Friday, November 30, 2012

Jersey confirms that Son of FATCA is on its way

Hot on last week's revelations in the International Tax Review that the British government is set to impose its own 'son of FATCA' on the UK Overseas Territories and Crown Dependencies, Jersey's Colin Powell (pictured) is reported in today's Jersey Evening Post confirming that, in the words of the JEP:  
"Jersey will have little choice but to hand over information to the UK tax man about UK residents who have bank accounts here, says the Island’s leading adviser on international affairs."
Despite our various caveats on this Son of FATCA arrangement (see here), not least the gigantic fact that this appears to be a unilateral move designed to protect the UK but not other countries, we welcome this steady ratcheting up of pressure from the UK government on its tax haven satellites. This, if indeed it comes to pass as reported, would be just a first step in a much wider process.

The message now needs to be firmly driven home that the time has come for these jurisdictions to seriously plan for a post-tax haven economy.  Sharpen those pencils please.




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UK's tax authorities called on to "step up its game"

Ahead of the imminent publication of the report on corporate tax avoidance by the UK Parliamentary Public Accounts Committee, Committee Chair Margaret Hodge has called on Her Majesty's Revenue & Customs to strengthen its stance towards companies using tax havens to shift profits offshore.  In an interview given to International Tax Review, Hodge - a Minister in the previous government - says that HMRC should
"step up its game" and "aggressively deal with those companies that are deliberately exporting profits from the UK to low-tax jurisdictions."

Elsewhere in the same interview, Hodge backs the case for Country-by-Country Reporting and aligns with TJN in supporting the case for taxing companies on a unitary basis with profits being apportioned only to those places where genuine economic activity takes place.  She does, however, caution that negotiations on these measures might be protracted, something we'd agree on, though we do see civil society taking an active role in keeping both projects moving down the street.

Read ITR's interview here, and look out for the PAC report early next week.  We expect fireworks!

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Britain's leading aid agencies unite to tackle tax havens

The Guardian is carrying the following letter in today's edition:

• The Guardian's investigation into offshore secrecy highlights a significant problem that is global in its impact. Developing countries lose vital resources for development through illicit capital flight, to such an extent that Africa is actually a net creditor to the rest of the world. Ending financial secrecy to expose corruption and tax dodging that hurts the poorest countries is a vital step in changing this reality: and that action must be global. We need a new international agreement to end the corporate anonymity and tax haven secrecy you have revealed. The prime minister has promised action at the G8, and our organisations will be working together next year to help make this happen. We are long overdue an end to the secrecy that denies resources to those in hunger and poverty.

Brendan Cox
Director of policy and advocacy, Save the Children
Christine Allen Director of policy and public affairs, Christian Aid
Neil Thorns Director of advocacy, Cafod
Max Lawson Head of policy and advocacy, Oxfam
Paul Cook Advocacy director, Tearfund
Beverley Duckworth Policy, advocacy and campaigns director, Action Aid
Mariana Merelo Lobo Director of operations, Action Against Hunger UK
Glen Tarman Head of policy and advocacy, Bond
Adrian Lovett Europe executive director, One
Sol Oyuela Senior UK political adviser, Christian Aid

TJN is thrilled to have such a widely based support. Things have moved on a very long way from the days, not so many years ago, when TJN's John Christensen would roam the corridors in the development community, trying, usually in vain, to get people interested in these gigantic issues.

Will the UK Prime Minister now get with the programme?

Worth mentioning, too, that the International Consortium of Investigative Journalists (ICIJ) and the BBC have played major roles in this investigation. 

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Calls for reform of Britain's 'last rotten borough'

Latest news: The Guardian has just posted this article with more details about those attending today's event.

An extraordinary coalition of activists, business leaders and politicians meets in London today to call for comprehensive reform of the City of London Corporation.  The newly created City Reform Group wants to radically overhaul the electoral processes of what is widely known as Britain's last rotten borough. CRG also requires a far higher standard of transparency of the Corporation's opaque and somewhat sinister finances, above all the so-called 'City Cash', which looks to outsiders like a slush fund for dodgy lobbying.

[City_of_London_map_01.jpg]

For those unfamilar with the political arrangements of Britain's state within a state, the City of London Corporation has survived for over a millenia, resisting each and every attempt at political reform, and using its financial and military muscle (yes, it still has its own militia and police force) to protect its special interests.

Behind the veneer of medeival pageantry and grotesque flummery, however, lies a powerful set of vested interests, which sees its role as projecting an economic model of de-regulated finance and economic liberalism across the world.  Read Ingrid Hauge Johansen's exposé of the extraordinary activities of the City's Lord Mayor, who carries the flag for this failed economic model to all corners of the globe.

For a wider exploration of the City's historical background and unaccountable powers read the penultimate chapter of Nick Shaxson's fascinating book, Treasure Islands: Tax Havens and the Men Who Stole the World.  If you have any doubts about the malignant power of the City and its political wing, this book will dispel them.

The newly formed City Reform Group, which meets today at Spitalfields in the City centre, plans to push for reform from within the Corporation by securing pledges from candidates for the Corporation elections in March 2013 to promote a wide series of reforms.

TJN supports the CRG's calls for reform, indeed we have been publicly calling for reform for several years and debated the need for reform with senior Corporation officials on the steps of Saint Paul's Cathedral.  But we won't be holding our breath: too many of the voters (which includes banks and other financial businesses) have a vested interest in the status quo, and history tells us that the Corporation is perfectly capable of outliving those who oppose it. Reform won't come from within; it will need to be imposed by Parliament.

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Thursday, November 29, 2012

Links Nov 29

UK May Plan FATCA-Style Regime For Dependencies Tax-News
Nov 29 - "Britain’s overseas territories, including the Crown Dependencies, the British Virgin Islands and the Cayman Islands, are expected to meet UK Government officials imminently to discuss the possibility of their exchanging more information with the UK, in the wake of a report that the UK is seeking to impose its own version of the US Foreign Account Tax Compliance Act on them."

Shipwreck in tax dispute - now sustainable solutions are in demand TJN Germany Blog
Nov 24 - Bringing you the press release of our colleagues from Alliance Sud and the Berne Declaration on the collapse of the Swiss/German tax deal.

Monti Cool On Italo-Swiss Tax Agreement Tax-News
Nov 29 - "Following recent indications by both governments that the tax treaty currently being negotiated between Italy and Switzerland could be ready by the end of this year, the Italian Premier Mario Monti and the Undersecretary for the Economy Vieri Ceriani have underlined that the talks still have some way to go ... any suggestion that Italian depositors in Switzerland should remain anonymous could be a sticking point."

Prosecutors raid German UniCredit unit in tax probe Reuters
Nov 29 - "State prosecutors raided the Munich offices of UniCredit SpA's [Italian banking group] German unit HVB as part of a tax evasion probe relating to share deals several years ago."

