Another gem from Andrew Haldane's speech, which we've just blogged
At the same time, the ballooning of trading activities was starving basic banking of resources. In consequence, the offering to bank customers became a rather different one. The humble, regional loan officer was pensioned-off, replaced by a centralised credit risk model which neither answered back nor required a pension. Branches were closed in an effort to contain costs. Banking became a transactional business, underpinned by a sales-driven, commission-focussed culture.
Financialisation is a huge topic, which deserves everyone's attention. Whole industries, whether bought out by private equity companies or otherwise, have turned their attention away from seeking long-term, organic growth based on building fantastic products and services, towards shorter-term activities based on financial returns. The result has been weakness and inequality.
And the financial sector itself has been financialised. What Haldane describes here is just an indication of the problem. Finance eats itself.
Alphaville last night chaired a discussion on “Socially Useful
Banking“, and the key speaker was the Bank of England’s now world famous
executive director for financial stability, Andy Haldane. FT Alphaville has provided a long summary of the event, which we wish we'd been able to attend. His speech is here,
and the FTA summary contains a number of newspaper headlines, which
speak (loudly) for themselves (We have added a couple of our own).
Bank of England’s Andrew Haldane: Occupy played key role – BBC
Occupy protesters who camped at St Paul’s Cathedral were morally
right to attack financial system, says Bank of England official – Daily Mail
Occupy protesters were right, says Bank of England official – The Telegraph
Bank of England official: Occupy Movement right about global recession – The Guardian
UK banks begin to turn over new leaf – BoE’s Haldane – Reuters
Top Bank of England director admits Occupy movement had a point – The Independent
Too much banking can be a bad thing - Evening Standard. And much more on this subject, fairly soon. Watch this space.
In response to the critics of Occupy, he said:
Occupy’s voice has been both loud and persuasive and that
policymakers have listened and are acting in ways which will close
Occupy has been successful in its efforts to popularise
the problems of the global financial system for one very simple reason:
they are right.
By this I do not just mean right in a moral sense. . . . it is the
analytical, every bit as much as the moral, ground that Occupy has
Haldane went on to point out that most financial sector workers in
the UK - and there are a lot of them - aren't to blame for what went
wrong; the problem, essentially, is systemic. But he said that Occupy
helped prompt a “reformation of finance” that is in its early stages,
and proposals to change banking may amount to the biggest change since
We hope he is right about that. There is still a very, very long way to go.
From the blog of Rowan Bosworth-Davies, a former UK detective and legal consultant advising financial institutions:
I have never tried to disguise my contempt for the way in
which the lead regulator has consistently failed to use their
prosecutorial powers to bring actions against financial criminals.
. . .
Criminalising the bastards is the only way to take them down, and
exclude them from the financial sector. It is a solution whose time came
of age a long time ago, and I don't know what is stopping it being used
aggressively, remorselessly and with maximum prejudice.
. . .
The FSA has routinely ignored the responsibility given to it by Parliament
And among several answers he says, with penetrating insight,
"I think it is a class issue."
Indeed. If you are a grubby housebreaker, you meet the full force of
the law. If you are a criminally-inclined City grandee, you are in the
clear. He describes the old revolving door factor, and produces some
pretty unveiled comments from insiders about how they don't want to
prosecute financial crime.
This blog is full of fascinating anecdotes, such as this one:
"I was once approached at a public conference by a young
German woman who asked me if she could have a copy of my paper which I
had just presented. I asked her why she wanted it and she told me that
she had been seconded to the FSA from Goldman Sachs for a year's
sabbatical. The FSA had entrusted her with formulating their Financial
Crime policy, but knowing nothing about financial crime, she was going
to every conference she could find and blagging copies of papers she had
listened to which she thought might be useful to her.
I rang her manager and suggested that the FSA hire me for a couple of
weeks to come in and teach this young woman what she needed to know
about financial crime so that she could make a genuinely valid
contribution to the debate. His answer was interesting. He said; '...Why on earth would be bother to consult you? If we need any
low-level consulting of this kind we can get it all for free from one of
the Big 4 consulting firms. They do it for nothing for us because they
like to be privy to our thinking...'"
Read the whole blog. It's devastating. This goes a long way towards
explaining why the City of London is as big and powerful as it is.
Some tax justice activists in the UK have put together what they call the Tax Haven Toolkit, offering "everything you need to run meetings, workshops, presentations and discussion groups about tax justice."
We like it, a lot. The toolkit contains:
An easy-to use 30 minute PowerPoint presentation (with guidance notes for the presenter
Three Audio clips
A printable handout including:
Introduction and questions for further discussion
A crib sheet: Countering the Arguments
A List of further resources
And here is an edited short section from the presentation, giving you an idea of how you might use this toolkit.
It is up to you how you want to use the toolkit; the PowerPoint presentation and related discussion activities. However, we recommend that you try to make the session as interactive as possible. This will work best if you have at least 1 hour for your session.
A willing group
A venue with computer facilities, speakers and preferably a large screen
A printer and some paper
A voice and buckets of enthusiasm
There is no need to become an expert to deliver the presentation - just download and print out the slides, notes and guidelines and make sure you feel comfortable with the content.
All with thanks to Meesha Nehru and designer Ellie Grassick.
The tax haven toolkit has been developed as a tool to accompany TJN's own Tackle Tax Havens website. Watch the video here.
"The performance of Sub-Saharan African economies over the past decade has inspired optimism on the region’s prospects. But the region still faces major development challenges, and it is now clear that the majority of its countries will not achieve key millennium development goals.
A key constraint to SSA’s growth and development is the shortage of financing. At the same time, the sub-region is a source of large-scale capital flight, which escalated during last decade even as the region experienced growth acceleration. The group of 33 SSA countries covered by this report has lost a total of $814 billion dollars from 1970 to 2010. Boyce and Ndikumana compare this to the level of development aid and foreign direct investment received by these countries. Assuming that flight capital could have earned the modest interest rate measured by the short-term U.S. Treasury Bill rate, they find that the accumulated stock of capital flight far exceeds the external liabilities of this group of countries, making the region a “net creditor” to the rest of the world.
This report provides updated estimates of capital flight for 33 SSA countries from 1970 to 2010. It describes the methodology used to estimate capital flight and highlights important methodological differences with other existing studies. The report presents key results on capital flight both in absolute terms and in comparison to other capital flows, especially debt, aid, and foreign direct investment, as well as in relation to the size of the economy (as percentage of GDP and in per capita terms). The report stresses the urgency of efforts to stem capital flight and repatriate stolen assets as a part of the broader goals of scaling up development financing, combating corruption, and improving transparency in the global financial system."
