Links May 31

Leading transparency campaigners welcome UN development report Global Witness

Australia Publishes Tax Transparency Legislation Tax-News
See also: World's big companies must be made to pay fair share of tax Sydney Morning Herald and Top firms' tax haven links revealed Sydney Morning Herald

Another nail in the coffin of tax secrecy Financial Times
Big economies are turning the tide against havens, though only up to a point

Minister wants to remove tax evader ‘shield’ swissinfo
Abandoning the traditional Swiss distinction between tax evasion and tax fraud would be a very interesting development. Banks have long hidden behind the view that if you declare nothing, there's no problem.

Swiss hesitate over tax accord swissinfo
Switzerland is withholding its signature on the OECD's convention on mutual administrative assistance in tax matters because it wants to “keep all options open”  according to Economics Minister Johann Schneider-Ammann.

Levy free: How billions of pounds have been siphoned off to tax havens The Guardian
On using royalties and interest payments as tax dodges. Pascal Saint-Amans, OECD's head of tax, explains measures will be taken - but says somewhat bizarrely: "We put an end to bank secrecy in 2009, we can do this too". We certainly didn't notice this 'end to bank secrecy.'

OECD prepares new rules to limit corporate tax avoidance The Guardian

Double Dutch: loopholes get multinationals off tax hook The Irish Times

Apple and Google got €25m in grant aid from IDA Irish Independent

Apple founder Steve Wozniak: public anger at tax arrangements is 'warranted' The Telegraph

Insight: How U.S. Treasury's tax loophole mistake saves companies billions each year Reuters

U.S.: No Replacement for Corporate Taxes The New York Times
See also: Don't reward companies that send profits offshore The Baltimore Sun

Singapore, Hong Kong to Claim Larger Share of Offshore Wealth Pie The Wall Street Journal

Offshore wealth grows despite crackdown on tax havens Financial Times

Lloyds continues sale of private banks The Telegraph
See here for our comment on the wow factor of these developments.

UK-linked tax havens must now join countries refusing to hide dirty money Christian Aid

Lee Sheppard: Don't sign OECD model tax treaties!

Update: June 3. We now know that Sheppard wrote an article for Tax Analysts entitled How Can Vulnerable Countries Cope With Tax Avoidance? (p410) It covers the issues below more thoroughly, and contains much that is interesting and not covered in the blog below.

We have just come across this video of a presentation in Norway by Lee Sheppard, contributing editor at Tax Notes International, and one of the U.S.' best known tax experts. Provided by Publish What You Pay Norway, it is fascinating, and in this blog we have transcribed a chunk of her speech, explaining why the OECD has caused so much damage in the arena of international tax.

She introduces her talk, promisingly, like this:

"I am going to talk about what the existing international consensus is, and how the countries that you people represent can defend yourselves against the structural problems."

First, a few short highlights, either in quotes or in our summary of the quotes. The full text of this section from her presentation is pasted below. The emphasis is obviously ours.

    •    "Don’t sign OECD model treaties, don’t sign U.N. model treaties!"[From her Tax Analysts piece: "By signing an OECD model treaty, a signatory accepts separate company accounting (which enables shell corporations), arm’s-length transfer pricing (a battle of the experts), and permanent establishment (a limitation on tax jurisdiction over companies doing business). The OECD model treaty — the accepted international standard — is the ultimate source of the problems."]

    •    For multinationals, "there are countries for which there is extraction, and countries where there are customers, and these are all countries from which income has got to be stripped. And the rubric that allows this is the international consensus. It is the whole treaty network. The treaties protect multinationals primarily. That’s all they were ever for: to make life comfortable for multinationals". . . The international consensus is "basically a load of nonsense that protects multinationals." When you sign onto the international consensus, you sign on to a bunch of deleterious consequences.

    •    "When you sign an OECD model treaty, you say there is no withholding, or hardly any withholding, on outflows of cash to multinationals. Now why in hell do you want to sign that?

    •    The OECD primarily protects the interests of the United States and the United Kingdom. Even Germany doesn't get a look in.

    •    "South America does not sign OECD model treaties. Because a treaty is a contract. They read the document. They don’t like the terms."

    •    When you sign an OECD model treaty you also sign onto a concept called Permanent Establishment. "It is a rather nonsensical concept that says, ‘well, if you, multinational, are operating in a country and making money in a country, but you have any presence that is short of, oh, a full automobile assembly plant, then you are not taxable in that country at the level of the owner of this plant. This thing has a little circle drawn around it, and it cannot be taxed in a normal way. That is a pillar of that treaty. . . . you do not want to sign a document that has got that in it.


    •    Do not sign tax treaties with tax havens. The United States by and large does not sign treaties with tax havens, though there is a group of "enablers" such as Ireland, the Netherlands, Switzerland which escape the net. "These are members of European organisations in good standing . .  but they also do a full-on business as conduits of money out of the market countries: that is all of your countries."

    •    The U.S. has treaties with Switzerland, the Netherlands, Luxembourg, all these European enablers – because our businesses want to strip income out of Europe. I don’t know why Europe doesn’t get peeved at us.

    •    "The US does a lot of business with Brazil. The US has no tax treaty with Brazil. You can do business with a country without a tax treaty. You don’t need one. You do need a bilateral investment treaty."


    •    "So what do you do if you have a treaty with the enablers? You want switch-over clauses. . . .  if the other party of the treaty doesn’t tax it, then the first party – in this case Norway – gets to tax it. And the OECD model has, in the draft, a switch-over clause that you can just pop into the document."

Full transcript of this section is below. The rest of the talk is interesting too. This section starts at about 3:20 into the presentation. She occasionally refers to a

diagram: it's here: click to enlarge.

"Don’t sign OECD model treaties, don’t sign U.N. model treaties!

The OECD does not have the interests of small and medium-sized vulnerable countries – and notice that I am not talking about developing and developed countries. As far as these multinationals and their advisers are concerned there is no differentiation: there is only countries for which there is extraction and countries where there are customers, and these are all countries from which income has got to be stripped. And the rubric that allows this is the international consensus. It is the whole treaty network. The treaties protect multinationals primarily. That’s all they were ever for: to make life comfortable for multinationals.

Secondarily, the OECD protects the interests of the United States and the United Kingdom. Germany is the biggest economy in Europe: it doesn’t really even qualify to be listened to at the OECD. There are things that Germany wants to address – this commission arrangement here (on the diagram) – they are not going to get them. They are not a constitutent. If they are not a constituent, is Norway a constituent?

Back to the treaty part: it’s almost an advantage being small: you want to enact specific defensive laws to address the problems that you know you have. If you problems with the pricing of minerals going out of your country, or you have problems with ships being towed out into the ocean and sold, I can write you a two sentence statute that says ‘if you have an oil rig that is licenced to operate in Norwegian waters continuously, and it is sold while under contract, then the sale took place in Norway, no matter where the actual sale took place. That is not a hard statute to draft. You can draft protective stuff and get it in their law and they can’t argue with it. Right now, in some of these situations the treaties are protecting them, and the countries that are harmed are not protecting themselves.

Those of you who are from mineral exporting countries, for heavens’ sakes, the agreements that you sign: this is the point of maximum leverage over the multinational company extracting the minerals: they want the minerals, you have them, you can put the conditions and the tax conditions in the agreements. 6:50 As I understand it, I am told that both sides of the North Sea: both the United Kingdom and Norway signed Production Sharing Agreements (PSAs) – you haven’t been able to get a PSA from Saudi Arabia for 50 years. The country owns the minerals, the multinational just paid to take them out, and then it buys them from the country at the world price, which is a very easy thing to find.