Italian tax probe says Google failed to declare £240m income Telegraph
Nov 28 - "Google's Italian arm has failed to declare income of €240m and pay VAT of €96m, according to a probe by Italian tax authorities, which the technology giant strongly denies."

See also:
Google Joins Apple in Drawing French Tax Collectors’ Ire Bloomberg

Nov 27 - "In what may be Europe’s first such effort, President Francois Hollande’s government says it will look into changing laws next year that will block the ability of online companies to pay levies on French earnings in European countries with lower tax rates.”

Buffett Says U.S. Businesses Haven’t Been Hurt by Taxes Bloomberg
Nov 28 - Warren Buffett said "Corporate taxes have not been a problem for corporate America ... The biggest beneficiary of reductions in tax rates in the last 30 or 40 years has been corporations, and the biggest increase has been in the payroll tax."

Secrecy for Sale: Inside the Global Offshore Money Maze - Nominee Directors Linked to Intelligence, Military ICIJ
Nov 28 - "A number of so-called nominee directors of companies registered in the British Virgin Islands (BVI) have connections to military or intelligence activities, an investigation has revealed."

Offshore secrets: government refuses to act on disclosures Guardian

Nov 28 - "UK Land Registry allows buyers to conceal identities by recording anonymous offshore entity as the purchaser."

Tax and the offshore industry: when bad money drives out good Guardian
Nov - "The stories that have been turned up in the course of the Guardian's investigation this week into Britain's offshore tax-avoidance industry have been jaw-dropping sometimes, but they underline one point: tax avoidance may well be an issue that nearly all developed countries are now trying to tackle – but Britain is at the extremes of the business of financial chicanery."

Inside Job - How crooks set up the largest bank in Afghanistan & then robbed it for almost $1 billion Global Witness
Nov 18 - ”Which banks accepted corrupt money from Kabul Bank shareholders or politically exposed persons? What measures did they take to assure themselves that the funds were not the proceeds of corruption? The answers to these questions are necessary to understand why so much corrupt money was able to flood the international financial system, to facilitate the recovery of stolen assets, and to ensure that it doesn’t happen again.”

South Sudan’s new laws offer a blueprint for a transparent oil sector Global Witness
Nov 29 - "Building a transparent and accountable oil sector in South Sudan will require serious political engagement from the government, major capacity building, and consistent implementation of the blueprint set out in the new legislation."

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Quote of the day - on the global elite

From Frederick Douglass, a leader of the 19th century abolitionist movement which brought an end to slavery:
"Power concedes nothing without a demand."
Cited in an article on tax havens in Al Jazeera on the global elite who pull the strings on tax havens.

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Wednesday, November 28, 2012

Two-thirds of millionaires left Britain to avoid 50p tax rate.

Or at least that's the headline in the UK's Telegraph newspaper. The Telegraph is often a very good newspaper, and this story is clearly going to get a lot of attention.

But this time, it has completely misunderstood the data.

Read this comprehensive demolition of the Telegraph story by TJN's Senior Adviser, aptly entitled The Telegraph’s claim that all the rich have run away because of 50p tax is completely bogus.

Did it not occur to this journalist that if most of Britain's rich people had left the country overnight, someone might have noticed?


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Links Nov 28

The UK's approach has attracted many post-Soviet billionaires, including some on the run Guardian
Nov 27 - Continuing the Offshore Secrets series (blogged here), noting that use of BVI entities to disguise Russian movement of funds into Britain appears to be widespread. See also, highlighting the New Zealand connection: At Least Half of the 21,500 Companies Revealed by the Guardian/ICIJ Offshore Investigation Have Connections With Rogue Agent GT Group naked capitalism

Treasury to crack down on UK’s offshore tax havens BVI news
Nov 26 - Interesting to read, in the British Virgin Islands press, this story on "Radical plans to force the UK’s tax havens to reveal the names behind hidden companies, account holders and trusts have been drawn up by the Treasury."

See also:
UK clampdown on ‘tax havens’? Isle of Man Today

Nov 28 - "Another dark cloud is looming on the horizon for the island’s finance sector with the UK poised to introduce more regulation aimed at clamping down on tax avoidance."

Indebted Caribbean tax havens look to tax foreign investors The Christian Science Monitor
Nov 26 - Industry analysts say new fees and taxes could bring in needed money to a region where some debts are near that of Greece. But could they scare off investors?

Tax avoidance: time for a FairTax logo to reward the good guys Guardian
Nov 27 - "HM Revenue & Customs will never name and shame tax avoiders so what about a FairTrade-style labelling system to reward those who can pay and will pay."

CEO Council Demands Cuts To Poor, Elderly While Reaping Billions In Government Contracts, Tax Breaks Huffington Post
Nov 25 - More on a story linked previously. "The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies' tax bills."

We have the power to change the rules Al Jazeera

Nov 28 - On how "Tax havens are are allowing a "tiny global elite" to "extract trillions of dollars" from rich and poor countries alike." And expressing beautifully: "Frederick Douglass, a leader of the 19th century abolitionist movement which brought an end to slavery, once said, 'Power concedes nothing without a demand'. If we want to change rules that have been written by the few and for the few, we must look outside existing power structures to the power of the many. We know from history that when people demand their rights, they can move mountains and change whole systems. Right now, there is a special moment of opportunity."

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John Kay in the FT supports unitary taxation

Following Prof. Sol Picciotto's and Nicholas Shaxson's comment piece in the Financial Times, the newspaper's regular columnist John Kay has followed it up with some commentary of his own.

Among other things, he takes to task the notion that tax competition is good:
There is an argument that low rates of corporation tax are one enticement a business friendly government can use to attract economic activity from other jurisdictions, and that such tax competition is beneficial. I am not sure this argument is very strong – the outcome is a beggar-my-neighbour process in which the winning country’s gain is necessarily smaller than its rival’s loss.
He then looks at the case of U.S. states which successfully implement what he calls 'profit apportionment' - a much nicer and more instructive term than the tax profession's term 'formulary apportionment - noting how lobbying by British multinationals in particular helped constrain the use of unitary taxation.
"Instead of attempting to estimate what fraction of a company’s total profit was earned in California and what amount in Wyoming, apportionment states taxed corporations on a share of their aggregate US profits corresponding to the share of their total US activity that took place in the state."
And his brief conclusion:
"Well conceived apportionment is the best – perhaps only – answer to the problem presented by multiple company tax jurisdictions."
Quite so. 

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Unpicking the illogic in Switzerland's "White Money" strategy

Switzerland, now recognising that its poisonous "Rubik" spoiler strategy to protect financial secrecy is dying, has rapidly swiveled its position, and its politicians and bankers are now pushing hard for what is being calling a "White Money" (Weissgeld) strategy to try and persuade other countries to go easy on the secrecy that it provides (the strategy isn't new, but the renewed emphasis seems to be, on our interpretation). The clear and regular message now is 'don't worry about our secrecy: we're going to take care of this ourselves.' Trust us.