This is an important new piece of research. It follows some research of theirs which we recently blogged (original here) exploring capital flight from North African countries.
List of killer loopholes in the Swiss "Rubik" agreements
We have written plenty about the useless (and immoral) Swiss tax deals with Britain, Austria and Germany, which have been designed to kill moves to greater transparency in Europe and particularly to stymie moves to strengthen the current lead transparency initiative, the European Savings Tax Directive.
Here is a short blog as a reminder, summarising the main loopholes in the Rubik model.
Foundations, discretionary trusts and other ‘ownerless’ structures –standard tax evasion vehicles – are deliberately and explicitly outside Rubik’s scope. Such structures are slippery: while they will ultimately benefit someone (an Italian tycoon, say), that person is not legally identified as the beneficial owner or beneficiary: the assets are ‘ownerless’ and therefore outside the scope of a Rubik deal. See Section 3.1 here. (For an exploration of how trusts work, see our primer In Trusts We Trust.)
Insurance ‘wrappers.’ An insurance ‘wrapper’ is bit like a trust, where the Italian tax evader is entitled to all the economic benefits from the assets in question, but legally speaking it is the insurance company that is the beneficial owner. The legal beneficial owner is not identified as Italian, so it is outside the scope of a Rubik deal. (Section 3.2.)
Commercial companies. Only domiciliary companies falling under Swiss definitions are in scope – and that excludes any untaxed offshore company from somewhere like the Cayman Islands, for instance, where it can be pretended they have a ‘commercial’ purpose (Section 3.3).
Foreign bank accounts, trustees. Move your assets from a bank's Swiss subsidiary to a Singapore subsidiary, and you fall out of scope. Or if a Swiss-based trustee manages, say, a Bahamas trust with account in the Bahamas, this is outside Rubik's scope. (Section 3.4)
Fees, donations, loans, royalties. Rubik only includes investment gains on “bankable” assets. So if your assets are in a safe deposit box in Zürich, or your profits are distributed as, say, a ‘consulting fee’, these assets are not ‘bankable” and are outside Rubik’s scope (Section 3.5).
Take your income as a 'loan' (which never gets paid back.) Section 3.7
Defer, then move. Rubik lets you defer all your income until you move to another country. So you might set up a deferred pension – then retire to sunny Portugal with your untaxed pension pot, which no bilateral Swiss- Italian deal could touch. Only the EU’s multilateral approach could work.
“…the laws ought to be equal, so they must be good and not evidently
destructive to the safety and well-being of the people. These things we
declare to be our native rights…”
- excerpt from the Agreement of the People, October 1647
From 27 October – 11 November, Occupy London celebrates the 365th
year anniversary of the original Putney Debates in 1647, by holding a
series of events looking at democracy in 2012. Inspired by the Levellers
and Diggers demands for social justice, civil rights and equal access
to the land from back then, Occupy London’s New Putney Debates will
focus on the challenges facing us now and what is needed now for a more
just and equal society.
Contributors include Richard Wilkinson (The Spirit Level), Natalie
Bennett (new Leader of the Green Party), Michael Mansfield QC, George
Monbiot, Polly Higgins, Jeremy Leggett, John McDonnell MP, Halina Ward
and Professor Conor Gearty, Annette Zera, Joseph Choonara, Hilary
Koob-Sassen, and many other writers, theorists, artists, and activists.
Throughout the New Putney Debates the emphasis will be on public
participation, in the spirit of 1647 when it was said that England was
“A Nation of Prophets”, with some of the events being held in the
original venue – St Mary’s Church in Putney – where the Debates started
on 28 October 1647.
Then and now: the fight for real democracy continues
The New Putney Debates will discuss why our so called ‘democracy’ is
failing us and how we can address the enormous challenges of our time,
as well as learning from the past. We want to reclaim our rights too,
and reclaim democracy for the people. All are welcome to participate in
these historic debates.
The Civil War saw our ancestors rise up against oppression by the
King and feudal lords to fight for the many of the democratic rights we
enjoy today. The Levellers in the New Model Army made radical demands
for a more equal society with an expanded franchise, freedom of
conscience & speech, equality under the law and for a sovereign
parliament that obeyed the will of the people.
Today our civil rights are under threat, our vote no longer seems to
count and inequality is increasing. There is no evidence that the
lessons have been learnt from the 2008 financial crisis and banking
bailout. The needs of the ‘market’ and the banks seem to take priority
over people, communities and the environment.
Highlights of the New Putney Debates:
Rehearsed reading and discussion of Caryl Churchill’s 1976 play in
St Marys Church Putney, where the original debates took place. The play
looks at the events of the English Revolution with the second half of
the play focuses on the conflict within the New Model Army between the
senior officers (the Grandees) and the Agitators, who stood for the
interests of the ordinary men and women
Occupy Economics will host the Bank of England’s Executive Director
of Financial Stability, Andy Haldane, for a panel discussion focusing on
Socially Useful Banking. Also participating are TUC senior economist
Duncan Weldon and Dominic Lindley, Head of Financial Services Policy
for Which?, with the event chaired by Lisa Pollack, FT Alphaville
Richard Wilkinson (The Spirit Level), will join the Debates looking
at the causes and consequences of inequality and John Christensen (see
Treasure Islands) will explain ‘The Finance Curse.’
Michael Mansfield QC and Professor Conor Gearty will be participating in the debates discussing who the legal system benefits
Open-space discussion sessions exploring the crisis of capitalism
and the possibilities for generating a level of social organisation that
is capable of being responsible in all the ways in which the capitalist
system is not
The new leader of the Green party, Natalie Bennett, George Monbiot
and the Runnymede diggers will be considering land and democracy
John McDonnell MP will discussing what a real democracy would look
like, and we will be asking if the time has come for a new civil rights
We challenge the authorities of the British Channel Island of Jersey (a secrecy jurisdiction) to open, public debate about our criticisms of that island's role as a tax haven.
Philip Bailhache, assistant chief minister to the island's government has given a fiery speech to that island's Association of Trust Companies, accusing those who criticise tax havenry (that's us) of being motivated by "the green-eyed bug of envy and ignorance." Ouch!
In 2011 we assessed tax haven Jersey with a secrecy score of 78 out of 100. This dismal score places the island well into the danger zone where it is likely to host large volumes of illicit financial flows and tax evading money. We offered the island's authorities plenty of opportunity to demonstrate where our assessment differed from their own. To date they have not offered a single shred of evidence that undermines our assessment. And their poor record of non-cooperation with the EU's savings tax directive speaks volumes about how weak their commitment to tackling tax evasion truly is.
Far from demonstrating ignorance on our part, our assessment of Jersey has stood up to scrutiny. And Bailhache knows this is the case.