Why not to sign OECD treaties? Professor Christian was talking about the norms: the international consensus. This is basically a load of nonsense that protects multinationals. When you sign onto the international consensus, you sign on to a bunch of consequences that have very deleterious effects on what we call a Source Country: that is, a market country. This is Norway and all the countries that are represented in this room: right here, where the limited risk distributor and the customer are. When you sign an OECD model treaty, you say there is no withholding, or hardly any withholding, on outflows of cash to multinationals. Now why in hell do you want to sign that?   8:30

India, South America, withhold. South America does not sign OECD model treaties. Because a treaty is a contract. They read the document. They don’t like the terms.

You sign on to respecting all these little boxes as real, live corporations that decide their own actions and are separate economic actors: and as we know these are not separate economic actors. On a balance sheet these things don’t exist and the transactions between them don’t exist. You sign onto not only recognising the transactions between them – you sign on to recognising and respecting the self-serving contracts that the multinationals’ lawyers wrote to explain those flows, out of your country, of cash on which there is no withholding.

You also sign onto a concept called Permanent Establishment, and this is one that the Indians are fighting to the wall. Next time you have one of these conferences, invite people from the Indian and Chinese goverments. They have signed a bunch of these treaties and they are fighting this stuff: they are fighting for their own interpretation of this stuff, fighting the Permanent Establishment concept. It is a rather nonsensical concept that says, ‘well, if you multinational are oprating in a country and making money in a country, but you have any presence that is short of, oh, a full automobile assembly plant, you are not taxable in that country at the level of the owner of this plant. This thing has a little circle drawn around it, and it cannot be taxed in a normal way. That is a pillar of that treaty. The treaty allows companies to go in through the internet and sell services to everyone in that country, and not pay tax. That is ridiculous. That is what Permanent Establishment has come to mean: you do not want to sign a document that has got that in it.

11:19

What do you do if you have these treaties? Norway has an awful lot of them. The European Commission the other day made some interesting suggestions. A multinational not paying tax anywhere, including in most of Europe, has gotten so bad that even the guys in charge of borderless Europe are starting to notice this, and say ‘you shouldn’t sign treaties with tax havens.’ You shouldn’t. The United States by and large does not sign treaties with tax havens.  That is how the US blacklists people: if you don’t have a treaty with the US that means it blacklists you. But they have a kind of narrow definition of tax havens: one of the definitions was that it’s a small jurisdiction, and you have to be small to be a tax haven. Because if you have real responsibilities to people and schools and so on, you kind of have to have taxes to finance that kind of stuff. It also offers special deals to non-residents. That’s like Gibraltar: that’s a very narrow definition.  You don’t want to sign treaties with. But also, the other ones you don’t want to sign treaties with are the international enablers: the Netherlands, Switzerland, Ireland, these are members of European organisations in good standing: they are low tax jurisdictions, they have real tax systems, they tax their own people – but they also do a full-on business as conduits of money out of the market countries: that is all of your countries.

When your people are consuming goods and services from big multinationals: all those American products and entertainment that you want to keep your children away from: you are a market country. These are the conduits they use to get the income out of your country after your child has whined and pulled on your leg and you went and bought that product you didn’t want to buy. You don’t really want treaties with them – but these conduits have treaties with everybody, because you can’t run yourself as a holding country without treaties.

You are beginning to see how treaties enable all this.

South America: Brazil is a huge country. The US does a lot of business with Brazil. The US has no tax treaty with Brazil. You can do business with a country without a tax treaty. You don’t need one. You do need a bilateral investment treaty, which says that there has to be arbitration if there is a dispute, you need the rule of law, but you don’t need a tax treaty.

15:00

So what do you do if you have a treaty with the enablers?

You want switch-over clauses. This country, Norway, signed a treaty with Ireland in 2000. It is clear that Ireland is one of the enablers. These rulings will defend the multinational’s position in competent authority negotiations: that is a treaty negotiations between the two affected countries. That is part of the services they sell. There is nothing for them to defend if you have a switch-over clause. The Norway-Ireland treaty, I don’t think has a switch-over clause. Here is what that means. Norway is an exemption jurisdiciton: that means foreign active income is exempt from taxation in Norway. Well, if the income is shifted to Ireland, and Ireland doesn’t tax it – then guess what? Ain’t nobody taxes it. A switch-over clause says that if the other party of the treaty doesn’t tax it, then the first party – in this case Norway – gets to tax it. And the OECD model has, in the draft, a switch-over clause that you can just pop into the document.

But your businesses will whine.

-    You have to have a treaty with Switzerland.
-    Why?
-    We need it for business!
-    What business?
-    Well, tax evasion, OK advoidance. We need it for tax planning.

And that argument carries, in the United States. The US has treaties with Switzerland, the Netherlands, Luxembourg, all these European enablers – because our businesses want to strip income out of Europe. I don’t know why Europe doesn’t get peeved at us for having this policy.

You have got to have switch-over clauses."

End of section.

This took up about 17 minutes: the rest of the 38 minute presentation contains much that is of interest.

This will be stored permanently on our Tax Treaties webpage.

Links May 30

Africa’s riches could ‘dwarf international assistance’: NGO EurActiv

Illicit financial flows have made Africa 'a net creditor to the world' The Guardian

Semeta Says Some EU Nations Make It Too Easy To Avoid Tax Bloomberg

Swiss want their banks to break the law and reveal US tax evaders—for now Quartz
See also commentary blogged earlier

Rwanda: Make Tax Evasion a Risky Venture allAfrica

Nokia's India Tax Troubles Widen The Wall Street Journal

Korea Will Probe Chaebol Executives Named in Tax-Evasion Reports Bloomberg Businessweek

Austria out front as EU zeroes in on tax evasion The Budapest Times

Apple's dirty little tax secret - video Guardian

Apple’s Tax Dodge Should Prompt Rethink in Ireland Bloomberg

Is the OECD puffing bluff so we don’t notice there will be no real progress on tax at the G8? Tax Research UK

Mauritius Central Bank Chief: We're Not A Tax Haven The Wall Street Journal
A common theme.

Documents Show Obama Officials in Tension Over British Banks Deal%k
On the HSBC and Standard Chartered money laundering scandals

One of the World’s Largest Digital Currency Companies and Seven of Its Principals and Employees Charged in Manhattan Federal Court with Running Alleged $6 Billion Money Laundering Scheme U.S. Department of Justice
See also: U.S. Says Firm Laundered Billions The Wall Street Journal

Fiat Industrial To Become UK Tax Resident Tax-News
Political row in Italy over move of corporate tax domicile to the UK

Income Inequality Gets Worse When You Slash Taxes On The Rich: Study Huffington Post

Dolce and Gabbana in court over tax charges The Guardian

Show Us the Local Subsidies: Cities and Counties Disclosing Economic Development Incentives Good Jobs First

A new reason why making banks hold more capital may not make them that much safer Quartz

Two superb articles on Google, Apple and tax

Philip Stephens in the Financial Times 'gets it' on Google and its boss Eric Schmidt, who has said he is proud of his company's slippery, gymnastic tax-dodging ways, and is 'perplexed' that anyone should question it. Lee Sheppard, writing in Forbes, gets it too - laying out Apple's tax strategies in more detail. First, Sheppard, summarising:

"Apple’s brand halo is slipping. Silicon Valley’s well-known vanity and contempt for government are amply displayed in Apple’s tax figures. Apple, a consumer products company that sells beautifully designed gadgets, pays very little tax anywhere in the world, including the United States.