Now who could argue against a "White Money" strategy for Swiss banks? Not us, certainly. Unless, of course, that label is merely a fig leaf: a dose of reassuring Alpine spin layered over a world of business as usual.

So which is it? Alpine spin, or real change?

Start with this headline from a Swiss online newspaper, which reflects the thrust of a number of articles currently out there. Tax evaders become pariahs for Credit Suisse. The mighty Swiss bank is going to be turning away tax evaders from its doors, apparently:
Credit Suisse does not intend to allow tax evaders to remain on as clients, he stressed. If potential clients refuse to report their assets to the tax authorities in their countries, "the bank will clearly tell them that it does not want their business," Rohner said, adding that the bank would also ask existing clients to leave if they did not declare their assets.
It sounds good, but consider the first problem. What happens when the "client" is, say, a Liechtenstein foundation or a (more Anglo-Saxon-style) discretionary trust? Under Swiss rules, there is literally no beneficial owner at all for these structures. Germans who stash money in these things -- which are bread and butter structures for the tax evasion industry -- place themselves firmly outside the scope of legislation that is supposed to relate to Germans. These assets are not, from the Swiss banks' perspective, "German." They are, to be precise, legally "ownerless", even if ultimately some Germans have the power to enjoy the income. (For a further explanation of the slippery nature of these structures, see Section 3.1 here). So if this money has no owner, who is going to declare it to their tax authority? Nobody: ownerless money doesn't have a home tax authority. That is, of course, the whole point.

But one can go a lot further than this.

Consider how, exactly, the Swiss banks are supposed to refuse tax evaders (who haven't made their assets 'ownerless' as above.) Look at this, from Suddeutsche Zeitung (translated here):
"Not all banks go so far. Especially smaller private banks are balking at a self-declaration, and they are supported by the Swiss Bankers Association. According to the trade association, this system [self declaration] does not exist anywhere else in the world. It also offers no guarantee against new black money. If someone is prepared to deceive their own tax offices, then it will not be hard for them to lie to the bank. The banks have to take the information provided by their customers at face value: they cannot, may not and should not check the declarations."
That bit in bold is key. And this brings us to the following wonderful piece of logic.
Take a European tax evader with assets in a Swiss bank. Under the European Savings Tax Directive, they have two options: either they submit to the 'declaration' option whereby information about their income will be transmitted automatically to the home country's tax evader, or they choose the 'withholding tax' option, where tax is withheld but their identity is kept secret from their home tax authorities.

Consider each option in turn. First, if the client opts for 'declaration' under the current system, then the 'self declaration' described by Credit Suisse is quite pointless. They are already declaring.
As for the 'withholding' option, consider this. What client is going to want to declare their income to their home tax authorities (and hence be taxed) - then get the Swiss bank to withhold taxes on it? What ever would the point of that be? If you choose the information exchange option, you don't get the taxes withheld.  So you would certainly not do this for tax reasons, and you would not do it for non-tax confidentiality reasons either: the client has already declared that they have broken confidentiality by self-declaring.

To conclude: if you see Switzerland subsequently handing over any money to Germany from this withholding tax option, you will know that the white money strategy is a hoax.
So what ever could the point of this white money strategy be?

Not a whitewash, surely!

If Switzerland were serious about having 'white money' in its banks, the solution would be very simple indeed: sign up for full automatic information exchange under the EU Savings Tax Directive.
And why not renounce banking secrecy while they are at it? Then we can start talking about white money.

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Why Britain is still the world's money laundering centre

From Rowan Bosworth-Davies, a voice of authority on financial crime, commenting on the excellent offshore investigations by the International Consortium of Investigative Journalists, together with the Guardian and the BBC:
All in all, it was a very grubby tale of greed and as blatant a piece of criminal law-breaking as you could expect. In one scene, a corporate services provider proposed that he would invite a local bank officer to come to a meeting in his offices to meet the purported launderer, and complete the banking formalities. Easier than going to the bank, was how he put it.
What made it all so acutely depressing was that there was no evidence that HMRC had ever prosecuted any of the corporate services providers under their supervision, for any breaches of the Money laundering Regulations, or indeed for straight-forward money laundering itself.
And then some colourful but apt further commentary:
The real problem in all of this is that the Money Laundering Regulations have never been properly policed, and never effectively enforced. That is where the answer to money laundering interdiction lies, in the enforcement of the Regs, but why will no-one, absolutely fucking no-one, step up and take the lead on this?
Bosworth-Davies, a former detective with many years' experience fighting financial crimes, notes that the UK's Financial Services Authority (FSA)
"have consistently refused to accept their Parliamentary responsibilities to enforce the Money Laundering law within the financial sector. HMRC cover another sector, and other agencies have input, but absolutely nothing gets done, and eventually the industry realises that there is no point bothering with a compliance regime because no-one enforces it.
I have been forced to come to the conclusion that Government does not really want the AML [Anti Money Laundering] laws to be enforced - they cannot do so, because they spend such little time and effort insisting on enforcement. . . . in practice, just keeping their noses out of the issue, for fear that too much regulation and compliance with international laws might mean putting off some of the slew of dirty money that is constantly flowing around the world looking for a safe haven, from coming to the UK."
For anyone who has even just dipped into Treasure Islands, they will see how true this is. This is the business model.
"we might as well fill our coffers with the profits from the drug trade and other people's tax evasion, and as long as we pay lip-service to the FATF guidelines, and make sure that we don't get put on some nasty blacklist (which we won't because we make sure we are well-represented at FATF meetings), and as long as we keep pointing the finger of non-compliance at Iran or Pakistan or wherever, we will get away with it."
So very unpleasantly true. And there is much more in there, well worth reading.

See our earlier blog on the issue, here.

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Tuesday, November 27, 2012

Links Nov 27

The Real Story Of How A Hedge Fund Detained A Vessel In Ghana And Even Went For Argentina's 'Air Force One' Forbes
Oct 5 - More on a big story linked previously. "The country has vowed to fight those remaining bondholders. They accused NML of using the Cayman Islands to avoid legal and tax issues (“a [tax haven] that has been denounced by the G20 and the UN”)."

If we want to make poverty history we've got to tackle corruption first Guardian
Nov 26 - Op-ed by Global Witness. "Why do governments ignore offshoring? It's the biggest obstacle to alleviating poverty."

Where is Africa's share of the spoils? The Independent
Nov 26 - Dr Vince Cable, UK's Secretary of State for Business, Innovation and Skills, outlines the need for transparency in the extractives industries.