In contrast to Bailhache's feeble rant about "envy and ignorance", we repeat our invitation to Philip Bailhache and his fellow ministers in Jersey to engage with us in public debate - on their home turf in Jersey - to discuss our concerns and to allow him full opportunity to respond. Our director, John Christensen (a former economic adviser to the States of Jersey), campaigning chartered accountant Richard Murphy (who correctly forecast the problems Jersey would incur with their 0/10 corporate tax policies) and Nick Shaxson (author of the critically acclaimed Treasure Islands: Tax Havens and the Men Who Stole the World) are all willing to take part in this debate.
Over to you Philip Bailhache. Do you have the courage to engage in this debate? Or will you continue to engage in snide back-stabbing in front of your home audiences? Our contact address is: Tax Justice Network, 38 Stanley Avenue, Chesham, Bucks, HP5 2JG, UK.
OECD and ATAF strengthen tax co-operation with Africa OECD
Oct 25 - "The OECD and the African Tax Administration Forum (ATAF) have signed a
Memorandum of Co-operation, agreeing to work together to improve tax
systems in Africa."
Argentina: International tax transparency: the role of the AFIP Cronista
24 - On the Argentine tax authority building structural policies
against abuse of tax havens, and promoting efficiency in the exchange of
information. Hat tip: Jorge Gaggero. Singapore To Overtake Switzerland In Wealth Centre Rankings By 2020 WealthBriefing
26 - "Singapore will overtake Switzerland to become the world’s biggest
offshore wealth centre by 2020, according to research on global
financial trends from WealthInsight." The report notes that the UK and
Channel Islands is currently the second largest offshore player, in
third place is the Caribbean and Panama, followed by Singapore,
Luxembourg, and Hong Kong.
Latvia sees good and bad as Russian money haven Reuters
23 - "Offshore funds flowing from crisis-hit Cyprus have helped boost
bank deposits in Latvia, strengthening the small Baltic state's position
as an offshore banking centre for neighboring Russia and other
Greece fights eternal battle against tax evasion Deutsche Welle
Oct 25 - Giving a view of the struggle against corruption and tax evasion, and reporting on the "list of shame." Hat tip: Offshore Watch.
See also: Tax-Evasion Allegations Dog Greece
Wall Street Journal
24 - "A former Greek finance minister on Wednesday accused
financial-crime investigators of failing to pursue leads against Greeks
who salted away more than €1 billion in Swiss bank accounts, fueling a
new round of finger-pointing over Athens' alleged failure to move
against wealthy tax dodgers. The controversy has become the hottest of
Greece's political hot potatoes."
Merkel’s Swiss Tax Pact Faces Veto as SPD Flexes Pre-Vote Power Bloomberg BusinessWeek
Oct 25 - Reporting on the Swiss/German tax deal, blogged frequently here and on the TJN Germany Blog. The piece highlights the importance of this issue on the German political scene.
Improving international tax cooperation, action Times of Malta
Oct 25 - " ... the achievement of the combating of offshore tax evasion and abusive
international tax transactions, ultimately lies in coordinated action
taken on a multilateral level – not in just cooperation and information
exchanges. Action will improve compliance and service to taxpayers in
concrete and significant ways."
Canadian Senator to Parliamentary Budget Officer: Investigate Tax Havens Canadians for Tax Fairness
25 - C4TF met with Senator Downe earlier this month to
discuss the spiraling impact of tax havens on the Canadian economy.
Philippines: Corona finally faces probers in tax case Rappler
25 - "Dismissed Chief Justice Renato Corona finally faced prosecutors
Thursday, October 25, in a preliminary hearing of a tax evasion case
filed against him and members of his immediate family."
Accountable companies build better brands Marketing Week
25 - "Anyone who thinks that
arcane discussions of tax law will not effect brand perception is living
in a fantasy world."
Amazon to be stripped of tax advantage on sale of ebooks Guardian
25 - "Amazon is to be stripped of its huge tax advantage on the sales
of electronic books after the European commission ordered Luxembourg to
close a VAT loophole."
To get in the mood for this next quote, read Chrystia Freeland's 2011 Atlantic Magazine article Rise of the Global Plutocrats, which says, among many other things:
"The rich of today are also different from the rich of yesterday. . . . they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves."
It comes from Adam Smith, talking about a shift from wealth derived from land ownership (which tends to root you, geographically speaking) towards stock ownership, which gives you greater mobility.
"He would be apt to abandon the country in which he was exposed to a vexatious inquisition in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business or enjoy his fortune more at ease."
And that is exactly the problem we face today. A globetrotting élite that can dip into societies, cream off the benefits they want, then get everyone else to pay their share of the costs of providing benefits. And that's part of the reason why tax havens cause poverty.
The quote was from year 1804. That's quite some foresight. Time for a vexatious inquisition into the offshore world. And the best place to start is probably here.
IRS delays key start dates for global tax evasion law Reuters
Oct 25 - New developments on the US's Foreign Account Tax Compliance Act (FATCA): "Tax authorities on
Wednesday postponed implementation of new rules to force banks and
financial institutions to disclose more information about U.S. clients'
offshore accounts ... Gaining an additional two years, institutions
will now have until January 1, 2017 to begin withholding U.S. tax from
clients' investment gains."
Cayman Islands Monitoring FATCA Developments Tax-NewsOct
25 - The Cayman Islands government has released an update on whether
the territory will negotiate a government-to-government reporting
arrangement with the United States to ease the compliance burden on
local financial institutions of complying with the requirements of FATCA.
Hedge Fund Havens Weigh Taxes as Caribbean’s Debt Rivals Greece Bloomberg BusinessWeek
Oct 25 - "From the Cayman Islands to the
Bahamas, hedge fund havens are considering a surprising remedy
for widening deficits -- higher taxes."
OECD sets 'test' to stamp out international tax avoidance Accountancy Age
Oct 24 - "An OECD party on fiscal affairs has been working to clarify beneficial
ownership of dividends, interest and royalties since 2008, and has
devised a test in order to establish beneficiaries." Taxing times in Timor… and the Pacific? Pacific Institute of Public Policy
Oct 17 - "If developed countries really want to help small islands in
the Pacific, then one step would be to get bodies like the Australian
Tax Office (ATO) to hand over vital information they have on the revenue
made by their companies in our territory – or better still help ensure
that international companies pay the taxes they should do." Argentina: Even with a sky high tax burden, proposals to raise taxes on individuals iProfessional (In Spanish)
Oct 23 - Jorge Gaggero, Cefidar researcher and member of the Phoenix
Plan, says that the tax system favors capital flight and the use of tax
Africa losing billions of dollars through illicit financial flows Zambia Daily Mail
Oct 25 - Reporting from the Eighth African Development Forum (ADF-VIII)
held in the Ethiopian capital Addis Ababa under the theme: ‘Governing
and Harnessing Natural Resources for Africa’s Development’, jointly
organised by the United Nations Economic Commission for Africa, the
African Union and the African Development Bank. Hat tip: Alvin Mosioma.