Apple AAPL +0.8% is playing fast and loose with consumers’ affection for its highly discretionary products, especially in Europe. It is ill-advised for any consumer products company not to pay tax where it sells products. Equally important, Apple’s tax avoidance is also testing the patience of strapped European governments that are looking for ways to get American multinationals to pay tax.
. . .
Even for a jaded tax lawyer used to hokey schemes to avoid taxation, Apple’s arrangements were surprising."

In short, Apple's Foreign sales, which make up 60 percent or so of Apple’s profits, are routed through these Irish subsidiaries -- and taxed nowhere at all.

Ah, says Eric Schmidt of Google, whose company has been subjected to similar scrutiny and criticism - but we are just doing what our shareholders tell us to do: it's our 'fiduciary duty,' he says. This is 'just capitalism," he says, and he's proud of Google's record stripping income out of Britain and many other countries and shoveling it into tax havens.

Eric Schmidt is "perplexed" as to what all the fuss is about.

As we have said on several occasions, Mr. Schmidt needs to get himself an education on tax, and what tax means. He might usefully turn to the Financial Times, and their columnist Philip Stephens, who has nailed it in a column entitled Why Google and Eric Schmidt really don’t care about tax:

thriving societies depend on more than strict adherence to the letter of the law. Communities work because citizens, institutions and, yes, even companies observe norms, conventions and mutual obligations that are nowhere on the statute book.

To suggest that each and every responsibility and duty must be codified in statute is to invite a lurch towards totalitarianism – the micromanagement by an overmighty state of every dimension of our myriad relationships.

There is no law (in Britain at least) that obliges me to join the back of a queue for, say, theatre tickets or a restaurant table rather than infiltrate myself at the front. I suspect, though, that Mr Schmidt would agree that queue-jumping is pretty antisocial.

To be legal, in this instance, is not to be right."

Which is just as we have been saying. Quite right.

And Mr. Stephens goes on: again nailing the issue beautifully.

"Then there is that fiduciary duty. Of course, companies should not pay “voluntary” tax.

But they do not face the binary choice posited by Mr Schmidt. Somewhere between charitable giving to the tax authorities and the setting up of Byzantine pyramids of shell companies in every tax haven known to man and womankind, there is what my lawyer friends call the wholly justifiable use of the tax code to protect shareholders.

The odd thing is that, at times, Google seems to understand that it ought to look beyond the letter of the law. The company boasts about its many “good works” in local communities. Presumably these are consistent with its fiduciary duty?

Which is, again, just as we have been saying. It exposes the fluffy illogic that Mr. Schmidt's arguments rest upon.

And then there's the matter of whether Google has been pushing right up against the boundaries of the law, potentially lying to the tax authorities and to the UK's parliament. There is no duty on any CEO anywhere to do that. Stephens summarises what Reuters found:

"When the company says that the billions in revenues garnered every year by its sales force in Britain are not liable to local tax because technically, the business is “closed” in Dublin, it frankly looks sleazy."

Which, again, is just what we have been saying.

And then there's the small matter of companies writing the tax laws.

Announcing the Financial Transparency Coalition

TJN is excited to bring you news of the launch of the Financial Transparency Coalition, overtaking the Task Force on Financial Integrity and Economic Development. Porter McConnell, the manager of the FTC, writes:

Announcing The Financial Transparency Coalition
By Porter McConnell

When the Task Force on Financial Integrity and Economic Development was created in 2009, only a handful of experts were following the issue of illicit financial flows. The subject was decipherable only to finance professionals taking advantage of tax havens, and a handful of civil society groups and finance journalists. Meanwhile, each year nearly a trillion dollars was being secreted out of developing countries, robbing them of revenue needed to build better lives for their citizens.

Over the last four years, a growing number of policymakers and citizens have begun to take heed. What good is pouring money into foreign assistance when ten times that amount leaves developing countries in corruption, crime, and corporate tax evasion, often arriving right back in rich country bank accounts? Meanwhile, activists in developing countries are pushing back against austerity, and demanding that foreign investors in oil, gas and mining and local elites pay their fair share.

Today, illicit financial flows are front page news:

• The US Senate is now investigating Apple’s tax avoidance schemes in Ireland and the US

• This spring, it was revealed that French budget minister Jerome Cahuzac had been secretly funneling money into a swiss bank account for years; he is being investigated for tax fraud.

• Global Witness recently uncovered evidence that Malaysia’s ruling party is selling off its country’s timber wealth for personal gain through shell corporations

These are exciting times, and we are changing with them:

As of today, we are changing our name to the Financial Transparency Coalition. We are a global group of experts, activists, and governments working together to blow away the smokescreen of financial secrecy and to build a more transparent financial system that works for everyone. It’s a simple premise, and it demands a simple name.

I joined the Coalition in March as part of the changes. In a decade in the development field, I heard the same message from colleagues in civil society groups from Malawi to Bangladesh:  foreign assistance is great, but managing our own domestic resources with transparency and accountability is better. In joining this truly global Coalition, I hope to honor their sentiment.

The Financial Transparency Coalition will build on the incredible foundation that the Task Force has created. We are continuing to invest in our global network of over 150 civil society groups, economists, and governments. Our growing global reach has allowed us to respond to political opportunities from Africa, Asia, and Latin America and the Caribbean, and we hope to expand this work in the coming year.

We are energized by recent signs of progress, but the battle is far from over. Developing countries lost an estimated $859 billion in illicit outflows in 2010 alone, up from 2009. The Coalition has committed to an ambitious work plan for this year and next, ranging from training journalists in developing countries on illicit financial flows to advocating that the U.S. Congress pass legislation to name the true owners of shell companies.

Be sure to check out our new website, FinancialTransparency.org, where we will continue to bring you the latest news on illicit financial flows and the resources you need to interpret it. We’ve consolidated most of our sections into one feed, to create the most informative experience possible.

And to witness for yourself the movement that we’ve created together, join us at the Financial Transparency Coalition annual conference in Dar es Salaam, Tanzania, on October 1-2, 2013.

Here is the press release:

Global Coalition Cracking Down on Illicit Financial Flows
The Task Force on Financial Integrity and Economic Development is today renamed the Financial Transparency Coalition (FTC).

Formed in early 2009 with the goal of creating greater transparency and accountability in the global financial system in order to curb illicit financial flows (IFFs), the coalition is composed of six coordinating NGOs - Christian Aid, Eurodad, Global Financial Integrity, Global Witness, Tax Justice Network and Transparency International - as well as leading experts and a rapidly growing number of government representatives (on May 22 Belgium became the thirteenth country to join the FTC’s partnership panel). 

“When we started working together, the damage caused by illicit financial flows in developing countries was recognised by only a handful of people,” said the FTC’s new manager Ms. Porter McConnell. “Today, thanks in part to the work of our coalition, it is now widely understood that this kind of criminal activity is incredibly harmful to people in developing countries, where for every $1 received in aid about $10 is lost to illicit financial flows.“

“As an international coalition composed of partners bringing a great diversity of expertise, we are able to draw attention to the inter-connections between financial secrecy, corruption, money laundering, and systemic tax abuse. Each of our NGO coordinating members has played an essential role in our push for greater transparency and accountability in the international financial sector. We will now place increasing emphasis on the important work done by our regional advocates based in Africa, India and Latin America and the Caribbean, as well as our network of some 150 allied organizations around the globe in order to make the movement for financial transparency truly global.”