Pictet joins list of banks investigated by US swissinfo
Nov 26 - "Pictet & Cie has confirmed that it is under investigation by the United States justice department as part of a probe into Swiss banks allegedly aiding wealthy US clients avoid tax." Pictet is Switzerland’s largest unlisted private bank, with an international presence including offices in several secrecy jurisdictions.

Swiss banks terminate accounts of German clients WirtschaftsWoche (In German)
Nov 26 - Following the collapse of the Swiss/German tax treaty, Swiss banks are reported to be telling their German clients to come clean on their taxes or close their accounts.

Liechtenstein Eyes New Tax On Top Earners Tax-News
Nov 27 - Liechtenstein, amongst other tax havens, is now feeling the pinch and trying to pull in greater revenues from it's own taxpayers.

A Minimum Tax for the Wealthy NY Times
Nov 25 - Warren Buffet renews his call for the wealthy to pay their fair share of tax, and notes that "it’s sickening that a Cayman Islands mail drop can be central to tax maneuvering by wealthy individuals and corporations."

A Failed Experiment NY Times
Nov 21 - On a decline of public services accompanied by the rise of private workarounds for the wealthy.

A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts IPS 
Nov 27 - Report from The Institute for Policy Studies looks at the enormous executive retirement plan and underfunded worker retirement plans of the Fix the Debt companies who are calling for a territorial tax system funded by cuts to Social Security and Medicare. Hat tip: Scott Klinger. See also: 'Fix The Debt' CEOs Underfund Employee Retirement, Demand Cuts For Elderly Huffington Post and the last report from IPS on the 'Fix the Debt' Campaign The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks (linked previously).

Kabul Bank 'diverted £540 million to group of 12 in massive fraud' The Telegraph
Nov 27 - "Afghanistan's biggest private bank was a massive fraud scheme from its founding, with £540 million ($861 million) diverted to a clique of beneficiaries including the president's brother, a British-funded audit has found."

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Quote of the day - regulatory competition

The quote is:
“We often encounter pressure from some sections of the industry that ‘If you don’t do X . . . then we will go somewhere else and Hong Kong will suffer’,” he said. “We always, always take that with a very heavy pinch of salt.”
Who is this Socialist firebrand? None other than Ashley Alder, lead market regulator in the tax haven of Hong Kong. Every now and then, the offshore world can surprise you. 

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Monday, November 26, 2012

Links Nov 26

Spain: Technology giants, tax dwarves El País
Nov 23 - Apple, Microsoft, Google, Facebook, Yahoo, Ebay and Amazon generated billions of Euros in sales but paid only 25 million Euros to the Treasury in the past three years.

Cayman networks in China Cayman News Service
Nov 23 - On Cayman's representation at a China Offshore Summit. "Besides private-sector firms such as law firms and company formation specialists, jurisdictions in attendance included Cook Islands, Samoa, the Bahamas, Cyprus, and the British Virgin Islands."

“The concept of a withholding tax has failed” swissinfo
Nov 24 - "Most Swiss newspapers have given the last rites to the withholding tax model, following the “no” from the German upper house of parliament to a tax treaty aimed at legalising undeclared assets held by Germans in Swiss banks ... 'The time has come for Plan B,' reckoned Le Temps in Geneva, adding that this officially didn’t exist."

If you thought tax evasion was insignificant think again – managing it represents 6 – 7% of the Swiss economy Tax Research UK

Nov 25 - Commenting on the Austria and UK governments continuing to support the Rubik agreements.

Swiss probe $139M SNC-Lavalin laundering case CBC
Nov 25 - The case involves a network of Swiss bank accounts and BVI companies with lone directors. "SNC-Lavalin knowingly allowed and condoned the use of millions of dollars to fund lobbyists in the Middle East to get lucrative contracts with major leaders of some countries, particularly in Libya," the suit claims.

Kodi Katika Afrika ATAF
Link to the newsletter Kodi Katika Afrika (meaning 'Tax in Africa' in Swahili), which we have linked before. Latest issue is Nov 20.

Africa Lost 1.6 Trillion in Capital Flight and Odious Debt Over Forty Years The Real News
Nov 26 - Featuring new research from new research from one of the authors of Africa's Odious Debts, Léonce Ndikumana.

U.S.: Early Dividend for Wal-Mart Is Latest Move in Tax Tactics NY Times
Nov 19 - "The Walton family, which founded Wal-Mart, could save as much as $180 million in federal income taxes after the huge retailer announced Monday that it would pay out its quarterly dividend on Dec. 27 instead of Jan. 2, as was scheduled."

Inequality is Killing Capitalism Project Syndicate
Nov 21 - Although not a new analysis, this is a good account.

Quote of the day: the City of London’s Good Chaps Treasure Islands
Nov 26 - From Rowan Bosworth-Davies, on the UK’s Financial Services Authority: "They think that by staffing themselves with former civil servants and Bank of England careerists, all of them suffering from the ‘Good Chaps’ syndrome to the core, that they think they can somehow regulate a market full of some of the most evil crooks and wide boys under the sun."

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UK, France, Germany to supercharge tax avoidance fight?

TJN's Senior Adviser Sol Picciotto and writer Nicholas Shaxson mentioned this in their Financial Times comment article last week:
George Osborne, the UK chancellor of the exchequer, and his German counterpart Wolfgang Schäuble have said they will engage with the OECD to tackle the problems in international tax.
How serious is this? Well, thanks to The Telegraph, we have more details:
"George Osborne, Wolfgang Schaeuble, the German finance minister, and Pierre Moscovici, the French finance minister, have written to the Organisation for Economic Co-operation & Development (OECD) with a pledge to provide €150,000 (£120,000) each to help stamp out “profit shifting” and ensure major companies pay their fair share of tax."
£360,000 to solve this gigantic, corrupting faultline in global capitalism. That should do it!

Hat tip: Nick Mathiason

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Offshore secrets: new ICIJ/Guardian investigation

The UK's Guardian newspaper has, together with the BBC's Panorama and the Washington-based International Consortium of Investigative Journalists (ICIJ,) put together a large-scale investigation of the offshore industry and its secrets. Read the opening article, and follow the associated links at the Guardian and also the ICIJ website, which promises to have even more. None of what in this excellent investigation will surprise readers of Treasure Islands, but it is extremely important to have such an in-depth investigation bolstering our case.