Money-laundering crackdown should put Nevada on notice Las Vegas Review Journal
21 - Las Vegas is well-known as a convention hub, but few groups it
attracts offered as much unintentional irony as the 11th annual AML and
Financial Crime Conference ... Funny they should have such discussions
in a city that is no stranger to the subject of money laundering, in a
state whose laws of confidential incorporation are widely known as some
of the most relaxed in the nation."
A New Score Card in the War on Shell Companies: Do as I Say, Not as I Do? Tax Analysts (via subscription)
Oct 24 - A new study suggests that developed countries -- particularly
the United States -- don't practice what they preach when enforcing
international rules aimed at increasing tax transparency and preventing
the misuse of corporate entities to engage in tax evasion, money
laundering, and terrorist financing.
Call for Expressions of Interest: Politics of Domestic Resource Mobilization for Social Development UNRISD
The United Nations Research Institute for Social Development (UNRISD)
invites expressions of interest from researchers to collaborate in its
new research initiative.
Research Fellow vacancies - Oxford University Centre for Business Taxation
Centre is seeking outstanding researchers in economics, law, taxation
and related fields, such as corporate finance, investment, location,
fiscal policy and governance. TJN has clashed with the Centre before (e.g. see here or here); perhaps they are open to new perspectives, however.
The still-rumbing Starbucks tax scandal in the UK, prompted by an initial Reuters report on the subject, has had a massive impact, with endless news stories, editorials, television broadcasts, radio discussions, big protests, and outrage from politicians and the general public. Pollster YouGov said its BrandIndex survey of 2,000 people showed a drop in Starbucks' reputation score to -26 before the Reuters story, from +3.
All this attention is welcome, and long overdue.
On a technical level, what Starbucks has been engaging in is a practice called Transfer Pricing. We have a huge, multi-faceted section on our website dedicated to transfer pricing, looking at the (until recently) globally accepted system guarded jealously by the OECD, a club of rich countries, and offering solutions. The OECD-led global system for taxing multinational corporations is broken: this is "the leading edge of what is wrong with international tax," says US tax expert Lee Sheppard in one of several devastating critiques of the existing international system on our transfer pricing page (see also this or this, for instance.)
Britain remains committed to a race to the bottom on international tax. British politicians on left and right continue to act in the interests of their own paymasters, via a series of revolving doors and party financing: big multinational corporations and especially the City of London. British politics has been thoroughly corrupted by this race to the bottom: politicians quail in the face of threats by multinationals and their supporters in the accountancy professions, who cry "don't tax us too much or we will run away!" Really? In the real world, Starbucks has been making huge profits in the UK: there is no way at all they would jump ship on account of five more pence on the rate of corporation tax. Raise corporation tax rates significantly (and here's one huge reason why you really should, and urgently) and Starbucks will still be making stonking after-tax profits. What's to walk away from? For an account of the race to the bottom, with an ugly peek into policy-making in the UK, take a look at this.
But for those who don't want to wade through the website and all its links, we'll include a section from a Tax Research blog, edited by us, which offers key pointers as to the way ahead. It's UK-focused, but it has international relevance.
First,the political mood music on corporate tax has to change.
We have reached the absurd point where politicians have joined in the
race to bottom in international tax regulation that began in tax havens
and was first promoted by lawyers, accountants and bankers. Surely we
should expect politicians to stand up for the states we vote them to
run? And yet now they don't. We have current politicians in the UK who
pride themselves on having abandoned our residence basis of tax so
suitable to a country that hosts large numbers of parent companies.
Instead they promote the whole notion of turning a blind eye to what
happens outside the UK by adopting a territorial basis of tax that only
taxes income arising in the UK, and asks few questions of how that
income arising is determined. Second, obviously, we need to invest much more heavily in collecting tax. There are only 2,000 or so fully qualified tax inspectors in the UK. That is ridiculously few. And let's recall that total staff in HMRC will have fallen from 100,000 in 2005 to 55,000 in 2015. More high quality, highly paid staff to challenge abuse by the largest corporations is vital. Right now companies and their lawyers are running rings round the Revenue.
Third, we must uphold existing law. We aren't doing enough to challenge the whole structuring of some deals. The law to let us do much of this exists, but we can only do it with a properly resourced and staffed Revenue authority. Cuts to the Revenue services directly increase fiscal deficits.
Fourth, The OECD arm's length pricing method
of transfer pricing does not work - and everyone in this field knows it. The FT has promoted the unitary model of taxation this week that I and others in
the Tax Justice Network have long promoted. This is a particularly promising avenue to explore, and essentially it involves moving away from the current system - where multinationals are taxed according to the artificial legal forms that their accountants cook up for them - and towards a system where they are taxed according to the real economic substance of what they do. This allocates group profit
to countries using a formula based on where the destination of sales is,
where people are employed and where real physical assets are. So (to over-simplify) if Starbucks has six percent of its coffee sales, employees and assets in the UK, then you take Starbucks' total global profits and allocate six percent of that to the UK, to tax at whatever rate it likes. This approach has an ugly name - "unitary taxation with formula apportionment," (though 'unitary tax' is more palatable) - and it works: for instance, a growing number of U.S. states are using it, for state-level taxes. For more on this, see our short section on unitary tax on our transfer pricing site; see this (outdated, but still very readable and entirely useful) primer on unitary tax, and a more detailed presentation here; and more wonkish readers might like to look at Michael McIntyre's more academic exploration of how this all works in the United States.
This reform is now
essential if we are to demand that global capital is to be accountable
locally for tax. Fifth, we have to be honest about the scale of the problem. Not a penny of the abuse the press and parliament are rightly worried about is in the HMRC tax gap figure. That's ludicrous. It suggests that they and their political masters are in denial about what is happening. An honest assessment of the tax gap and what should be in it is vital.
Sixth, our politicians have to go to the EU and argue that we must have change on the lines I have outlined above [see the first part of the original blog for a detailed look at the EU-related issues: essentially, what happens technically within the letter of the law but is abusive can be challenged]: I believe we can demand that the EU Code of Conduct be revisited, and we now must demand that the idea of the abuse of law in these cases must be tested.