While applauding the tremendous recent developments in automatic disclosure of tax information and transparency measures in the banking sector, the FTC will continue to campaign until these changes are universal - starting with next month's G8 summit in Northern Ireland. In addition, the FTC will pursue campaigns for updated money laundering legislation that includes public registries of the real (or “beneficial”) owners of companies, and monitor the OECD Base Erosion and Profit Shifting process to ensure that developing countries are included in the deliberations and proposals are based on independent research into possible reforms. We will also campaign internationally for greater transparency in corporate reporting with country-by-country reporting in all sectors.

In addition to working as it has done with the OECD, G8 and G20, the FTC plans to look at what contributions the United Nations and governments not yet actively involved can make to changing the agreements, treaties and laws that facilitate financial crimes. The coalition also welcomes participation from other bodies, including international corporations that understand the value for business of ensuring strong and financially stable markets in the developing world

“Now that these illicit flows have become front page news, and the general public wants more information about how  complex financial dealings can serve as a smokescreen for trafficking, tax evasion, and corruption, our coalition is adapting to speak to those audiences,” McConnell continued. “The FTC’s mission is to blow away that smokescreen of financial secrecy and complex loopholes, so that those who would use them to steal from citizens of developing countries are exposed and their harmful activities stopped. Cracking down on IFFs will also benefit citizens of richer countries, who are losing out on much-needed revenue and feeling the pinch of austerity budgets.”

NOTES:

G8 June 17-18 June, 2013: FTC members, including Porter McConnell, will be available to comment on secrecy jurisdictions, beneficial ownership, automatic exchange of financial information and money laundering as related to the G8 agenda..

The FTC’s recommendations are:

• Requiring corporations to report their sales, profits and taxes in each country where they operate 

• Making public the true or “beneficial” owners of companies, trusts, and foundations

• Requiring governments to collect and automatically exchange the tax information of non-resident individuals, companies and trust

• New regulations to curb the practice of transfer pricing

• Reforms to prevent money laundering by making it illegal for banks to accept the proceeds of international crime

Taken together, these reforms would help people in developing countries advance their economies and achieve greater financial stability and independence, as well as strengthening the global financial system.

For further information about the work of the Financial Transparency Coalition or to request interviews, please visit our website www.financialtransparency.org, or contact:

Dietlind Lerner: dlerner@financialtransparency.org, (+1) 202.577.3455
Nick Mathiason: nmathiason@financialtransparency.org (+44) 77.9934.8619
__________________________
The Financial Transparency Coalition addresses inequalities in the global financial system that penalize billions of people, and advocates for improved transparency and accountability.

For additional information please visit http://www.financialtransparency.org

Follow us on: Twitter | Facebook | YouTube

Quote of the day: Apple's taxes

From Lee Sheppard, a top U.S. tax expert:

The [Irish] holding company pays no tax to any government, and has not paid tax for five years. It claims tax residence nowhere.

Even for a jaded tax lawyer used to hokey schemes to avoid taxation, Apple’s arrangements were surprising.

Our quote of the day is the bit in bold. The article is excellent.

Top income shares vs. top marginal tax rates

From an important new paper on the NBER website by Thomas Piketty, Emmanuel Saez, Anthony Atkinson and Facundo Alvaredo, a rather striking graph (via Business Insider):

Just look at that slope.

The authors identify four key drivers of the massive increase in income of the top 1 percent:

• Tax policy, which has varied over time and differs across countries. Top tax rates have moved in the opposite direction from top income shares. 
• "A richer view of the labor market", where we contrast the standard supply-side model with one where pay is determined by bargaining and the reactions to top rate cuts may lead simply to a redistribution of surplus. Top rate cuts may lead managerial energies to be diverted to increasing their remuneration at the expense of enterprise growth and employment. 
• Capital income. Inherited wealth is, in Europe if not in the United States, making a return. 
• The correlation between earned income and capital income, which has substantially increased in recent decades in the United States. This has hardly been investigated.

There's lots more in that paper, of course. And now for an infographic, putting all of this into a different, more colourful perspective:


Source: Road to Riches: Tracking the Journey of the Global Superwealthy

If you're in Montreal today: a Canadian tax justice roundtable

From Canadians for Tax Fairness:

"Canadians for Tax Fairness and McGill University Law School are co-hosting a Public Round Table on Tax Justice and our first Tax Justice Research Symposium.  The public Round Table takes place at McGill University Faculty of Law, Chancellor Day Hall - 3644 Peel Street, Montreal on Wednesday, May 29 at 7:30pm, Montreal time. It will also be a live webcast. So follow this link to find out more.

The panellists include some of the most passionate and informed tax justice advocates in the world. Canadians for Tax Fairness President Diana Gibson will be joined by James Henry, the Chair of the Global Alliance for Tax Justice; John Christensen from UK’s Tax Justice Network; and Frédéric Zalac, from the CBC and the International Consortium of Investigative Journalists.

The following day, our Tax Justice Research Symposium brings together academic researchers, investigative journalists and campaigners to identify key research needed for effective campaigning on tax justice issues.   Topics include:

• Making corporations pay their fair share of taxes

• Provincial and municipal fiscal challenges and solutions

• Closing tax loopholes and tackling tax evasion.

Canadians for Tax Fairness is excited to be bringing these committed and creative people together.  It is one way we are working to build collaborative networks of researchers and campaigners who are committed to working for tax fairness.  But there is so much more to do. You can help support our work here."

Canadian Money Offshore

Canadians for Tax Fairness recently used Statistics Canada data to calculate that ultra-wealthy Canadians and large corporations now have $170 billion parked offshore – an all-time high.  Much of it is untracked and untaxed, resulting in billions of lost revenues. Click here for the top three tax havens.

A Swiss-US secrecy deal: justice for sale?

James S. Henry, writing in The American Interest, notes a rash of recent prosecutorial zeal in Washington recently, including attacks on whistleblowers, journalists, and even Tea Party Activists. He adds:

"All this prosecutorial zeal is a marked contrast to the failure to convict or criminally prosecute even a single senior banker for helping to produce and direct the post-2007 global financial crisis.

But now,  according to several credible reports, Eric Holder, the Attorney General, and Jacob Lew, the ex-Citi banker who now heads the US Treasury, may be on the brink of surpassing even this dubious track record. If these reports are to be believed, they may be on the brink of signing a “sweetheart” deal with Switzerland and its pirate bankers—with the indulgence of the White House and the enthusiastic support of some of Obama’s biggest guns on Wall Street."

It is true: there have been reports swirling around about a possible U.S.-Swiss deal.  While we don't know whether such a deal truly is imminent or what its terms might be, we do know that this moment in time - just when the global chips are up in the air on tax havens and there's everything to play for - is absolutely not the time to be releasing the pressure on Switzerland, the oldest, hardest nut in the entire global offshore menagerie. As he puts it:

"The world really is at an historic crossroads with respect to putting secrecy jurisdictions like Switzerland out of business once and for all."