The investigation begins:
The existence of an extraordinary global network of sham company directors, most of them British, can be revealed.
BBC Panorama tonight will show an undercover investigator asking James Turner, of Turner Little in York, to help him hide money stashed in a Swiss bank, and he offers nominee directors in Belize and says:
"They won't even know that they were a director, they just get paid."
That bit in bold is extraordinary, and it seems it's not uncommon either: another company representative explained "that many of its nominees are not even aware of how their names are being used." The investigation finds 21,500 companies through just nominee directors. They find the British Virgin Islands (BVI) particularly troubling - something that TJN has been shouting about for a long time: while Cayman is the first Caribbean jurisdiction most people think of in the context of tax havens, the BVI has not got nearly enough attention. This needs to change, dramatically. The UK appears to have some plans to clean up, but as we've noted, while this appears to be significant we don't have a lot of confidence in its potential for real change.
"This Caribbean territory, which is ultimately controlled by the UK, has sold more than a million anonymously-owned offshore entities since launching itself in 1984 as a tax haven."
We are also delighted to read that a worldwide research effort has been launched this year by the ICIJ. It aims to identify, country by country, thousands of the true owners. 
"We are applying specialist software to crunch through literally hundreds of thousands of offshore entities to look for patterns. We are marrying our findings with old-fashioned shoe leather and interviews from key insiders who can provide further context on this little known and loosely regulated world."
An official from one of the companies approached, in Hertfordshire in the UK, said:
"if we were approached by the Indian tax authorities and they say we believe you are acting for this client and he is doing money laundering, we would give the information. If they said we were acting for this client and they are doing tax evasion, we wouldn't give a monkey's."
 And the subsequent conversation made matters somewhat worse. Another official is described:
"(he) offers his customers "anonymity of the ultimate owners". He tells them: "The prime advantage … is to place the 'management and control' issue firmly outside a high tax jurisdiction." This allows the owners to claim the company is being run from an overseas tax haven, rather than from where they live."
Now read on. This is what the Fourth Estate is for. Gradually, bit by bit, fragments of Britain's "second empire" are being dragged out into the light of day. Why has Britain not reformed this swamp?
"The UK government refuses to step in and make reforms. One reason was candidly spelled out by Michael Foot, a former Bank of England official and Financial Services Authority managing director. He reported to the then Labour chancellor, Alistair Darling, in a Treasury paper published in 2009, saying that to abolish the BVI's secrecy regime "would be likely to result in a loss of business".
It really is as sordid as that. There are of course many other aspects of this we'd like to see covered, for instance:
  • they don't talk very much about layering - where nominee directors and shareholders are other shell companies, or trusts. This is an essential component of any "sophisticated" scheme.
  • The investigation seems to focus more on nominees being independent service providers or small firms: they (perhaps for reasons of libel management) don't really talk about where nominee directors and shareholders are provided by and within banks & trust companies, wealth management arms of some well-known names. That would make a very interesting area to explore (see more on that in our intermediaries project.)
 Further articles so far:
  • BBC's Panorama shows staff admitting nominee directors are often a sham (with associated video)
  • Sham directors: the woman running 1,200 companies from a Caribbean rock (with associated video). A focus on Nevis. "If Britain is crying about its tax dollars, that is not really a problem for us," a Nevis official says. And, of course, Britain is just one of many, many countries suffering.
  •  The 'Sark Lark' Britons scattered around the world.
  • British Virgin Islands, land of sand, sea and secrecy. The world's biggest provider of offshore entities, yet the UK refuses to step in and force it to reform. We have for some time been strongly encouraging journalists to put a spotlight on the BVI. We are delighted to see this scrutiny. "The paperchase can often be costly and almost endless, giving suspects time to empty their accounts and cover their tracks."
  • The offshore trick: how BVI 'nominee director' system works. A handy graphic, showing three letters that the nominees send to their clients, included an undated resignation letter, allowing the nominee to duck liability at the drop of a hat; a general power of attorney handing back all control to the client, and the use of couriers to send information. We will post this on our 'mechanics of secrecy' web page.
  • Vince Cable promises to investigate offshore sham director industry.
  • Post-Soviet Billionaires Invade UK ... Via British Virgin Islands
And the Guardian's investigation will continue through the week. Read about it here. The ICIJ is promising a multi-year investigation, which will be an important global resource on tax havens for years to come. Click here.



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Friday, November 23, 2012

The Tax Justice Network's November Taxcast



In November's Taxcast: is it the beginning of the end of tax avoidance for multi-national corporations? Some countries fight back. And the Finance Curse - why an oversized finance sector's bad for an economy. A special extended edition.


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Links Nov 23

German Senate blocks divisive Swiss tax deal swissinfo
Nov 23 - More reporting on the rejection of Rubik by the German upper house of parliament.

How GSK orchestrated a law that saved them 405 million Euro in taxes Médiattitudes (In French)
Nov 23 - David Leloup reports on how the pharma giant engaged in lobbying that resulted in the passing of a law that enabled them to avoid 405 million Euro in taxes on patents.

India: GAAR amendments finalised Hindustan Times
Nov 23 - "Amendments to GAAR, the controversial law against tax avoidance through foreign investments, have been finalised, finance minister P Chidambaram disclosed."

Cayman Islands profile BBC
Nov 22 - "One of the world's largest financial centres and a well-known tax haven, this British overseas territory in the Caribbean has more registered businesses than it has people..."

Operation Tempura complaint ordered released Compass Cayman

Nov 22 - Operation Tempura in Cayman is a corruption case highlighting alleged misgovernance between Britain and its offshore financial centres. This latest news is a very important ruling.

Liechtenstein pens tax deals with South Africa, Bahrain Expatica Switzerland
Nov 21 - More news on how Liechtenstein "is keen to boost its image as a more transparent tax haven." See also "We are not a tax haven."

BVI students exposed to careers in financial services BVI News
Nov 22 - "The BVI International Finance Centre (BVIIFC) in partnership with industry professionals participated in the ... ‘Career Expo’ held at the Catholic Community Centre in Virgin Gorda last week." Heads in the sand?

France says Google would lose court case over taxes Phys
Nov 20 - French Junior Minister for Budget, Jerome Cahuzac, "said he had 'the most genuine conviction' that the courts would back France's claim against Google over unpaid taxes."

UK: Corporation tax black hole raises spectre of further cuts The Independent
Nov 21 - "A slump in corporation tax receipts in October has knocked the Government’s deficit reduction plans for this year further off course. It also raises the likelihood that the Chancellor will be forced to outline further cuts."

Tax avoidance is also an ethical issue Herald Scotland
Nov 22 - "The question often raised is whether such arrangements are ethical. Morality is not a concept that troubles those charged with drawing up balance sheets. Politicians and businesses are increasingly aware that terms such as "legitimate tax avoidance", "tax efficiency" and "tax planning" are the focus of public anger."

Why these huge corporation tax losses could be just the tip of the iceberg The Independent
Nov 22 - Richard Murphy explains that his research, based on the accounts of major UK companies and published by the TUC in both 2008 and 2010, estimated that the total loss to tax avoidance by such corporations might have been £12bn a year at that time - and that there are various reasons why this estimate will now be low.

Whistleblowers reveal bonus targets Santander staff are pushed to hit  The Is Money
Nov 15 - Whistleblowers reveal how Santander coaxes staff to hit targets by selling inappropriate products. Awful stuff. See also report from last July Case Against Chairman of Banco Santander Is Dropped New York Times on Spain’s national court closing a tax fraud investigation on Emilio Botín, the chairman of Banco Santander, and 11 of his relatives.