Last, but by no means least, we must have country by country reporting in accounting as well. We have to know where corporations are and what they do, and how much tax they pay in each and every country in which they trade. Nothing else will also hold companies to account – and force them to change their behaviour under the glare of pubic, investor and regulator (including tax inspector) scrutiny.
Political will is the first prerequisite for change, but political will has to be built on a basis of solutions. We hope this starter pack can help focus some minds.
A final note. Ellie Mae O'Hagan writes in the Guardian today about her experiences campaigning on these issues with the protest group UK Uncut.
"If there's one thing UK Uncut has taught me it's that campaigning is sometimes inconvenient, and it takes time to see results. I remember the first time I met someone from the Tax Justice Network: he talked to me about campaigns in terms of decades, rather than months. In an age of ultra-convenience, it was a shock – and, I felt, an injustice – to have to wait that long for something I wanted. But what I realise now is that the continuing presence of tax avoidance isn't a sign that UK Uncut has failed: it's a sign that the campaign isn't yet finished."
We should add that this was a conversation between TJN's John Christensen and Ellie Mae on the steps of Top Shop on Oxford Street in London. And quite so.We're in this for the long haul.
The October taxcast: Helsinki, Starbucks, and the selling of secrecy
In October's TJN Taxcast: Helsinki declares itself a tax haven-free zone, Starbucks joins the tax avoidance Roll of Dishonour and we follow the money: asset recovery, dictators and the selling of secrecy.
Rüschlikon is a village
in Switzerland with a very low tax rate and very wealthy residents. But
it receives more tax revenue than it can use. This is largely thanks to
one resident - Ivan Glasenberg, CEO of Glencore, whose copper mines in
Zambia are not generating a large bounty tax revenue for the Zambians.
Zambia has the 3rd largest copper reserves in the world, but 60% of the
population live on less than $1 a day and 80% are unemployed. Based on
original research into public documents, the film describes the tax
system employed by multinational companies in Africa.
Director Christoffer Guldbrandsen
Producer Henrik Veileborg
Produced by Guldbrandsen Film
The Why Poverty? series will be broadcast in many countries starting November 2012. Watch out for it.
Starbucks tax solutions: the FT is ahead of the game
Update: Michael Devereux of the Oxford Centre For Business Taxation, a sparring partner of ours, supports formulary apportionment too. We have slightly amended the text to reflect his letter.
As the latest Starbucks tax scandal in the UK shows, the accepted global methods for taxing multinational corporations is broken, defunct, dead, not much better than useless (etc etc.) There has been a lot of (justified) noise about Starbucks' ability to take the benefits from the UK without paying their share of the costs. But now, (again, thanks to Sol Picciotto) we see the FT coming in with the broad outlines of a solution. It is a workable system already used by many U.S. states for state taxes, known by the name of formulary apportionment.
The FT spells out in simple terms what it entails:
"Public anger might equally be directed at the tax system itself, especially the way it treats multinationals. Current practice has turned tax into a largely voluntary gesture for such businesses. It is all too easy to shuffle income off to low-tax jurisdictions through intra-group debt financing and the transfer pricing of intangibles such as intellectual property.
Rather than relying on the taxman and the public to police the fuzzy boundary between legitimate tax avoidance and illegal evasion, a more rational method of linking the tax multinationals pay to real economic activity must be found. The EU has been considering the adoption of a system of “formulary apportionment” by which multinationals’ tax bases would be divvied up according to where they do business. This agenda, which needs a group of states to join forces, should be keenly pursued."
In very simple terms, the alternative to the dominant
global system, protected jealously by the OECD, involves taxing
multinational corporations not according to the artificial legal structure into which the corporation's accountants contort it, butinstead according
to the real economic substance of where it does business. So (to
oversimplify quite a lot) if Starbucks sells one fifteenth of its coffee
in the UK, then you simply say 'the UK has the right to tax a fifteenth
of those global profits, at whatever rate it likes.' And if it sells
one millionth of its coffee in a tax haven, then that tax haven gets
allocated one millionth of its profits, to tax at whatever rate it
likes. And if the haven's tax rate is zero percent, then who cares?
We have blogged before how businesses have supported the general principle of formulary apportionment, at least in the context of Europe's horribly named Common Consolidated Corporate Tax Base (CCCTB). Now, in a follow-up letter to the FT's latest editorial, Michael Devereux of the Oxford Centre Against For Business Taxation supports the FT's line too. When TJN, businesses, the FT and Devereux support the principle, it seems fair to say that it's time for people to sit up and take notice. Particularly when there is so much agreement as to how broken the OECD's dominant system is.
All this would bring another benefit. If the multinationals no longer had an incentive to use tax havens - which they wouldn't under a truly workable system of this kind - then tax havens would lose a whole lot of the political cover that has been keeping them in business for all these years. And they would be far easier to tackle.
When you get down to the nitty gritty, formulary apportionment isn't simple, and it isn't the only alternative approach to the current system, but it is fantastic option to pursue. If you want to understand quite how insane the system is, try this or this.
Tax Challenges in Latin America TJN Latin America and Caribbean (In Spanish)
19 - Luis Moreno explains challenges, and points to the way forward -
"Economic integration processes, and political and economic cooperation,
can make the debate on fiscal policy acquire a proper regional and
Stealing Africa Why Poverty?
Brilliant film trailer deals with Glencore and Zambia, trade mispricing and tax dodging. The full film will be broadcast around
the world in November, as part of the major Why Poverty? series. Hat tip: Alex Cobham
See also:Will Africa ever benefit from its natural resources? BBC
15 - "So why have so many African countries failed to turn natural
riches into benefits for the masses? Who is to blame for the foreign
exploitation, and whose responsibility is it to put things right? What
about possible solutions - renegotiation of contracts, better
transparency mechanisms, higher taxation, resource nationalism?"
Country-by-country reporting for banking, construction and
telecommunications would help to address corruption, tax evasion and
other malpractice Eurodad
Oct 19 -
"The European Parliaments Legal Affairs committee has voted for a
requirement for country-by-country reporting of payments to governments
in the banking, construction and telecommunications sectors. This is a
crucial step that comes on top of the requirement for extractive and
logging industries to report on a country-by-country and
project-by-project basis." Tax, social protection and development: European proposals paint only half the picture Eurodad
Oct 18 - "In its Communication on Social protection in European Union development cooperation,
released last month, the European Commission (EC) emphasises the need
for fair and efficient tax systems to support social protection schemes
in partner countries, but misses a crucial part of the picture:
preventing the enormous illicit financial flows that rob billions each
year from the exchequers of those countries..."