Henry's article looks at the panorama here: the evolving FATCA architecture, changes at the OECD, events in the European Union, the Offshore Leaks scandal, and a possible $10 billionish fine to be shared among many Swiss banks, and he concludes:

"A DOJ-Swiss global truce would be of great benefit to the Swiss, but a huge mistake for the US and the EU—especially now.  This is true for several reasons.

• It would fly in the face of the dramatic progress that the world is finally making right now toward cracking down on secrecy havens in general and the "leader of the band" in particular. It would also risk dividing the US from the EU and the rest of the OECD, taking the pressure off Switzerland to reform.
• It overlooks the numerous loopholes that still exist even in FATCA, let alone global AIE, especially for secrecy jurisdictions like Switzerland with a long history of untrustworthy behavior.
   
• Even a $10 billion fine is a tiny fraction of Switzerland’s earnings from  doing “pirate banking” for the world’s elite, even from US citizens. And a global settlement would remove the one penalty that Swiss banks fear most—jail time.
   
• Any settlement still requires Swiss parliamentary approval, which could take years—even while it has already serves as a useful "whitewash" device.
• Most important—the impending DOJ - Swiss settlement, when looked at closely, has a strong odor of justice for sale. This is a clear case where powerful financial institutions, whose principle business is enabling tax dodging, kleptocracy, and money laundering for the world’s elite, would be permitted to commit these crimes over and over again for decades, and then walk away simply by paying fines, with the help of influential friends in high office on both sides of the Atlantic.  

This is just a taster: the long article is well worth reading. Whatever happens, the battle to get Switzerland to open up will be a long, hard slog, not least because opening up Switzerland's banking secrecy will almost certainly require approval by referendum, and the population of Switzerland currently supports banking secrecy and the facilitation of global crime very strongly.

Bit by bit, though, we will get there. Now is absolutely not the time to ease up the pressure.

To David Cameron: a letter from Africa

Zitto Kabwe MP, the chair of Tanzania's Public Accounts Committee, has written a letter (below) to UK Prime Minister David Cameron.

Dar es Salaam: Zitto Kabwe MP presents the letter to Prime Minister David Cameron to the British High Commissioner Dianna Melrose

The letter praises Britain for its "long and productive relationship" with Tanzania as a development partner, but then adds:

"This support is, however, dwarfed when the amount that Tanzania loses every year to tax evasion and aggressive tax avoidance is taken into account
. . .
Some of this money is held in British Overseas Territories and Crown Dependencies. Tanzania and other developing countries in Africa have been finding it hard to tame this trend because of financial secrecy laws.
. . .

In my district of Kigoma, western Tanzania, the maternal mortality rate is 933 out of every 100,000 live births. This trend is largely contributed by poor health services. The Government is incapacitated to provide better health services because of the low revenue base. Tax havens and secrecy jurisdictions are one of the fundamental reasons for this."

He urges Cameron to make this fight against tax havens a priority for the G8 summit due in Northern Ireland in June, and to place aggressive sanctions against British tax havens, a call for much greater transparency.
 
We have just blogged the scale of the problem, in a new report from the African Development Bank and Global Financial Integrity, estimating net illicit financial outflows from Africa of up to $1.4 trillion between 1980 and 2009.


The full letter is reproduced below, and the original is here.

Letter to Rt Hon PM David Cameron

New report: Illicit Financial Flows from Africa, 1980-2009

From Inter Press Service:

"Over the past three decades, Africa has functioned as a “net creditor” to the rest of the world, the result of a cumulative outflow of nearly a trillion and a half dollars from the continent. (hat tip: @zittokabwe)

The new data comes from a report released jointly today by the African Development Bank (AfDB) and Global Financial Integrity, entitled Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009. It complements TJN's research published last year estimating that there is $21-32 trillion sitting offshore, effectively out of the reach of tax authorities.

The traditional thinking has always been that the West is pouring money into Africa through foreign aid and other private sector flows, without receiving much in return. This report confirms what we have noted many times in the past -- particularly in the context of the excellent book Africa's Odious Debts – that Africa has been a net creditor to the rest of the world for decades. The trouble is, of course, that Africa’s foreign assets remain hidden in secrecy jurisdictions and in the hands of tiny and wealthy African élites, while its foreign debts are public, shouldered by the broad population of  Africa through their governments.

Unsurprisingly, perhaps, the report reveals that the largest losers of net resource transfers are all resource-rich countries: the top five exporters of net resources are Nigeria, Libya, South Africa, Algeria and Angola. From the press release:

"The reportfinds that Africa suffered between US$597 billion and US$1.4 trillion in net outflows between 1980 and 2009 after adjusting net recorded transfers for illicit financial outflows.

“The resource drain from Africa over the last 30 years—almost equivalent to Africa’s current GDP—is holding back Africa’s lift-off,” said Prof. Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank."

The report itself adds:

"Illicit financial flows are a global problem and will require concerted efforts from the international community and the involvement of individual African countries. Many international institutions—the African Development Bank, G20, UN, European Union Commission, African Union Commission, World Bank, International Monetary Fund, and Bank for International Settlements—have underlined the importance of a determined and collective approach to resolving the challenges posed by the global shadow economy, comprising tax havens, secrecy jurisdictions, disguised corporations, trade mispricing, and money laundering. The chances of success will increase markedly if African governments themselves take domestic measures to address corruption, strengthen their anti- money laundering efforts, and also improve their investment codes. None of these is technically difficult, but they all require political will for success."

We would agree with all of that.

One more for our page entitled "Estimating the Price of Offshore."

Links May 28

Country by country reporting is a victory for citizens over companies The Conversation
Prem Sikka on the breakthrough on Country-by-Country Reporting - it is the first people-led accounting standard and may be sign of things to come.

Globalisation isn't just about profits. It's about taxes too The Guardian
Joseph Stiglitz: Big corporates are gaming one nation's taxpayers against another's: we need a global deal to make them pay their way

Latin America, second developing region with more tax evaders El País (In Spanish)
Hat tip: Jorge Gaggero

Liberia natural resources deals not compliant with law, find auditors The Guardian

Switzerland, Panama ... Paris blacklists seventeen tax havens Le Monde (In French)
France's aid body creates new tax haven blacklist, beyond the official French blacklist.

Luxembourg: Juncker Defends Automatic Information Exchange Stance Tax-News

Austria Notes EU Agreement On Tax Evasion Action Tax-News

Austria's 'SoKo' To Tackle Offshore Tax Evasion Tax-News
Austrian Finance Ministry sets up special committee in connection with "offshore leaks"

US tax inspector targets Caribbean bank The Guardian
The focus on correspondent banking is an important issue to note

HSBC to cut use of tax havens as chairman Douglas Flint says they have 'bad name’ The Telegraph

Julius Baer Gets Request for Data on U.S. Clients The Wall Street Journal
See also: Julius Baer starts transfer of Merrill Lynch’s wealth management business in HK, Singapore The Asset, and Julius Baer warns EU tax deals will slow its money inflows International Adviser

FATCA sounds death knell of banking secrecy swissinfo

Cayman Islands' investment in S. Korea tops 7.7 tln won Yonhap News Agency
"The Cayman Islands is the largest investor as a tax haven country in the South Korean market"

Interview with TJN Director John Christensen France 24
A focus on The Finance Curse

Ireland is third largest tax haven for US companies says new report Irish Central
See also: Ireland readies diplomatic corps to rebuff tax haven claims Reuters

German Rail uses tax haven for tax evasion TJN Germany Blog (In German)

Australia's Bradbury Slams Multinationals' 'Complex' Tax Practices Tax-News

Starting the Conversation: A Formulary System For Dividing Income Among Taxing Jurisdictions Bloomberg BNA
Michael C. Durst - embarking on what will be a series of articles evaluating formulary apportionment as a viable alternative to the arm's-length standard, notes the intense disagreement between those on either side of the debate--and the lack of any detailed comparison between the two approaches.