Land of the corporate giants The Economist
Nov 3 - "Economies of scale run out at a certain point. The largest firms in America may be beyond it."

Beware the next financial blindspot Financial Times
Nov 22 - Describing the perils of policy-making in silos - and mental blindspots - highlighting how the shadowy network of non-bank finance entities in London poses systemic risks, and asking what issues continue to fall through the cracks.


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UK government to take British tax havens to task? Up to a point

Nov 25: updated to add non-dom loophole.

International Tax Review has just published the following story, which we think is potentially significant, but we'd add several important, even major, caveats: see underneath the story.)

A leaked government document seen by International Tax Review reveals that the UK is planning to impose its own version of the US Foreign Account Tax Compliance Act (FATCA) on its Crown Dependencies and Overseas Territories. The move will deal an almost-fatal blow to tax evasion through the UK’s tax havens.
Responding to an International Development Committee report earlier this week, the government publicly rejected the need for a UK version of FATCA the need for a UK version of FATCA, which would require tax authorities to automatically exchange information relating to UK citizens or corporations.

In private, however, the government has already drafted FATCA legislation which it will impose on its Crown Dependencies and Overseas Territories. These include some of the world’s most notorious tax havens such as the Cayman Islands, the Channel Islands and the Isle of Man.

The draft agreement, seen by International Tax Review, will require the automatic exchange of information for each reportable account of each reporting financial institution. That will include full details of all beneficial owners of the account, including those whose identities might otherwise be hidden by trusts or companies

It will also require the account number, name and identifying number of the reporting financial institution as provided when registering with the IRS for FATCA purposes, and the account balance or value as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, immediately before closure.

The move will come as a huge blow to tax havens and companies and individuals hiding money in them. But it is a coup for the Tax Justice Network (TJN), which has long been arguing for automatic information exchange.

“This is a requirement for full, open disclosure,” said the TJN’s Richard Murphy. “It looks through trusts, companies, who owns the assets. It’s full automatic information exchange.”
(Continue reading to see the whole story.)
If this goes ahead as flagged here, it does represent a very significant advance, not least for its embrace of the concept of automatic information exchange. We would add a couple of important, even major, caveats, however.

First, FATCA was originally designed as a unilateral mechanism to protect the fiscal position of the United States from offshore erosion. That is a valuable goal, but that does not help other countries. This looks, on the face of it, to be a similar move: the UK government moving to protect the fiscal position of the United Kingdom. It will do nothing - at least immediately - for developing countries. So this does not signal any end of the 'feeder' relationship that Britain's tax havens have with respect to the City of London, as Treasure Islands outlines in detail.

Second, as usual Britain's "non-domiciled" taxpayers, who pay tax only on their domestically-sourced income, will be exempt from all this. These include the majority of Britain's very wealthiest citizens, so the non-dom loophole is a very large one indeed.

Third, this section will require careful analysis
"That will include full details of all beneficial owners of the account, including those whose identities might otherwise be hidden by trusts or companies."
That sounds good but trusts can be so very slippery - discretionary trusts are a particular case in point - that it is possible that billions or even trillions in assets would remain out of the scope of this. Britain's tax evasion and avoidance industry has made a living out of navigating these complex distinctions. Will this include foundations? (We recently noted, for instance, Guernsey introducing foundations, which "gave a multiplicity of control retention mechanisms over key decisions for the founder while offering a higher level of confidentiality than trusts.") We will remain skeptical for now, but would be delighted to be proved wrong.

Fourth, these jurisdictions will still offer zero percent and low tax rates, and tax exemptions, which even if all this comes to pass will enable a whole cornucopia of abuse, even by British companies.

Fifth, we note this recent UK parliamentary exchange:
We recommend that the Government introduce legislation similar to the relevant section of the US Foreign Account Tax Compliance Act (FATCA), requiring tax authorities automatically to exchange information relating to UK citizens or corporations. The Government should also use its influence (via the OECD Tax and Development Task Force, and similar avenues) to persuade other governments to follow suit. (Paragraph 41)

Disagree.
The Government is fully committed to tackling tax evasion and sees transparency and information exchange as key tools but does not regard the introduction of FATCA in the UK as an appropriate means to achieve this. FATCA is unilateral and extraterritorial in its approach and has created significant difficulties for the US as well as affected countries in its implementation. The UK approach is to work in partnership with other governments, including those in developing countries, to increase tax transparency and exchange of information. The Government works closely with the G20, EU and OECD to deliver real progress in international tax transparency and substantially increase levels of information exchange. 
It would seem, however, that the Department for International Development may have been misled on this one.
 
However, even after saying all that, this new initiative behind the scenes could be significant. Change takes place step-by-step and FATCA has been, is, and will continue to be a major factor in the implementation of automatic exchange of information. 

The British government should now throw its weight firmly behind the principle of automatic information exchange, on a multilateral basis, in addition to moving on this apparent Son of Fatca - if that is what it is - as soon as possible.  

Britain's appalling track record in this general area constitutes grounds for severe caution. But that is not to take away from the fact that if this move is genuine, it represents genuine progress. And among other things - as Robert Palmer notes - it does show that Britain remains in a position to require its satellite tax havens to submit to its authority.


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Germany rejects Swiss tax deal, TJN slams UK

From Reuters:
Germany's upper house of parliament on Friday rejected a deal with Switzerland to tax assets stashed by German citizens in Swiss bank accounts.
. . .
The tax deal could still be salvaged in a mediation procedure that seeks to resolve differences between the Bundestag, the lower house of parliament, and the Bundesrat, but the chances of that happening are slim.
TJN writer Nicholas Shaxson, author of Treasure Islands, has a big article in The Guardian today anticipating this move and explaining how the spotlight now falls on Britain. it begins
The world is seeing the first stirrings of an emerging new architecture of global transparency in taxation which could, if pushed forwards, help governments for the first time raise serious revenues from the estimated $21-32 trillion sitting offshore. Switzerland, in alliance with the tax havens of Luxembourg, Austria and Britain, is leading the charge to derail it.
Swiss politicians are putting a brave face on this, and still holding out hope for a route through to a deal. Commentary on Shaxson's article is here.

Cartoon hat tip: here

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Thursday, November 22, 2012

Links Nov 22

Press Release of the Alliance: "No Way of Escape for Tax Cheats" TJN Germany blog
Nov 22 - On the day before the vote in the German Bundesrat on the tax agreement with Switzerland, the alliance "No Way of Escape for Tax Cheats" puts forward a set of measures with alternatives to the tax treaty. Points out why and how a common, coordinated action against tax fraud is needed, instead of a confusing mesh of bilateral agreements and special arrangements. See the statement here.

