPs from 4 different political parties call for “a moratorium on EU public financing for mining projects until adequate standards and regulations are in place.” See also: European Parliament makes clear it wants full country-by-country reporting Tax Research UK

In a first, Mauritius gives details of black money The Times of India
May 26 - Yielding under "pressure", Mauritius has for the first time provided bank details of a person being investigated by the Income Tax Department (ITD) for tax evasion and money laundering. The Central Board of Direct Taxes (CBDT) is in favour of re-negotiation of the tax treaty with Mauritius so that India could have access to banking details besides tax-related information.

Armenia: Sarkisian Warns Big Business Over Tax Evasion, Unfair Competition azatutyun.am
May 26 - President Serzh Sarkisian warned Armenia’s leading entrepreneurs on Thursday against evading taxes and obstructing competition. He said, “It is unacceptable when an entrepreneur spends a lot of time thinking about and developing mechanisms for avoiding taxes or abuses his dominant positions in markets in order to make excessive profits”.

HSBC and Goldman Sachs held $335m of Libyan state oil money Global Witness
May 26 - Global Witness has been leaked a draft presentation that appears to show the investment position for the Libyan Investment Authority (LIA) as of 30 June 2010, which stood at $53 billion. The information shows the diversity of Libyan assets held by major financial institutions. “It is completely absurd that banks like HSBC and Goldman Sachs can hide behind customer confidentiality in a case like this."

Tough Swiss Regs Induce UBS to Consider Glass Steagall Lite Partition, So Risky Ops May Become US Problem naked capitalism
May 26 - Switzerland recognizes that it cannot credibly backstop banks whose assets are more than eight times the country’s GDP. UBS apparently plans to partition the bank in a Glass-Steagall lite split, leaving the traditional banking operations in Switzerland and putting the investment bank in a separate legal entity outside Switzerland. The Wall Street Journal questions whether this will work. Hat tip The Cynical Tendency.

Conviction of Lawyers in Tax Shelter Case Seen as Deterrent New York Law Journal
May 26 - The conviction of four people in the Jenkens & Gilchrist/BDO Seidman tax shelter fraud case on Tuesday continues a long run of aggressive enforcement by prosecutors in New York against lawyers and other promoters of transactions that lack economic substance and are meant solely to generate paper losses. "The government has sent a very strong message in this area and it has been heard."

Offshore Tax Crackdown Scorecard: UBS, Credit Suisse, HSBC Bloomberg
May 23 - The U.S. extended its crackdown on offshore tax evasion last week, charging a further tax cheat with failing to report his offshore account at HSBC Holdings Plc (HSBA) to U.S. authorities. The article provides a handy scorecard on U.S. cases.

Calvin Johnson's Shelf Project on corporate compensatory options A taxing matter
May 18 - Compensatory stock options were touted as a way to align managers' interests with shareholders' interests. It turns out that they give managers even more reason to juice up the value of the stock in "timely" fashion, in order to give themselves more pay at shareholders' expense. Johnson suggests ending a special tax exemption for performance-based stock options.

America’s Underground Economy: Measuring the Size, Growth and Determinants of Income Tax Evasion in the U.S
Report of Jan 2011 - This study empirically investigates the extent of non compliance with the tax code and the determinants of federal income tax evasion in the U.S. Employing the most recent data we find that 18-19% of total reportable income is not properly reported to the IRS, giving rise to a “tax gap” approaching $500 billion dollars. Three time periods are studied, 1960-2008, 1970-2008, and 1980- 2008.