Yes, taxation can be a good thing for developing countries Alvin Mosioma TJN-A / Christian Aid Blog

The Financial Takeover Of “Our” Newspapers Don Quijones / naked capitalism
On how the European media, like its US counterpart, is coming under the control of wealthy financiers and investors who curb its content.

Is Wall Street literally writing America's laws now? The Week
Hat tip: Offshore Watch

Lakshmi Mittal Taking Major Loss On London Mansion Forbes

4 Ways Apple CEO Tim Cook Spins Tax Avoidance Mother Jones

ICIJ Offshore Secrecy Project - Google hangout

On Google's Eric Schmidt saying it's fine to dodge taxes if it's legal

From Paul Collier, a development expert, writing in Prospect Magazine:

"For companies to claim that they are morally in the right by having devised loopholes is ridiculous, even if their behaviour has been legal. Any society rests not just on laws but on conventions that make life decent and tolerable. If every citizen pushed right up against the limit of the laws, it would be unworkable. Society relies on people having a degree of mutual respect. Companies rely on a certain level of public spending, for example on the education of the people they employ. All this relies on people and companies paying taxes."

This is one of several reasons why Google's boss Eric Schmidt has recently been wrong - dumbfoundedly wrong - in his claim that everything's just fine with his company's tax compliance.

Collier is right (even if we don't agree with every last word of his article) - but there's plenty more to be said on this topic.

When it comes to corporate taxes, as Collier suggests, there is a  large grey area between the two poles of tax evasion (by definition, illegal) and tax avoidance (by definition, not illegal, but still involving getting around the spirit of the law.

Corporate CEOs have a choice as to how aggressive to be when pushing up into this grey area, towards (and sometimes over) the edge of the law and into the seriously dark side.

Some fine investigative work by Tom Bergin of Reuters, and revelations in the Sunday Times and elsewhere, show us that Google has done exactly this - claiming to the tax authorities that it hasn't been running its sales operation out of the UK, while it has actually been doing just that. (That way, it has been claiming that it isn't taxable on its UK sales.) But if it has really been running sales out of the UK, this raises the question of whether Google has been lying to the UK tax authorities and to parliament and whether it has been evading - yes, evading - tax. (Ultimately, it's for Britain's hopelessly conflicted tax authorities, which on recent form wouldn't say boo to a corporate goose, to decide the answer to this question.)

This does look very ugly for Google: a clear choice by Schmidt, it seems, to push right up against the boundaries of the law, effectively taking the decision to de-fund hospitals and schools and the resources for filling those widening potholes in the roads, and so on.

This isn't just a Google thing, of course: it's a generalised problem. As Prem Sikka reminded us recently:

"Following a briefing from a former PwC insider the PAC chairperson said that the firm “will approve a tax product if there is a 25% chance – a one-in-four chance – of it being upheld. That means that you are offering schemes to your clients where you have judged there is a 75% risk of it then being deemed unlawful” 

There is no CEO, anywhere in the world, who has a fiduciary duty to push aggressively, as far as he or she possibly can, up against the boundaries of the law.

So Schmidt is wrong: quite wrong. Either he doesn't understand the issues, or -- perhaps more likely -- he is an example of the situation where it is difficult to get a man to understand something, when his salary depends on his not understanding it. And make no mistake: corporate tax avoidance feeds directly into corporate CEOs' stock options and bonuses and so on.

Yes, we need to hold governments' feet to the fire, to tighten up the tax system as far as possible. But we also need to hold the feet of the CEOs of those aggressive corporations to the fire.

A little while ago, we wrote about Schmidt stating that "I am very proud of the structure that we set up. . . . It’s called capitalism," picking his argument into little pieces and then revealing the true nature of his assertion.

Foolish? Self-serving? Evasive? Take a look at our blog entitled Google boss Eric Schmidt takes a dim view of capitalism, then you decide.

Oh, and then there's the small matter of Google enjoying a quasi-monopoly on internet search, thus  reaping economic 'rents:' the 'income of the man who reaps where he does not sow.'

The response of any seasoned economist when they see the word 'rents' is to reply with a three-letter word ending in '-x' : a word that has been making unusually large numbers of newspaper headlines in recent months.   We like the word so much that we even put it in the three-word name of our organisation. 

Schmidt is defending the indefensible. (I was on BBC World Service TV last night making this argument, though I can't find the link.)

Britain's former top taxman joins Deloitte

Update: the Guardian has covered this here.

A tweet from Richard Brooks, a former UK Tax inspector, investigative journalist and author of The Great Tax Robbery:

 What is this all about?

Well, it concerns an announcement from the UK's Office of the Advisory on Business Appointments, that it had approved a request from Dave Hartnett, the former Permanent Secretary for Tax at HMRC (the UK's tax authorities) to be allowed to join the Big Four accountancy firm Deloitte on a part time basis. Hartnett has been widely excoriated for his apparent willingness to do cosy 'handshake' deals with HMRC's corporate 'clients,' which many believe have resulted in the loss of billions of pounds of tax which could have been collected had there been the willingness to do so.

All this is rather odd. From Private Eye in 2011:

"Why does accountancy firm Deloitte remain such a favourite of HM Revenue and Customs’ tax boss when it is arguably the biggest tax avoidance drain on the British economy?

A parliamentary question from Tory MP David Davis reveals that HMRC’s business-friendly tax boss Dave Hartnett has met Deloitte UK chairman David Cruickshank no fewer than 48 times since 2006."

Obviously there is no suggestion here of a cosy relationship, or of a revolving door, or anything like that: perish the thought.

And, from The Great Tax Robbery, concerning a cosy deal done with Vodafone over, among other things, the shoveling of some €42 billion through the Swiss branch of a Luxembourg company:

"Years of navel-gazing on the subject of large corporate tax administration had created an extremely business-friendly tax authority. At its apex sat HM Revenue and Customs' ambitious but impressionable permanent secretary for tax Dave Hartnett, valuing his department's 'relationship' with big business above all else.
. . .
HMRC's relationship with Vodafone was closer than most. . . when it came to talking turkey, another familiar face in the world of tax turned up in the urbane person of Deloitte's senior British partner David Cruikshank. Now he appeared as Vodafone's adviser . . . since his firm Deloitte was Vodafone's auditor, his appointment to advise on a multibillion-pound bone of contention posed a normally prohibitive conflict of interest that had to be cleared by the Vodafone board and specially noted in its annual report.

But as Cruikshank was known for getting deals with Hartnett, he was worth it."

So that's OK then. At least the office advising on business appointments did put a long list of caveats onto Hartnett's proposed job with Deloitte.

Now, on the subject of Hartnett taking business appointments, how does this one, from July 2012, sound?

The committee has been asked to consider an application from Dave Hartnett, former Permanent Secretary for Tax at HMRC, who is seeking permission to accept a part-time appointment with HSBC Holdings Plc. 