Italo-Swiss Tax Deal Expected In December Tax-News

Nov 22 - "It is expected that, under the agreement, Italian holders of Swiss accounts will remain anonymous."

Former UBS Paris head placed under investigation Reuters
Nov 19 - "The former head of UBS's French arm has been placed under investigation as part of a months-long probe into allegations the Swiss bank aided clients evade taxes, a judicial source said ... He is also being investigated on suspicions of money laundering". Hat tip: Offshore Watch.

Four more years of Swiss-US banking tension? swissinfo

Nov 22 - "Although Switzerland was given a black eye by the Obama camp during the United States presidential campaign for sheltering some of Mitt Romney’s fortune, a top Swiss official claims banking secrecy will not dominate Obama’s final term ... Experts in the United States, however, warn that tax evasion in Switzerland will remain a “hot button issue” for Washington."

Mexico, US Sign FATCA Agreement Tax-News
Nov 22 - "Foreign financial institutions (FFIs) across the world have all expressed concern about the legislation, particularly the changes to their systems it will entail, and the penalties that will ensue in case of non-compliance. Those concerns led the US Treasury to pursue government-to-government frameworks for implementing FATCA." For an overview of The U.S. Foreign Account Tax Compliance Act (FATCA) see here.

Seized ships and hungry vultures: the piratical world of hedge funds define modern capitalism
 The Independent
Nov 22 - "Protests uniting Ghana with Argentina offer an insight into vulture funds: a dark new force in modern business which are making indebted countries suffer further." The article goes on to describe "the leitmotif of the “Vulture Fund”; feeding off toddling, recovering nations from murky secrecy jurisdictions." See also: Argentina against Vulture Funds Third World Network Hat tip: Jorge Gaggero.

Arrest of Maxim Bakiyev raises concerns over his activities in the United Kingdom Global Witness
Nov 19 - On the activities of the son of the former president of Kyrgyzstan who now resides in the United Kingdom. See also Grave Secrecy, a report published in July 2012 that highlighted shell companies registered in New Zealand and the United Kingdom that were involved in suspicious activity in Kyrgyzstan’s then-largest bank in the months before the Kyrgyz revolution of April 2010.

Australia: Tax Office wary of 'Double Irish Dutch Sandwich' ploy The Age

Nov 22 - "The government is preparing for an assault on companies such as Google that funnel their Australian income through low-tax countries such as Ireland and Singapore."

See also:
Giant profits, tiny tax bills: time to close loopholes on corporate tax avoidance The Conversation
Nov 22 - Gives examples from the Australian perspective, explaining how some of the dodging mechanisms work. Cites TJN and "Nicholas Shaxson's magnificent book Treasure Islands: Tax Havens and the Men who Stole the World."

Beating tax cheats key to Italy’s recovery plan Salon / Associated Press
Nov 14 - "Good plumbers may be worth their weight in gold, but when one was spotted zipping around in a bright red Ferrari, Italian tax police were fast on his trail ..."

‘Secretive tax haven’ Jersey Jersey Evening Post
Nov 22 - "Jersey has been labelled ‘one of the most secretive tax havens in the world’ in the House of Lords after it was revealed that UK citizens hold some £19 billion in Jersey, Guernsey and Isle of Man accounts."

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Wednesday, November 21, 2012

Links Nov 21

Mexico inks pact with U.S. to crack down on tax cheats Reuters
Nov 20 - "Mexico's finance ministry said on Tuesday it has approved an agreement with the U.S. Treasury Department that aims to help stamp out tax evasion." See reference to Agustin Carstens in  letter from TJN to the UN of January 2011.

German-Swiss Tax Deal Set to Fail  Wall Street Journal
Nov 20 - "Germany's opposition Social Democrats and Greens are set to block passage Friday of a Swiss-German tax accord, scuttling a controversial deal to get Swiss banks to hand over taxes owed by German citizens with secret bank accounts there." We've blogged this shabby deal frequently, latest here.

Swiss bankers say foreign assets not blunted by tax evasion deals
Washington Post
Nov 21 - "Swiss Bankers Association CEO Claude-Alain Margelisch says there has been 'no noticeable shift of foreign client money to other countries' contrary to expectations that Swiss tax agreements might prompt huge withdrawals."

The world’s tax havens are just laughing at regulation meant to control them Tax Research UK
Nov 20 - Richard Murphy on the farce of the OECD's bilateral Tax Information Exchange Agreements. Illustrating the point, he provides a revealing list representing 20% of existing agreements.

Tax can promote growth and equity, says the IMF…but how? Martin Hearson's blog
Nov 21 - Insights on recent findings by the IMF, from Martin and from Mark Herkenrath of Alliance Sud. Refers to IMF working paper Tax Composition and Growth: A Broad Cross-Country Perspective survey and survey Tax Policy Can Help Spur Economic Growth.

Latin America: Tax revenues are rising, but still low and varied among countries OECD
Nov 13 - Report, produced jointly by the OECD, the Inter-American Centre of Tax Administrations (CIAT) and The Economic Commission for Latin America and the Caribbean (ECLAC), notes that "Tax revenues in Latin American countries are lower as a proportion of their national incomes than in most OECD countries, but are rising slowly."

Africa: Experts to Review Africa's Tax Incentives allAfrica
Nov 20 - "The African Tax Administration Forum has embarked on a campaign to review tax incentives, which most African countries have agreed with multinational companies." See also TJN-Africa reports on tax incentives and revenue losses.

Africa: Rich Presidents of Poor Nations - Capital Flight From Resource-Rich Countries in Africa allAfrica

Nov 20 - Article by Léonce Ndikumana and James K. Boyce, authors of Africa's Odious Debts. "These pathologies are perpetuated by complicit foreign special interests and a shadow international financial system that enables the perpetrators of financial crime to walk free thanks to banking secrecy."

Guinea's battle against corruption: which side is the west on? Guardian
Nov 15 - "... the clandestine flows of dirty money essential for corruption ... depend on an army of facilitating lawyers, accountants and bankers. They are the people who establish shell companies and nominee bank accounts to conceal true beneficial ownership, and whip money across borders far faster than the lumbering process of inter-governmental legal co-operation."

Free Enterprise Is Not Free Huffington Post
Nov 20 - TJN-USA Executive Director Nicole Tichon explains how - "There's real money in cracking down on offshore tax dodging. Congress needs to close these loopholes and make large corporations pay taxes in the same country that provides them with the benefits and legal protections that make it so profitable to operate in the United States in the first place."

Global shell game: Nations must close loopholes on tax evasion Pittsburgh Post-Gazette
Nov 19 - "Multinational companies have a responsibility to their investors to maximize profits. But it's up to the nations in which they do business, including the United States, to close the loopholes that let them turn their tax liability into an international shell game." See also: European Countries Seek More Taxes From U.S. Multinational Companies Wall Street Journal.