Anger grows over large companies' tax bills as attention turns to eBay and Ikea Guardian
21 - "Pressure is mounting on large multinational companies to pay
their fair share of tax following new revelations about the amount of
tax paid by eBay and Ikea.The focus on the tax affairs of the internet
auction house and the Swedish retailer comes amid increasing anger about
Indonesia - OECD Economic Survey OECD
economic survey has a strong focus on improving the tax system. But
there's something strange: the report says nothing about tax information
exchange - it does not even mention the OECD's own
information-on-request approach.Hat tip: Francis Weyzig. Goldman Sachs 'muppet' trader says unsophisticated clients targeted Guardian
Oct 22 - "Greg Smith, the former Goldman Sachs employee who infamously quit Wall Street via a New York Times article in March,
says the investment bank routinely took advantage of charities and
pension funds in order to increase its profits." - Reporting on an interview on CBS News' 60 Minutes. U.S.: Tax Cuts for Job Creators The New York Times
19 - Explaining that Mitt Romney's tax plans would reduce federal
revenues by trillions of dollars, and noting that, crucially, "we have
found no evidence that such cuts lead to substantially faster employment
growth at the national, state or even ZIP-code level."
Income Inequality May Take Toll on Growth The New York Times
16 - "“What worries me is the idea that we’re in a vicious cycle,”
said Joseph E. Stiglitz, a Nobel laureate in economics who has studied
inequality extensively. “Increasing inequality means a weaker economy,
which means increasing inequality, which means a weaker economy. That
economic inequality feeds into political economy, so the ability to
stabilize the economy gets weaker.”
Baker looks at the UK-Switzerland Tax Cooperation Agreement, the zombie that we have sought to kill several times, but refuses (so far) to die. We hadn't seen this video, but it is a superb, funny and caustic look at the tax agreement, from someone who (presumably) isn't, like most tax advisers working on this issue, conflicted. Beneath it we provide a few choice sentences, followed by a full transcript (with a few bits left out; check against delivery for the proper version.)
Here are a few choice sentences from Baker:
Here is a picture of
Dave Hartnett, head of UK revenue, putting his signature, and Frau Schlumpf
walking away looking like a very happy lady, walking away with the Crown
People have commented: it has more loopholes than an Emmental cheese. If the assets are held under a discretionary agreement, you cannot identify the beneficial owners. A discretionary trust, foundation, has no beneficial owner. Corporate assets: Unless you can effectively look through the company – are not included. Assets held by an insurance company, in an insurance wrapper, are excluded. The other night I happened to attend a lecture in London, I spoke to the person next to me about the Switzerland, and she said ‘oh, we have a solution: a liechtenstein insurance wrapper, if you want to keep evading tax. (Note: these are just some of the loopholes we identified; see more here.)
The revenue projections
The UK government expects it to yield 4-7 billion, between 10 and 20 percent of our tax gap, but they don’t say over what period. Over the next year, the next 10 years, or the next 100 years? Most people think it is hopelessly, hopelessly, optimistic. Previous disclosure facilities didn’t even raise half a billion. Why should we expect so much more from this one?
The big question mark is whether the UK will ever get any more than that. The general view is: no, they won’t. That is all they will ever get out of this agreement.
The tax rates
The one-off payment has an incomprehensible formula, 19-34%, with the average likely to be about 22%. Note: if I look over the past ten years, I have paid about 50 to 60 percent of what I charge my clients. If I had known I could get away paying 22 percent, oh I wish I had gone to Switzerland ten years ago.
The morality of it all
It guarantees future Swiss bank secrecy. If I put my money into a Liechtenstein insurance wrapper, I keep my account secret. Why? Why should the UK government wish to preserve Swiss bank secrecy? No-one has explained to me why we should have this. I bank in the UK and France, and if I am investigated by either authority, I know they can look at my accounts, and I accept that. I expect them to keep that information inside the Revenue, and not leak it into the public domain. On the legality
Is it compatible to EU law? It is a big question of whether the UK government even thought about EU law when they entered into this agreement - and what the quality is of the advice they are getting.
On Switzerland promising to help identify where the money has escaped to
There will be a joint UK-Swiss commission to oversee it, and if people take their money out of Switzerland and send it elsewhere, then the Swiss will identify the ten major recipients. Professor Obserson: can I ask you to be a witness please? I am now handing you a list of the ten countries to which the money is going to move. I know, and you know, and he knows what those are. If I get all ten right, xavier will you pay me 10 swiss francs? . . .
(a short pause)
I don’t think Xavier is dissenting from my list.
To conclude (in front of an Italian audience:)
The big question is: will other countries follow suit? Other countries that have been mentioned include Greece, Italy, which may enter similar agreements. We all do silly things from time to time.
FULL TRANSCRIPT (Note that this is very close to the original but words may have been missed here and there; you can check for accuracy against the original.)
I have been asked to look at the UK Switzerland co-operation agreement. (Background: he discusses the UK tax gap, with estimates ranging at £35 billion at the low end, to £120 billion at the high end. He discusses the fact that the UK doesn’t do tax amnesties but has disclosure facilities, which typically raise relatively modest sums. He discusses the Liechtenstein Disclosure Facility (LDF) We don’t do amnesties in the UK, we never have, and we still don’t. But what we do have are disclosure facilities, where you can come forward, pay the tax, pay a fixed penalty, you don’t go to jail, and you regularise the past. We have had a number of these facilities – we had one between 07-08, that raised £400m in undisclosed taxes, a relatively low figure. We backed that up by disclosure from a significant number of banks with overseas branches: 146 UK banks disclosed information about offshore branch accounts, that led to a second new disclosure facility starting in 2009 which so far has raised a tiny amount, £85 million.
We have a special arrangement with Liechtenstein: this started with the theft of information about liechtenstein bank accounts bought by the German secret service, then sold on to the British. So we reached an agreement with the Liechtenstein government to introduce a disclosure facility for just over five years. Someone who uses this facility pays 40% at an average rate, or less if they can show their tax would be less. They pay a 10 percent penalty, they have a guarantee of non-prosecution, it is currently available, and amazingly it applies to worldwide activities. Anyone who wants to actually use this can go to Liechtenstein now, create a “meaningful relationship” – that is the term used – with a Liechtenstein banker, then go to the Revenue and you can legitimise your money, anywhere in the world. So: I have been evading tax for years, I have my money in Panama, I have never been to Liechtenstein, I don’t even know where it is - but I form a ‘meaningful relationshiip’ with a Liechtenstein banker, then go to UK revenue and say “I would like to regularise this, would you give me my get out of jail free card?” And you get that under this facility.