(The appointment was approved.) From Private Eye last February (Issue 1334, if you want to dig up the full story,) a reference to Sanjay Sethi, who pleaded guilty to charges that he "conspired with HSBC bankers in New York, London and Geneva to hide assets from the IRS [the U.S. tax authorities.]". Private Eye comments:

HMRC pores over thousands of undeclared accounts leaked by a Swiss whistleblower.  Yet in spite of all the evidence, in October 2011 HMRC’s then permanent secretary, Dave Hartnett, agreed a deal with the Swiss government under which it would be “highly unlikely to be in the public interest of the UK to undertake a criminal investigation against Financial Intermediaries [aka bankers]”.

Probed on this by MPs, Hartnett claimed: “It was very unlikely indeed that we would get evidence against Swiss bankers during the course of this.”  But as the Sethi case proves, far from being remote from HSBC’s Swiss tax dodging ways, the London arm of HSBC’s private banking operation was thus right at its heart.

No action has been taken against HSBC or its bankers in the UK.  Which is extremely convenient for the man who was chairman of HSBC private banking . . . and who reported just a few weeks later: “During 2002, excellent teamwork with HSBC’s retail banking operations in the UK, Asia, the UAE and the Americas led to a significant increase in client referrals from these locations”.  The happy banker?  None other than current trade minister Lord (Stephen) Green.

And, from the U.S. Department of Justice, we will just drive the point home:

"The International Bank operated a division in the United States called "NRI Services" that marketed offshore banking services to United States citizens of Indian descent. Through its NRI Services division, the International Bank encouraged United States citizens to open undeclared bank accounts in India."

Do Swiss bankers really want automatic information exchange

Last week we wrote a blog entitled Swiss Bankers Favor Automatic Information Exchange? which noted that the President of the Swiss Private Bankers Association (SPBA,) Nicolas Pictet, was advocating automatic information exchange. How sincere is he? Mark Herkenrath of Alliance Sud in Switzerland fills in some important details:

Over the last days, the president of the Swiss Private Bankers Association, Nicolas Pictet, has repeatedly been quoted as being in favor of automatic information exchange (see TJN Blog; Tax Research; Tax News). Unfortunately, these wonderful news are only partially true.

Pictet wants Switzerland to establish automatic information exchange (AIE) only with a handful of (rich) countries. Moreover, he is in favor of AIE only under the condition that there is increased transparency with regard to discretionary trusts, foundations and Anstalten. And he wants Switzerland to negotiate AIE only in return for increased market access for Swiss banks.

Here is my translation of the relevant parts in the original interview in German-language Swiss newspaper Tages Anzeiger:

"What rules to check the tax conformity [of incoming assets] should Switzerland apply with regard to emerging market countries?

It would be wrong to treat bank customers from all over the world in exactly the same way. Unfortunately, many countries do not provide the kind of legal protection of property rights and juridical norms that we are used to. Customers from such countries deposit their money in Switzerland for safety reasons, not because they want to evade taxes...

"... out of fear of expropriation, political repression and extortion? There are also cases in which personal safety is concerned.

"That is, Switzerland should agree automatic information exchange with Europe, but not with, for instance, Asian and Arabic countries? 

Exactly. Under clearly defined conditions--regulations regarding the settlement of the past; market access--automatic information exchange with some countries is conceivable, but not with the whole world. And the principle of a 'level playing field' must be applied with regard to all countries that have similar legal orders and with regard to all kinds of circumstances--including trusts."                                                                                                                                           

 In short, Pictet does not want Switzerland to establish automatic information exchange with emerging market and developing countries. Nor does he want any other kind of regulations regarding the inflow of undeclared assets from the global South.

That is, the Swiss banks' business with tax evaders from developing countries shall go on! Recent figures show that the share of assets under management by Swiss banks that stem from Asian and African countries is growing at unprecedented pace.

Job Posting: EU Advocacy Lead Of The Financial Transparency Coalition

Do you care about stamping out corruption, money laundering and tax dodging? The Financial Transparency Coalition (formerly the Task Force on Financial Integrity and Economic Development) is looking for a dynamic individual, with a proven track record of achieving policy change, and ‘intelligence’ of the EU/Brussels environment and structure. This is an exciting opportunity to lead EU advocacy on an influential advocacy campaign to curb illicit financial flows. Further information about the Coalition can be found at www.financialtaskforce.org.

The next 18 months present important opportunities to influence EU legislation: The EU is now in a process to update its anti-money laundering directive, including by taking steps to increase transparency over the ownership of companies. Moreover the European Commission has launched an action plan to crack down on tax evasion and avoidance. There is also movement on the long stalled revision to the savings tax directive, which provides an opportunity to push for further steps automatic exchange of information.

This position involves leading the Coalition’s advocacy towards the EU. The successful candidate will lead an advocacy campaign towards the European Union’s review of the Anti-Money Laundering Directive (75%), and the Coalition’s advocacy towards the EU on other Coalition related areas (25%)

Key responsibilities:

• Carry out advocacy towards the EU institutions to influence the Anti-Money Laundering Directive
• Develop and maintain relationships with key European Commission staff, Cabinet members, Members of the European Parliament and Permanent Representative offices, NGOs, journalists and other private sector stakeholders relevant to the success of the campaign
• Coordinate a NGO coalition working to influence the Anti-Money Laundering Directive
• Revise and lead the implementation of the coalition’s advocacy strategy
• Energise and coordinate  strategic thinking  on automatic information exchange (AIE),
• Develop an AIE action plan, including identifying realistic targets and key ‘actors’ to help drive the  work forward
• Prepare advocacy notes and frequent updates for coalition members
• Write compelling advocacy materials for lobbying and the media
• Be prepared to travel on short notice, if necessary
• Other activities that are required to fulfil the role

Required qualifications/experience

• Excellent understanding of the EU co-legislative processes
• Advocacy experience within the EU
• Ability to help non-governmental organisations work together to achieve common aims
• Strong English written and verbal communications skills
• Excellent interpersonal skills
• Ability to understand and articulate the Coalition’s issues
• Ability to work independently and on own initiative

Desirable experience:

• Knowledge of one or more EU languages other than English
• A background in anti-money laundering, anti-tax evasion or anti-corruption efforts
• Competence in an advocacy role with institutions at a high level
• Office and reporting: The advocacy lead will be hosted by the European Network on Debt and Development (Eurodad) in Brussels, and work closely with a policy team of Coalition members in Europe and the Coalition Manager in Washington DC.

Contract details:

18 months full-time contract with a possibility of extension, depending on performance and funding. There is a probation period of 3 months. Gross yearly salary of € 46,145 –€ 48,025, depending on experience. In addition there is a package of benefits including daily meal vouchers, hospitalisation insurance, travel insurance and contribution to pension plan.

Application instructions:
Please carefully read the key responsibilities and requirements, and the instructions below. We have designed these instructions to reduce the administrative burden on our teams so we can devote more time to our vital work. Therefore, we regret that we will ONLY accept applications that respect these instructions and will exclude applicants who submit general cover letters.

Send your CV (two pages maximum) with a cover letter of 2 pages or less in English. This cover letter should:

• be properly formatted, clearly and concisely written, and set out why you match the above job description.
• describe a concrete experience you had of designing and implementing an advocacy strategy to influence an EU process, preferably a co-legislative process. Please make sure you set out the steps or phases you went through, and how you tried to ensure a successful outcome.

Send your cover letter and CV:

a)     By e-mail only to apply@financialtaskforce.org Please format the subject line as “job application advocacy lead”.

b)     Please give the two files the following names: Surname_CV  and Surname_Cover [so if Peter Bloggs applied for a job we would expect files with the following names: Bloggs_CV and Bloggs_Cover]

Application deadline:

9 June before midnight Brussels time.

We will not be able to reply to all candidates. If you have not heard from us by 24 June, this means your application has been unsuccessful.

About the Financial Transparency Coalition:
The Coalition is a consortium of research and advocacy organisations and governments, Coalition members work together to implement the following five measures that would benefit the poor in developing nations and stabilise financial institutions in developed nations:

• Curtailment of mispricing in trade imports and exports;
• Country-by-country accounting of sales, profits, and taxes paid by multinational corporations;
• Confirmation of beneficial ownership in all banking and securities accounts;
• Automatic cross-border exchange of tax information on personal and business accounts;
• Harmonization of predicate offenses under anti-money laundering laws across all Financial Action Task Force cooperating countries.
• Six non-profit organisations are represented in the Coordinating Committee (CoCom) of the Coalition: Christian Aid, Eurodad, Global Financial Integrity/Center for International Policy, Global Witness, Tax Justice Network and Transparency International.

Globalisation: almighty clash of ideas has reached its zenith over tax

Guest blog: Meesha Nehru, Fair Tax researcher:

Tax is not just about morality: it’s about the battle for our future

Last Thursday Margaret Hodge said that ‘Google is evil’ when it comes to its tax avoidance. By cleverly twisting the company’s own ethically-motivated slogan, the leader of the Public Accounts Committee made it clear that pushing the law to the extreme to avoid contributing millions of pounds worth of tax to governments is not only immoral but also just plain wrong.

Over the last couple of years, the call for a moral crusade against tax avoidance and evasion seems louder with each passing day. In the face of increasing financial pressures, concerned citizens are waking up to the Injustice of how companies and wealthy individuals flagrantly flout the rules, as well as to the impact that such behaviour is having on both developed and developing countries.

Yet despite the mounting outrage, representatives of big business are adamant that tax has nothing to do with morality. Facing daily revelations about the tax avoidance of Apple, Google, Amazon, Starbucks and others, business leaders have shown that they are as quick to shift the blame, as they are their profits. Sir Roger Carr of the Confederation of British Industry insists that tax avoidance isn’t the fault of business but of the broken rules. Governments must fix the system. Tax cannot be about morality “there are no absolutes”, he says.

Sir Roger is right yet he still misses the point. Tax avoidance is not about morality in the sense that some in media like to portray it – as greedy immoral fat cats engorging themselves on all the cream whilst the morally-upright and scrupulous yet financially downtrodden taxpayers suffer the consequences. Capitalists have morals too – how else do we think they sleep at night – they just operate within a different framework.

More than being a matter of principle, tax provides the most important focal point for the defining ideological battle of our age. This almighty clash of ideas, bubbling away during the last thirty years of accelerated globalisation but as old as capital versus labour, has reached its zenith with the current debate over taxation. Underneath the rhetoric about morals is the issue that business leaders and zealots alike are missing (or choosing to ignore). We are at a crossroads and there is no going back.

Our dysfunctional economic system is creaking and whilst finance and big business try to carry on as usual - and pull all their powerful strings in order to do so - there is also an increasingly vocal movement working on the ground to build a new, more equitable future less reliant on finite resources. Taxation, and the government that collects it, is nothing less than the key battleground where control over the direction of the coming transition will be contested and won.

Far from being as simple as getting companies to pay what they owe or closing certain loopholes, what is at stake is the very nature of our democracy: from the global to the local and all of the institutions in-between. Nation-states must attempt to reassert some power over rampant global capital – creating new regulations may stem some of the financial flows but it will be taxation that reins in the unfettered and highly unequal accumulation.

History has shown us that governments won’t do this alone. For the last thirty years they have gone in the opposite direction for both ideological and practical reasons. Wealthy career politicians faced with the problem of administering an increasingly complex global society happily defer to the so-called efficiency and experience of their friends in the private sector. Now is the time that the rest of us get a look in.

This means continuing pressure to get companies to pay their fair share of tax and to get governments to close down the schemes and locations that facilitate its avoidance. But more importantly, it means holding businesses to account for the way in which they are run and holding the nation-state to account for the way in which the newly collected revenue is spent. It is not enough to rely on elections and weak mandates to make all the decisions during a time of momentous change.

The issue of fair taxation requires a different kind of moral crusade – one that insists that government is invigorated and that all taxpayers, regardless of their financial standing, are empowered with the tools, space and voice to have real say in how their money is spent. Whether we like it or not, tax as a topic is here to stay, the sooner we recognise it as fundamental to our future transformation, the better.

If you're in Amsterdam over the summer . . .

A Dutch politician will be taking a tax-free tour of Amsterdam:

SP takes you on TAX FREE TOUR

Always wanted to know where those companies are that barely pay taxes? The SP will take you this summer along on Tax Free Tour through Amsterdam. On May 24, June 15 and August 24, SP MP Arnold Merkies will tell you all about the letterbox firms and trust companies where tax is evaded.

Merkies: "Many people have no idea how many companies are involved and where they are. It is high time that we explained that. " Also SP leader Emile Roemer and MEP Dennis de Jong will be present at the Tax Free Tour.

You can sign up for the tour now, here.

Hat tip: Sam from Amsterdam

Links May 24

EU wants big companies to reveal national tax bills Reuters
See also: From January 2003 to May 2013 – progress with country-by-country reporting Tax Research UK, and EU on verge of "historic breakthrough" for tax justice Christian Aid, and The good, the bad and the indecisive: EU leaders put tax centre stage at summit Eurodad

HSBC faces court threat as deal on money laundering charges stalls The Guardian
A very important development - a move that could leave HSBC facing a criminal prosecution and the threat that its charter to do business in the US could be revoked.

How to take a serious bite out of corporate tax avoidance The Guardian
Prem Sikka: A new system of unitary taxation must be debated at the next G8 meeting. It isn't perfect, but it would be a huge step forward.

James S. Henry: The Bizarre Economics of Tax Havens and Pirate Banking TEDxRadboudU
TJN Senior Adviser James Henry is lead researcher of The Price of Offshore Revisited

Tax havens most dangerous scam in world economy – Professor Jeffrey Sachs Ghana Business News

Uganda: No tax holidays for investors under EAC New Vision
The Government will not offer tax holidays to firms seeking to invest in Uganda as the country joins the rest of East African countries in harmonising taxes in the region.

The Caribbean - Treasure islands in trouble The Economist
Britain’s Caribbean dependencies have been hurt by economic stagnation, the war on tax havens and their own fiscal recklessness and corruption

The G8 can eliminate hunger by ensuring tax fairness TJN Germany Blog (In German)
The UN Special Rapporteur on the right to food, Olivier De Schutter, has sent an open letter to the current chairman of the G8, UK Prime Minister David Cameron

Senate Hearing Demonstrates How U.S. Tax Rules Allow Apple (and Many Other Companies) to Use Offshore Tax Havens Citizens for Tax Justice

Companies and tax - Cook lightly grilled The Economist
The testimony on Capitol Hill by Apple’s boss made the case for corporate tax reform in more ways than one

Jersey, Guernsey Reply To Cameron Over Tax Info Exchange Tax-News