How The Government Set Up A Fake Bank To Launder Drug Money NPR

Nov 20 - "In the early 1990s, Colombian drug cartels had a problem: They had more money than they knew what to do with. So a pair of federal agents created an offshore bank..."

Jersey puts stop to vulture funds circling its courts Guardian
Nov 20 - "Tim Jones, policy officer at Jubilee Debt Campaign, which is campaigning for the cancellation of debts owed by poor countries, said: "We warmly welcome this legislation to protect 40 countries from odious vulture fund claims in Jersey. However, vulture funds continue to cause havoc across the global economy."

The Amazon Debate Milestone
Nov 16 - This piece is not sympathetic to TJN's view, but it does contain an in-depth look at some of the tax issues regarding Amazon. See yesterday's comment article by TJN Senior Adviser Sol Picciotto and writer Nicholas Shaxson in the Financial Times Make Corporate Tax Rules Fair For All

Media point finger after UBS trader verdict swissinfo

Nov 21 - A view of press commentary on the sentencing of former UBS trader Kweku Adoboli in London for fraud, following the bank's $2.3 billion (SFr2.2 billion) loss incurred by UBS through Adoboli’s trading.

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From The Bookseller:
Booksellers across the country are displaying “We Pay Our Taxes” posters in their shop windows in a reference to rival company Amazon’s appearance in front of the Public Accounts Committee last week (12th November).

The Booksellers Association has created striking red point-of-sale materials for its IndieBound members to encourage their customers to choose to shop at their local bookshop as opposed to using rival online site Amazon.

The first of the two POS styles reads: “Your Money, Your Bookshop, Your Community", with a stack of pound coins followed by the message “We Pay Our Taxes”; the second features a Union Jack-patterned purse with the message “Can Pay Do Pay!”, followed by “We Pay Our Taxes.”
And the Booksellers' Association website says:
"As part of the BA's Keep Books on the High Street campaign, we are encouraging all our friends and partners in the book trade to take a step in favour of contemporary high street bookshops.  We believe consumers deserve the choice of shopping with their local bookseller, whether on the high street or on their website.  So we urge you to introduce the idea of bookshops to your website visitors."
We would wholeheartedly support this. The use of national flags in campaigns can sometimes be dangerous, but in this instance it's absolutely apt: paying tax is one of the most patriotic things one can do.

Hat tip: @KarolinaSutton


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Parliamentarian calls for British companies to lead on Country-by-Country Reporting

Intenrational Tax Review reports that Conservative Member of the UK Parliament, Stephen McPartland, has joined the call for UK companies to take a lead on Country-by-Country Reporting (CBCR).  As ITR reports:

UK Conservative MP Stephen McPartland calls for country-by-country reporting
20 November 2012
Matthew Gilleard - ITR
Stephen McPartland, a Conservative member of the UK parliament, told International Tax Review he is committed to country-by-country reporting and has called for the UK’s largest companies to lead the drive for tax transparency.
The Stevenage MP says he believes in greater transparency, and has written to the chief executives of all the FTSE 100 companies to ask them if they are willing to pledge their support for corporate tax transparency and if they will support a new international accountancy standard for country-by-country reporting.
“It is extremely important that large multinationals take the lead on the issue of tax transparency. It’s the most realistic way of getting progress on the issue,” said McPartland. “It is time for a concerted international effort to tackle corporate tax avoidance and for multinationals to actually commit to tax transparency. Governments from around the world will agree with the sentiments of greater tax transparency, but they will struggle to introduce it as every nation competes in the global race.”
Therefore, he said it is up to companies to lead the way. The only way to do that, McPartland argues, is if those companies’ customers – the British public – “drag them kicking and screaming towards tax transparency and a fairer tax system for us all”.
“I believe in greater transparency. Country-by-country reporting is the way forward,” reiterated McPartland. “The current standard only requires reporting on a global basis, and while that’s the case, companies will move profits around the world.”

reproduced here with kind permission from ITR

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Tuesday, November 20, 2012

Links Nov 20

Exec braces to tackle tax havens and aggressive tax planning Europolitics
Nov 19 -" The European Commission will present, on 5 December, an action plan to combat tax fraud and evasion in the EU. It will propose, among other measures, that the 27 tackle head-on tax havens and aggressive tax planning."

Switzerland blocks more than 200 requests for tax information from France Le Temps (subscription)
Nov 19 - Of hundreds of requests for information on French taxpayers with holdings in Swiss banks, "very few responses" have been received, despite claims by Switzerland of being willing to provide information to assist in cases of tax evasion.

Dirty Money Paradise Switzerland? Club 2 (In German)
Nov 18 - Discussion on Swiss bank secrecy, includes whistleblower Rudolf Elmer.

Greek-Swiss Bank Tax Deal Hits Snags Greek Reporter
Nov 19 - "Greece has been trying to reach a deal with Swiss authorities and banks there so that Greeks with deposits there can be taxed, but Swiss banks have refused to provide any information, adhering to their infamous secrecy."

Guernsey Foundations Explored In London Tax-News
Nov 20 - Reporting on expansion of wealth management vehicles in Jersey and Guernsey -"...foundations removed some of the uncertainties associated with trusts: ... they gave a multiplicity of control retention mechanisms over key decisions for the founder while offering a higher level of confidentiality than trusts."

Brazil: Sao Paulo ex-mayor guilty of stealing public funds BBC
Nov 17 - "The former mayor of Brazil's largest city, Sao Paulo, has been found guilty of stealing millions of dollars from public funds and diverting them to his offshore accounts in Jersey."

Illicit Financial Flows (Dirty Money) and Safe Havens as Enablers of Transnational Organized Crime U.S. Department of State
Nov 17 - Great speech by David M. Luna, Director for Anticrime Programs , Bureau of International Narcotics and Law Enforcement Affairs.

U.S.: New Poll Shows Tax Fairness Was Important Consideration for 2/3 of Voters Americans for Tax Fairness
Nov 20 - "Voters want to reduce the budget deficit by increasing revenue through progressive tax measures, not by cutting Medicare and Medicaid - 84 percent of voters approve of increasing taxes on the profits American corporations make overseas, to ensure that they pay the same taxes on those as they do on domestic profits."

Little will for reform over tax haven status Belfast Telegraph

Nov 20 - "Ireland's 'tax haven' status is becoming uncomfortable but there's little sign of any real political will for reform."

UK: High-street shops turn fire on Amazon's tax avoidance Guardian
Nov 20 - "Indie booksellers advertise their tax returns in dig at online giant's alleged use of tax havens."

UK: Comet staff demand MPs probe boss Jackson The Sun
Nov 15 - Tabloid newspaper supports worker claims for transparency of financial information on collapse of a high street electricals giant, and its former private equity owners, demanding a parliamentary investigation.

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