So the UK doesn’t do amnesties – we do disclosure facilities, we don’t have any constitutional restriction on any of these arrangements, though perhaps we ought to be more aware than we are about EU law. We do traditonally settle many of our tax disputes by agreements, and we seldom prosecute (though the Revenue is not the only body that can prosecute tax matters.) Importantly, in the last year there has been a great deal of disquiet about the Revenue settling tax disputes for a fraction of the tax due. Vodafone, Goldman Sachs, big companies that settled large tax bills with relatively small payments. This is all background to the agreement.
Here is a picture of Dave Hartnett, head of UK revenue, putting his signature, and Frau Schlumpf walking away looking like a very happy lady, walking away with the Crown Jewels.
So what did the agreement contain?
There are actually five parts to the document
a) the main agreement
b) Joint declaration concerning equivalence, saying that the agreement will have ‘an enduring effect, equivalent to the outcome that would be achieved through an agreement to exchange information on an audomatica basis. This is supposed to be the same as automatic exchange. I will leave you to judge whether that is true or not.
c) A declaration on stolen data. The UK promises that in the future, we will not actively seek to acquire data “stolen” from Swiss banks. We have acquired stolen data in the past: you may ask whether it is right or not, but clearly Swiss banks don’t like it.
d) Side letter about criminal investigations, saying that somebody who uses this Swiss facility is highly unlikely to be subject to a criminal investigation by HMRC. That is not an absolute guarantee. With Li, you get an absolute guarantee. Frau Schlumpf missed a bit here.
e) Memorandum on financial services by Swiss firms. Swiss firms believe they have not had full market access, this memo explains how Swiss banks should go about marketing financial services.
The main core of it, though, is the agreement signed on Oct 6, not yet in force, so you can’t yet use this facility.
It will probably come in force on Jan 1 next year. The key implementation is by the Swiss bank, the Swiss paying agent. The taxpayer remains anonymous. The bank does everything on their behalf. It applies to assets that were already in Switzerland at the end of Dec 2010, and have remained there. So you can’t move yourself into this agreement, you have to have been evading tax in Switzerland at the end fo 2010, then you can use it. It only applies to individuals who are the beneficial owners of assets in Switzerland.
People have commented: it has more loopholes than an Emmental cheese. If the assets are held under a discretionary agreement, you cannot identify the beneficial owners. A discretionary trust, foundation, has no beneficial owner. Corporate assets: Unless you can effectively look through the company – are not included.
Assets held by an insurance company, in an insurance wrapper, are excluded. The other night I happened to attend a lecture in London, I spoke to the person next to me about the Switzerland, and she said ‘oh, we have a solution: a liechtenstein insurance wrapper, if you want to keep evading tax. (That also by the way means having a ‘meaningful relationship’ with a liechtenstein insurance person.)
What are the elements of the agreement? Very similar to the agreement with Germany.
The first element is clearing the past, by the custyomer telling the bank to exercise one of two options:
a) the one off payments
b) disclosing the customer’s details to the UK government.
The one-off payment has an incomprehensible formula, 19-34%, average likely to be about 22%. Note: if I look over the past ten years, I have paid about 50 to 60 percent of what I charge my clients. If I had known I could get away paying 22 percent, oh I wish I had gone to Switzerland ten years ago.
It applies to all major direct taxes, and as a sign of ‘good faith’, the Swiss paying agents have agreed to apy the UK government an up front payment of CHF 500m in advance. The big question mark is whether the UK will ever get any more than that. The general view is: no, they won’t. That is all they will ever get out of this agreement.
Second element: if you choose secrecy, and don’t disclose, then the cost of that is that tax will be withheld by the Swiss bank on different types of income, and paid over to the UK. The rate is slightly less than the top UK rate of 50 Percent; it’ll be 48 percent withheld; dividends, other income have other rates.
The third element of the agreement is co-operation between the Swiss authorities and the UK, we already have provision under our treaty for exchange on request, that is now elaborated: the UK can request information if they have identified a tax risk and have identified and notified the taxpayer they are investigating. But if that taxpayer has elected to have the one-off payment and the WHT, then no information is to be supplied. So you maintain your secrecy, by agreeing to have a one-off payment and the Withholding Tax.
There is a maximum number of requests that can be made: 500, but if we make bad requests, and they are unsuccessful, the number drops. If we make 100 requests and less than one third are successful, then our maximum drops for future years. So we can only make good requests, or we are penalised.
Swiss banks promise not to encourage the use of artificial arrangements for the sole purpose of tax avoidance. You might have thought it was the purpose of bankers to bank, rather than sell artificial tax avoidance arrangements: they promise not to do that in future. Swiss banks will be audited to see if they are maintaining this, there will be a joint UK-Swiss commission to oversee it, and if people take their money out of Switzerland and send it elsewhere, then the Swiss will identify the ten major recipients.
Professor Obserson: can I ask you to be a witness please? I am now handing you a list of the ten countries to which the money is going to move. I know, and you know, and he knows what those are. If I get all ten right, xavier will you pay me 10 swiss francs, If I get none of them right, I will pay you 100 pounds.
(a short pause)
I don’t think Xavier is dissenting from my list.
the UK government expects it to yield 4-7 billion, between 10 and 20 percent of our tax gap, but they don’t say over what period. Over the next year, the next 10 years, or the next 100 years? Most people think it is hopelessly, hopelessly, optimistic. Previous disclosure facilities didn’t even raise half a billion. Why should we expect so much more from this one?
It guarantees future Swiss bank secrecy. If I put my money into a Li insurance wrapper, I keep my account secret. Why? Why should the UK government wish to preserve Swiss bank secrecy? No-one has explained to me why we should have this. I bank in the UK and France, and if I am investigated by either authority, I know they can look at my accounts, and I accept that. I expect them to keep that information inside the revenue, and not leak it into the public domain.
There are major loopholes to the agreement. Big question mark is whether people will actually use this, given that the Li facility is so much more attractive, it is now available and gives a guarantee of no prosecution, but it doesn’t keep secrecy. It does give disclosure.
Is it compatible to EU law? It is a big question of whether the UK government even thought about EU law when they entered into this agreement, and what the quality is of the advice they are getting.
Is the UK way better? Is it better to prosecute a few Swiss bankers from time to time, pour encourager les autres. Candide. The big question is: will other countries follow suit? Mentioned Greece, Italy, may enter similar agreements. We all do silly things from time to time. Will you follow suit on this question.
Last comment: we have the agreement, but we need legislation in parliament to support it. That legislation will be passed, the UK government has a majority, but it is a question of how much damage it may do to them if they push ahead with this agreement. It is not an absolute certainty we will have this agreement.
Civil society calls for measures to stop the drain of resources Eurodad
Oct 18 - Reporting on an event organised by Latindadd, highlighting serious challenges faced by developing countries trying to mobilise
their own resources for development.
Cayman: Mac ‘knocking on doors’ Cayman News Service
Oct 18 - 'The premier said he was “knocking on doors” in Asia, a “land of
expanding economies where investors are looking for new opportunities.”
... “We have to go to the right places, to knock on the right doors;
whether that is to try to stop the EU from forcing us to 'converge' our
financial services legislation with theirs, as we have had to go all the
way to Greenland to do, or it is to seek the right kind of investment."'
Tax Fairness is a Key to Addressing Poverty Canadians for Tax Fairness
18 - "Until recently many progressive groups, including
progressive political parties, have shied away from advocating for tax
fairness and tax reform fearing that the issue was political dynamite.
... But the tide is turning."
Glaxo Canada Wins Key Transfer Pricing Case Tax-News
19 - "Canada's highest court has backed pharmaceuticals giant
GlaxoSmithKline Plc in a landmark battle over the use of transfer
pricing rules to reduce its federal tax bill. ... The saga is not
completely over, however. In its judgment, the Federal Court of Appeal
had declared that the case should be returned to the Tax Court, for a
A look at tax havens by the Fortune 500 Business Insider
Oct 18 - On a new report from Citizens for Tax Justice - "the 285 members of the Fortune 500
that have parked money overseas would owe an estimated $433 billion in
taxes if and when it is repatriated. No wonder these companies are
working so hard to get a "repatriation holiday" even though the one given in 2004 did not yield any significant new investment, but lots of dividends and stock buybacks."
U.S.: Levin Writes to Bipartisan Leaders on Closing Offshore Loopholes, Avoiding ‘Fiscal Cliff’ Sen Carl Levin website
Oct 17 - "Seeking to help step back from the “fiscal cliff,” Sen. Carl
Levin, D-Mich., chairman of the Senate Permanent Subcommittee on
Investigations, has written to congressional and administration leaders
on the need to address offshore tax abuses as part of a balanced
Bank secrecy targeted in money laundering case swissinfo
Oct 17 - 'A spectacular case involving French and Swiss citizens and
linking drug smuggling, money laundering and tax evasion is likely to
further tarnish Switzerland’s image as a “tax haven”, only too ready to
accept “dirty money” ... the well-known investigating magistrate, Eva
Joly, described drug smuggling and tax evasion as "two sides of the same
Switzerland/U.S.: Bank heads’ “immoral behaviour” riles staff swissinfo
17 - More on the story of "thousands of bank staff and consultants
whose names have been turned
over to the U.S. Justice Department by Swiss banks suspected of tax
offences across the Atlantic"- reporting that the strategy was decided
by those at the top, who remain protected. See also: Ex-Swiss banker may be helping U.S. in tax probe-lawyers Reuters
17 - "A former Swiss banker accused of helping rich Americans dodge
taxes may be cooperating with a broad U.S. government investigation of
Swiss banks for providing tax evasion services."
African Nations Join OECD Tax Transparency Initiative Tax-News
Oct 19 - "The OECD has welcomed Burkina
Faso and Cameroon to the Global Forum on Transparency and Exchange of Information
for Tax Purposes."
Argentina's Taxman Clamps Down On Grain Exporters Tax-News
17 - "The announcement from AFIP comes as part of efforts to tackle tax
avoidance and evasion among the nation's largest companies. In previous
years, AFIP pursued a handful of major exporters for triangulating
trades through other nations and using illegitimate accounting ploys to
cut taxable profits." See here for background.
Denmark Toughens Rules On Holding Companies Tax-News
16 - "The legislation also seeks to ensure that foreign companies do
not use Danish companies as conduit companies to achieve tax-free
dividend distributions between foreign companies and non-European Union
(EU) parent companies." See the Financial Secrecy Index for information on Denmark as a secrecy jurisdiction.
Global Witness condemns API lawsuit to strike down Dodd-Frank oil, gas and mining transparency provision Global Witness
Oct 12 - "Global Witness is outraged by a lawsuit filed by the American
Petroleum Institute (API), the U.S. Chamber of Commerce and others to
gut Section 1504, an important anti-corruption provision of the
Dodd-Frank Wall Street Reform and Consumer Protection Act."
Cayman Financial Crimes Unit: Not enough SARs filed Cayman News Service
15 - "The volume of suspicious activity reports (SARs) being filed in
the Cayman Islands is far too low considering that the jurisdiction is
the fifth largest in the world, according to Detective Superintendent
Brian Donley, lead in the RCIPS Financial Crimes Unit. DS Donley said
that there had to be more suspicious activity taking place in Cayman and
compliance officers were either being prevented from reporting such
suspicious activity or were just not seeing it." Compliance officers
are, in general, conscientious - so this highlights interesting
Bank staff data handover grates in Switzerland swissinfo
17 - "The Swiss government’s authorisation to hand over bank employee
details to the United States as part of a large tax probe has riled
banking circles and divided politicians back home ... Five banks have
now delivered the names of thousands of their staff and consultants, who
in many cases were not even informed in advance and could take no
Monaco: Prince Albert's Taxing Issue CNN
Oct 16 - More on the topic of "We are not a tax haven". See also: Singapore - Full disclosure The Economist
Oct 17 - As reported in Oct 15 links, Singapore's real story ishere. Occupy London celebrates first birthday with launch of The Little Book of Ideas Occupy London
Oct 15 - ‘The Little Book of Ideas’, the free pocket sized book – written by the Economics Working Group of Occupy London – is now available for download. Includes chapters on Tax Avoidance, Tax Havens, and Accounting Transparency.
U.S.: States battle Levin effort to unmask beneficial owners, as US agencies make historic funding offer ACFCS
Oct 16 - "United States law enforcement agencies and prosecutors believe
so strongly in a law that would help uncover the true beneficial owners
of corporations formed in the various states that they have taken the
unprecedented step of offering to fund state expenses with federal
forfeiture funds. To facilitate passage of the legislation, the Treasury
and Justice Departments have offered $30 million in forfeiture funds
over three years to defray the expenses the states say would result from
Double Taxation Agreement Germany/Liechtenstein TJN Germany Blog Oct 17 - Apress release of the Federal Parliament summarizes the public technical discussion in the finance committee of the Bundestag. TJN's statement is here. Starbucks facing boycott over tax Daily Mail
17 - More on the UK Starbucks story - "Protest groups threaten to try
and close branches over revelations it hasn't paid for three years." See also: UK committees to examine Starbucks tax strategies Reuters
Oct 17 - "The legislators said such investigations should
also lead to recommendations on how to change tax law to prevent
companies from shifting profits overseas."
The Tax Justice Network (TJN) is an international, non-aligned network of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens.