tag:blogger.com,1999:blog-244876262024-03-24T23:10:09.896-07:00Tax Justice NetworkWhy tax havens cause povertyTJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.comBlogger3794125tag:blogger.com,1999:blog-24487626.post-1911100369916480282014-01-17T08:19:00.001-08:002014-01-21T09:07:59.481-08:00The new Tax Justice Network website and blog is now live<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNR_50cW2n2uZ9ToTU1BLxyGeTCODCcwuOjOJIIYQ1V1Dx7G2iRztHpRITAFXDlr5tUNSJ_JANabPb6qYW2RZwF4fJYea-9j0jVRcY_U9Yz8MUoZnTdnX214J80HT0C2AShg/s1600/New+TJN+website.tiff" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNR_50cW2n2uZ9ToTU1BLxyGeTCODCcwuOjOJIIYQ1V1Dx7G2iRztHpRITAFXDlr5tUNSJ_JANabPb6qYW2RZwF4fJYea-9j0jVRcY_U9Yz8MUoZnTdnX214J80HT0C2AShg/s1600/New+TJN+website.tiff" height="65" width="320" /></a></div>
<br />
We have a completely new website!<br />
<br />
It's in the <a href="http://www.taxjustice.net/blog/"><b>same place as before</b></a>.<br />
<br />
Please take a look.<br />
<br />
From now on our blog will be integrated into the new site. We won't kill this blogger site that you're reading now: but it will become a static site. All the old blogs will still be available, but we won't be updating the blog here any more.<br />
<br />
We're told that all the old links from the old site will continue to work, though there may be exceptions. Please let us know if any don't work - or any other problems you encounter. <br />
<br />
<br />
<br />TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-60019241930742235872014-01-17T06:11:00.005-08:002014-01-24T00:07:13.181-08:00TJN site disruptionWe are in the middle of launching a new TJN website. There may be some disruption to the site over the weekend. We will bring you any updates on this blog.TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-64402154985856445402014-01-17T04:42:00.002-08:002014-04-02T13:33:09.387-07:00Public Eye Awards: Help put FIFA in the Hall of Shame!<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3rwiuOfll1u-EcVgsBO2pP-Z6k3ihpZdEcHJXn77yzh0GqKqFdoWCef8lhTODVO6dqr7RMAtQd03y2cFqq4LL2ECI3ructyj_HHxi1-3b_ZUP0Byncp0Igqhlr1SPSYj_rQ/s1600/Unknown.jpeg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3rwiuOfll1u-EcVgsBO2pP-Z6k3ihpZdEcHJXn77yzh0GqKqFdoWCef8lhTODVO6dqr7RMAtQd03y2cFqq4LL2ECI3ructyj_HHxi1-3b_ZUP0Byncp0Igqhlr1SPSYj_rQ/s1600/Unknown.jpeg" /></a></div>
A while ago we wrote about something quite reprehensible from world football's governing body FIFA. This <a href="http://taxjustice.blogspot.de/2010/05/footballs-fifa-and-african-tax-free.html"><b>Tax Bubble</b></a> that FIFA created around the South African world cup - despite FIFA's being a gargantuan, unaccountable billionaire monopolist based in Switzerland - was a particularly shameful example of their anti-democratic rent-seeking behaviour.<br />
<br />
And they are going to <b><a href="http://www.bbc.co.uk/news/magazine-13616328">do it again and again</a></b>. <br />
<br />
Now the <a href="http://www.bbc.co.uk/news/magazine-13616328">Public Eye Awards</a>, which draw attention to particularly egregious corporate misbehaviour, have sent us this. Please sign it today. <br />
<blockquote class="tr_bq">
<b><a href="http://publiceye.ch/en/case/fifa/">Help put FIFA in the Hall of Shame!</a></b><br />
Vote NOW for FIFA as the worst corporation of the year at the Public Eye Awards and spread the word: http://publiceye.ch/en/case/fifa/<br />
<br />
For the Campaign Dismantle Corporate Power,<br />
FIFA should be considered the Worst Corporation of the World because:<br />
<br />
Although it is called a ‘non-profit organization’ FIFA uses its World Cup agreements with host countries to protect the investments of its corporate sponsors; corporations who are given exclusive rights to sell their products during the tournament. This is a situation that has a major impact on local economies, street vendors and waste pickers who are blocked from venues and persecuted for conducting their regular business during the tournament.<br />
<br />
Brazil’s “World Cup General Law” is a key example of FIFA’s capture of government policy. FIFA forced the government to introduce legal reforms, resulting in the loss of rights for the Brazilian population. One example was the attempt by FIFA to suspend half price admission for Brazilian youth and elderly people to cultural events during the tournament and to make world cup games completely inaccessible to those who cannot afford inflated ticket prices. While the current Brazilian laws prohibit the sale of alcoholic beverages in stadiums, according to FIFA’s rules, they are suspended to allow only Budweiser beer to be sold in the stadiums.<br />
<br />
The World Cup General Law allows FIFA to regulate retail operations, advertising and propaganda in special “zones of exception” that surround stadiums and tournament events spaces in a two kilometer radius. Some of the Transnational corporations that have exclusive rights to operate in these buffer zones are: food and beverage companies Coca Cola, McDonalds, Budweiser and Brazilian supermarket giant Seara. For a complete list of sponsors for the 2014 world cup follow this link: http://pt.fifa.com/worldcup/organisation/partners/<br />
<br />
Private security army G4S, which operates in occupied Palestine, is FIFA’s favorite option when it comes to repression during the.FIFA’s events. The British company faced a boycott campaign during the South African World Cup games Cup in 2010.<br />
<br />
The Global Campaign to Dismantle Corporate Power and Stop Impunity is supporting the nomination of FIFA by ANCOP for the Public Eye Awards. The Campaign stands in solidarity with:<br />
<br />
- Women movements who are denouncing the commodification of the female body and image through sports entertainment and FIFA’s public relations messages;<br />
- The Boycott Sanction and Divestment (BDS) Campaign on TNCs operating in occupied Palestine;<br />
- Peasants movements that resist agribusiness and supermarket corporations and promote food sovereignty; - Networks and movements that denounce the abuses of financial sector;<br />
- Environmental justice networks supporting communities that have been evicted directly or indirectly because of the world cup;<br />
- Civil society groups fighting for democracy and right to protest in Russia, country of the FIFA next World Cup (2018);<br />
- Migrant workers subjected to unjust labor standards in Qatar who are building infrastructure for the 2022 FIFA World Cup.<br />
- Street vendors in South Africa who were criminalized by FIFA in the World Cup 2010 and other communities affected by FIFA legacy;<br />
- Athletes that love sports and culture and resist the corporate takeover by the entertainment industry<br />
<br />
Vote NOW! for FIFA as the worst corporation of the year at: http://publiceye.ch/en/case/fifa/</blockquote>
Update April 2014: for more information on corporate tax see <a href="http://www.taxjustice.net/topics/corporate-tax/">here</a>.TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-82953772335760222232014-01-16T07:42:00.002-08:002014-01-16T07:46:30.032-08:00Links Jan 16<a href="http://eurodad.org/Entries/view/1546127/2014/01/15/The-time-is-now-European-Parliament-to-vote-on-the-Anti-Money-Laundering-Directive">The time is now: European Parliament to vote on the Anti-Money Laundering Directive</a> Eurodad<br />
<i>See also: </i><a href="http://www.ifcreview.com/viewnews.aspx?articleId=7278">Member states split on proposed transparency for trusts legislation</a> IFC Review / European Voice<br />
<br />
<a href="http://www.smh.com.au/business/finance-lobbies-oecd-for-flexibility-in-tax-regulation-20140116-30xoa.html">Finance lobbies OECD for flexibility in tax regulation</a> The Sydney Morning Herald<br />
<br />
<a href="http://www.jpost.com/National-News/Netanyahu-had-off-shore-bank-account-while-serving-as-finance-minister-338296">Israel: PM’s Office: No wrongdoing in Netanyahu’s offshore bank account</a> The Jerusalem Post<br />
<i>"Netanyahu used tax haven while overseeing agency responsible for reducing use of such accounts by Israelis.</i>" <i>See also: </i><a href="http://www.globes.co.il/serveen/globes/docview.asp?did=1000909829">Netanyahu held tax haven bank account</a> Globes<br />
<br />
<a href="http://greece.greekreporter.com/2014/01/14/offshore-companies-and-huge-bank-accounts-for-golden-dawns-members/">Greece: Offshore Companies and Huge Bank Accounts for Golden Dawn’s Members</a> Greek Reporter<br />
<br />
<a href="http://www.taxresearch.org.uk/Blog/2014/01/16/australias-going-for-the-foxes-in-charge-of-the-henhouse-approach-to-corporate-tax-collection/">Australia’s going for the foxes in charge of the henhouse approach to corporate tax collection</a> Tax Research UK<br />
<br />
<a href="http://www.swissinfo.ch/eng/business/Head_of_Swiss_financial_regulator_steps_down.html?cid=37740868">Head of Swiss financial regulator steps dow</a>n swissinfo<br />
<div>
<i>... to be succeeded by former UBS senior executive who testified before the U.S
Senate on the bank’s
role in aiding US tax evaders, and headed the Japanese securities unit involved in Libor rate rigging.</i><br />
<br />
<a href="http://www.politico.com/story/2014/01/switzerland-renzo-gadola-tax-investigation-102149.html#ixzz2qQxc9mZ3">Switzerland probing banker who is helping U.S. tax investigations</a> Politico<br />
<i>"The
Swiss contend they’re merely upholding their privacy laws, but some say
the investigation sends a message to bankers: Keep quiet or else.<span style="border: 0px none; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 10px; font-style: normal; margin: 0px; outline: none 0px; padding: 0px; vertical-align: baseline;">"</span></i><br />
<br />
<a href="http://www.forbes.com/sites/robertwood/2014/01/16/even-u-s-banks-must-aid-irs-hunt-for-offshore-accounts/">Even U.S. Banks Must Aid IRS Hunt For Offshore Accounts</a> Forbes<br />
<i>Reciprocity seen as critical to implementing FATCA. See also: </i><a href="http://www.tax-news.com/news/US_Court_Dismisses_Challenge_To_IRS_Reporting_Rule____63366.html">US Court Dismisses Challenge To IRS Reporting Rule</a> Tax-News<i>, and</i> <a href="http://www.compasscayman.com/caycompass/2014/01/16/US-banks--challenge-to-tax-info-exchange-fails/">US banks’ challenge to tax info exchange fails</a> Compass Cayman<br />
<br />
<a href="http://www.tax-news.com/news/Indian_High_Court_Pressed_On_Vodafone_Transfer_Pricing_Case____63356.html">Indian High Court Pressed On Vodafone Transfer Pricing Case</a> Tax-News,<br />
<br />
<a href="http://www.icij.org/blog/2013/04/release-offshore-records-draws-worldwide-response">Latest update: Release Of Offshore Records Draws Worldwide Response</a> ICIJ<br />
<br />
<a href="http://www.step.org/argentina-clamp-down-taxpayers-undeclared-assets-panama">Argentina to clamp down on taxpayers with undeclared assets in Panama</a> STEP<br />
<i>See Spanish language version <a href="http://www.step.org/argentina-buscar%C3%A1-datos-de-contribuyentes-con-bienes-no-declarados-en-panam%C3%A1">here</a>.</i><br />
<br />
<a href="http://www.tax-news.com/news/Argentina_Imposes_Withholding_Tax_On_Exports____63335.html">Argentina Imposes Withholding Tax On Exports</a> Tax-News<br />
<i>Measures adopted by the Argentinian government to tackle transfer pricing abuse</i><br />
<br />
<a href="http://www.trust.org/item/20140116114710-y7xjf/">Mexico scrutinizes multinationals for tax evasion</a> Thomson Reuters<br />
<br />
<a href="http://www.imf.org/external/pubs/cat/longres.aspx?sk=41205.0">Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries</a> IMF<br />
<br />
<a href="http://yle.fi/uutiset/president_critiques_corporate_tax_evasion_public_sector_growth/7033106">Finland: President critiques corporate tax evasion, public sector growth</a> Yle<br />
<br />
<a href="http://www.huffingtonpost.ca/2014/01/15/tax-cheats-hotline-canada_n_4604338.html">Canada: Tax Evasion Hotline Offers Bounty For Cheaters</a> Huffington Post<br />
<br />
<a href="http://www.scmp.com/business/china-business/article/1406044/analysts-divided-impact-qianhai-bvi-move-hong-kong">Analysts divided on impact of Qianhai-BVI move on Hong Kong</a> South China Morning Post<br />
<br />
<a href="http://dqtax.tumblr.com/post/73400560421/an-eye-opening-message-about-the-culture-of-denial-in">An eye-opening message about the culture of denial in the tax industry</a> David Quentin's tax & law blog<br />
<br />
<a href="http://steuergerechtigkeit.blogspot.co.uk/2014/01/doppelbesteuerungsabkommen-einseitiger.html">Double taxation agreements - one-sided profit?</a> TJN Germany Blog (<i>In German</i>)<br />
<br />
<a href="http://taxprof.typepad.com/taxprof_blog/2014/01/taxing.html">Taxing the Behemoths</a> TaxProf<br />
<br />
<a href="http://www.bloomberg.com/news/2014-01-14/obamacare-website-fixer-has-thing-for-tax-havens.html">U.S.: Obamacare Website Fixer Has Thing for Tax Havens</a> Bloomberg<br />
<br />
<a href="http://ctj.org/ctjinthenews/2014/01/new_york_times_letter_to_the_editor_end_the_corporate_tax.php#.Utflx2R_st1">New York Times Letter to the Editor: End the Corporate Tax?</a> Citizens for Tax Justice<br />
<i>See also our recent blog <a href="http://taxjustice.blogspot.co.uk/2014/01/time-to-abolish-corporate-tax-part-2.html">Time to abolish the corporate tax? Part 2: Only fools or shills would agree</a></i><br />
<br />
<a href="http://www.caymannewsservice.com/crime/2014/01/15/tempura-lawyer-reinstated">Cayman: Tempura lawyer reinstated</a> Cayman News Service<br />
<i>Latest twist in the corruption case highlighting alleged misgovernance between Britain and its offshore financial centres</i><br />
<br />
<a href="http://www.trust.org/item/20140114171910-w8aby/">An indictment of financial crime enforcement</a> Thomson Reuters<br />
<br />
<a href="http://edition.cnn.com/2014/01/14/justice/ty-warner-beanie-babies-tax-evasion/">Beanie Babies creator Ty Warner won't serve prison time for tax evasion</a> CNN<br />
<br />
<a href="http://www.telegraph.co.uk/sport/motorsport/formulaone/10575775/Bernie-Ecclestone-will-face-criminal-charges-as-position-at-head-of-Formula-One-comes-under-serious-threat.html">Bernie Ecclestone 'will face criminal charges' as position at head of Formula One comes under serious threat</a> The Telegraph<br />
<br />
<a href="http://www.runnersworld.com/elite-runners/mo-farah-applies-to-become-tax-exile-from-the-uk">Mo Farah Applies to Become Tax Exile from the UK</a> Runner's World<br />
<br />
<a href="http://www.independent.ie/irish-news/revenue-scouring-facebook-and-twitter-for-tax-cheats-29919876.html">Revenue scouring Facebook and Twitter for tax cheats</a> Irish Independent</div>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-66774638215001115552014-01-16T01:55:00.004-08:002014-01-16T01:55:57.492-08:00New TJN website: coming very soonVery soon we will be launching a completely new TJN website to replace our current one.<br />
<br />
It will have the same address as before: you will click on <a href="http://taxjustice.net/">taxjustice.net</a> and suddenly you will notice that everything has changed. The old links will remain alive, at least for most of them.<br />
<br />
The blog is going to be integrated into the new website.<br />
<br />
But don't worry: we're not going to kill this site. These blogs will remain available, just as before. It's just that we won't be adding new ones here, but at taxjustice.net.<br />
<br />TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-36773219850540448022014-01-14T04:32:00.002-08:002014-01-14T04:35:42.562-08:00Links Jan 14<a href="http://www.oecd.org/tax/beps-webcasts.htm">"BEPS Action Plan: Update on 2014 Deliverables"- Live Webcast Thursday 23 January</a> OECD<br />
<br />
<a href="http://www.tax-news.com/news/Hellenic_EU_Presidency_Outlines_Priorities____63326.html" target="_blank">Hellenic EU Presidency Outlines Priorities</a> Tax-News<br />
<i>"Greece
will press for the extension of automatic information exchange
procedures as part of its six month European Union (EU) Presidency.</i>"<br />
<br />
<a href="http://www.financialexpress.com/news/india-wants-g20-oecd-nations-to-adopt-its-transferpricing-policy/1217452" target="_blank">India wants G20 & OECD nations to adopt its transfer-pricing policy</a> The Financial Express<br />
<br />
<a href="http://www.ft.com/cms/s/0/62b10d60-793e-11e3-91ac-00144feabdc0.html?siteedition=uk#axzz2qJ68hLMU" target="_blank">Alcoa in $384m deal to settle Bahrain bribery charges</a> Financial Times (<i>paywall</i>)<br />
<i>Alcoa admits links to "corrupt international underworld" via havens Guernsey, Luxembourg, Liechtenstein and Switzerland.</i><br />
<br />
<a href="http://www.tax-news.com/news/Kazakhstan_Exempts_EDRB_From_Taxes____63329.html" target="_blank">Kazakhstan Exempts EDRB From Taxes</a> Tax-News<br />
<br />
<a href="http://www.bloomberg.com/news/2014-01-09/hunt-for-kazakh-bank-s-missing-billions-leads-to-riviera.html">Sleuths Hunt for Kazakh Bank’s Missing $6 Billion</a> Bloomberg<br />
<br />
<a href="http://www.forbes.com/sites/robertwood/2014/01/10/from-spanish-royals-to-american-tax-protestors-tax-evasion-can-mean-jail/">From Spanish Royals To American Tax Protestors, Tax Evasion Can Mean Jail</a> Forbes<br />
<br />
<a href="http://financialsecrecymediamonitor.wordpress.com/2014/01/13/mauritius-authorities-announce-new-unit-against-financial-crime-and-new-powers-to-sanction-offshore-entities/" target="_blank">Mauritius: Authorities announce new unit against financial crime and new powers to sanction offshore entities</a> Financial Secrecy Media Monitor<br />
<i>Their proclamations sound good, but how much is spin?</i><br />
<br />
<a href="http://www.washingtonpost.com/opinions/a-rising-tide-of-dark-money/2014/01/12/cb7e0e04-77e2-11e3-8963-b4b654bcc9b2_story.html" target="_blank">A rising tide of dark money</a> The Washington Post<br />
<br />
<a href="http://www.ctj.org/taxjusticedigest/archive/2014/01/should_it_bother_us_that_boein.php#.UtQ9hGRdUt0" target="_blank">Should It Bother Us that Boeing Says It Needs a Tax Incentive to Make Its Planes Safe?</a> Citizens for Tax Justice<br />
<br />
<a href="http://www.swissinfo.ch/eng/business/Israeli_bank_data_disc_aids_German_investigation.html?cid=37723706" target="_blank">Israeli bank data disc aids German investigation</a> swissinfo<br />
<br />
<a href="http://www.torontosun.com/2014/01/10/rbc-accused-of-stalling-during-us-tax-evasion-court-case" target="_blank">RBC accused of stalling during U.S. tax evasion court case</a> The Toronto Sun<br />
<br />
<a href="http://www.forbes.com/sites/robertwood/2014/01/13/prada-mimics-dolce-gabanna-tax-trouble-should-copy-apple-google-instead/" target="_blank">Prada Mimics Dolce & Gabbana Tax Trouble, Should Copy Apple & Google Instead</a> ForbesTJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-57546743741890972012014-01-13T03:10:00.001-08:002014-04-02T13:54:05.034-07:00Jersey: A Case Study in Path Dependence<div class="MsoNormal" style="mso-margin-bottom-alt: auto; text-align: justify;">
Update April 2014: For more information on secrecy see <a href="http://www.taxjustice.net/topics/secrecy/">here</a>.<br />
<br />
This blog is part of a series highlighting the narrative reports
from a number of secrecy jurisdictions around the world, explaining how
they became offshore financial centres. </div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; text-align: justify;">
</div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; text-align: justify;">
<span style="mso-ansi-language: EN-GB; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Jersey ranked ninth on the <a href="http://www.financialsecrecyindex.com/"><span style="color: #660000;"><b>2013 Financial Secrecy Index</b></span></a>.<span style="mso-spacerun: yes;"> </span>This ranking is based on a combination of its
secrecy score of 75 (poor) and the island's tiny share</span><span style="mso-ansi-language: EN-GB; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> of the global market for offshore financial
services. For decades the island has pursued a development strategy which has given primacy to offshore finance. It is now victim to <a href="http://www.taxjustice.net/cms/front_content.php?idcat=150"><span style="color: #660000;"><b>The Finance Curse</b></span></a>. Any attempt to diversify away from financial services will need to grapple with a host of issues arising from what development economists term the island's <a href="http://en.wikipedia.org/wiki/Path_dependence"><span style="color: #660000;"><b>'path dependence'</b></span></a>, the biggest of which are the extraordinarily high cost of living and the narrow skills base of the island's workforce.</span><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFHl0gRVeTq5fQHIX4xRJXkDFaZ_dgt2G1ryfUsrE8oTkd4GMYswWkTs83EKHZt6jJn-qnzKIbYNvffbvmmwE8_V09jzHCMSVFE2RXhjKaDumMKit5panPEF6hiBeaKT2Mjw/s1600/Teapot-Soc+-+FEB-2009+069.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFHl0gRVeTq5fQHIX4xRJXkDFaZ_dgt2G1ryfUsrE8oTkd4GMYswWkTs83EKHZt6jJn-qnzKIbYNvffbvmmwE8_V09jzHCMSVFE2RXhjKaDumMKit5panPEF6hiBeaKT2Mjw/s400/Teapot-Soc+-+FEB-2009+069.jpg" height="115" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: x-small;"><b>French protestors spell out their vision of Jersey</b></span></td></tr>
</tbody></table>
<br />
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">The Jersey financial centre: history and overview</span></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Jersey, the largest of the Channel
Islands, lies 135 </span><span style="mso-ansi-language: EN-GB; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">kilometres</span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">
south of the UK and just 45 minutes by jet from London. Proximity to the UK
means that the island’s financial centre is intimately linked to London and the
majority of inflows to Jersey are ultimately destined to the City.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Despite its tiny size, with a
population of around 95,000, the island hosts a major offshore financial centre
in its capital, Saint Helier, with a sophisticated cluster of international
banks, trust companies and law firms – including many top players in the
self-styled ‘Offshore Magic Circle’.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">For
decades offshore trusts have been a mainstay of the island’s wealth management
sector, which attracts capital inflows from around the world. Jersey also hosts
hedge funds, shadow banks and has </span><span style="mso-ansi-language: EN-GB; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">specialised</span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> in offshore </span><span style="mso-ansi-language: EN-GB; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">securitisation</span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> of loans. </span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">With its tiny population and economy,
and a long history of weak political governance, Jersey is 'captured’ by the financial services sector. Despite regular protestations that
it is clean and transparent, Jersey’s very high secrecy score and large
financial sector means it fully deserves its place in the top ten global
secrecy jurisdictions.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">History</span></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">For centuries, part-British Jersey has
taken advantage of its peculiar constitutional relationship with Britain to
maintain its fiscal autonomy. It was a relatively early entrant to the offshore
financial services market.<span style="mso-spacerun: yes;"> </span>In the 1920s
UK high net worth individuals either emigrated to the island or shifted their
wealth to Jersey registered offshore trusts and companies for estate planning
purposes. Income tax was originally introduced in 1928 at a rate of 2.5 percent,
but subsequently raised to 20 percent in 1940 by the German military
government. The personal income tax rate remains 20 percent, but corporate
profits and capital gains are not taxed. As academic researchers have noted (<i style="mso-bidi-font-style: normal;">Offshore Finance Centres and Tax Havens</i>,<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"> </i></b></span><span lang="EN-US"><a href="http://www.amazon.co.uk/Offshore-Finance-Centres-Tax-Havens/dp/0333727479/ref=sr_1_1?ie=UTF8&qid=1316782333&sr=8-1"><b style="mso-bidi-font-weight: normal;"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">p181</span></b></a></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">): “a large proportion of the
transactions conducted in Jersey are tax driven (that is, transactions that are
booked there without the requirement of adding value so that there is little
real activity) which is a key identifier of a tax haven.”</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Before the abolition of British
exchange controls in 1979 under Prime Minister Margaret Thatcher, all banks in
Jersey came under the Bank of England exchange control regulations, but the
Bank of England has historically been relatively content to operate a regime of
benign negligence with respect to Jersey. Offshore banking expanded rapidly
from the 1960s as London-based secondary banks expanded their offshore
Euromarket activities: Hill Samuel from 1961, then Kleinwort Benson and Royal
Trust of Canada in 1962, Hambros Bank in 1967 and then the first U.S. bank,
First National City, the following year.<span style="mso-spacerun: yes;">
</span>Within a decade 30 international banks were operating from Saint Helier,
including Citibank, Bank of America, Deutsche Bank, Banque Nationale de Paris,
Barclays Wealth, HSBC and Bank of India.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">The link with Britain and the City of London</span></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">A British </span><span lang="EN-US"><a href="http://webarchive.nationalarchives.gov.uk/+/http:/www.dca.gov.uk/constitution/crown/crwdep.htm"><b style="mso-bidi-font-weight: normal;"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Crown
Dependency</span></b></a></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> since the 13<sup>th</sup> Century, Jersey’s key officials,
including senior law officers, the president of the States of Jersey (the
legislature), and the island’s Lieutenant Governor are all appointed by the
British monarch.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">One commentator describes (<i style="mso-bidi-font-style: normal;">The offshore Interface</i>, </span><span lang="EN-US"><a href="http://www.amazon.co.uk/Offshore-Interface-Havens-Global-Economy/dp/0333616979/ref=sr_1_1?ie=UTF8&qid=1316781887&sr=8-1"><b style="mso-bidi-font-weight: normal;"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">p154</span></b></a></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">) Jersey’s relationship with Britain
as “within and yet without, of being under the UK umbrella and yet with the
space to have a surprising amount of freedom”.<span style="mso-spacerun: yes;">
</span>Jersey Finance, the self-styled Voice of the International Financial
Centre,</span><span lang="EN-US"><a href="http://www.jerseyfinance.je/media/PDF-Brochures/Banking%20%20Brochure%20Oct%202013.pdf"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> <b style="mso-bidi-font-weight: normal;">admits</b></span></a></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">: </span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">“For many corporate treasurers,
institutional bankers and treasury specialists, fund promoters, brokers and
other corporate financiers, Jersey represents an extension of the City of
London.”</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">All legislation agreed by the island’s
legislature must be ratified by the UK monarch’s Privy Council before being
enacted.<span style="mso-spacerun: yes;"> </span>And yet politically Jersey is
not part of the UK and, through smoke and mirrors, regularly projects itself as
being free from UK interference.<span style="mso-spacerun: yes;"> </span>This
provides comfort to British elites using Jersey for tax cheating, while at the
same time reassuring them that if the worst arises they can protect their
interests through appeal to the UK Supreme Court.<span style="mso-spacerun: yes;"> </span>This odd relationship with the UK is echoed
in the peculiar relationship between Jersey (and its fellow Bailiwick of
Guernsey) and the European Union.<span style="mso-spacerun: yes;">
</span>Strictly, Jersey is inside the Customs Union for the purposes of trade
in tangible goods, but is not party to EU Directives or treaties such as the
Single Market Act or the Maastricht Treaty.<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">This inside-outside relationship with
Britain is also reflected in the island’s culture and social relations.<span style="mso-spacerun: yes;"> </span>Superficially the island feels very British,
but with Norman-French street names.<span style="mso-spacerun: yes;">
</span>And, as author Nick Shaxson notes in his book </span><b><i><span lang="EN-US"><a href="http://treasureislands.org/"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Treasure
Islands</span></a></span></i></b><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">, the tiny scale amplifies many of the problems of contemporary
Britain: conflicts of interest and corruption are rife, social inequality has corroded all sense of community, and the elite have made
their own interests synonymous with the interests of the entire
population.<span style="mso-spacerun: yes;"> </span>In the near-absence of
opposition politics and independent media this is a recipe for stifling dissent
– especially when it challenges the dominant offshore financial sector.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<b><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Sun, sea and secrecy</span></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Although Jersey does not have formal
banking secrecy backed by criminal law (as is the case in Switzerland or the
Bahamas, for example) secrecy is provided in various other ways, including via
Jersey trusts, offshore companies and, since 2009, foundations.<span style="mso-spacerun: yes;"> </span>These legal arrangements, combined with
judicial separation from the UK, provide an effective secrecy space that
attracts illicit financial flows from across the world.<span style="mso-spacerun: yes;"> </span>While the funds were flooding in during the
1980s and 1990s the island’s regulatory authorities did little to intervene to
prevent dirty money from rushing through Saint Helier en route to London. On
September 17, 1996, in a searing article about an accumulation of scandals in
Jersey, the <i>Wall Street Journal</i> described this secrecy jurisdiction as
“an offshore hazard . . . living of lax regulation.” Two years later, in
response to a major regulatory failure involving the Jersey subsidiary of Swiss
banking giant UBS and a convicted foreign exchange dealer operating from offices
in the island, New York assistant district attorney John Moscow was quoted in
the <i style="mso-bidi-font-style: normal;">Financial Times</i>:</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">“The Isle of Man authorities see their
job as keeping the bad guys out.<span style="mso-spacerun: yes;"> </span>Jersey
sees its job as co-operating with criminal authorities when the law requires
it, without necessarily keeping the bad guys out.” </span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Such articles are usually met by a
frenzy of public relations activity, along the line ‘we are clean, well
regulated and cooperative; and our critics are motivated by foul motives.’<span style="mso-spacerun: yes;"> </span>In addition, when major wrongdoing has been
uncovered and </span><span style="mso-ansi-language: EN-GB; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">publicised</span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">,
Jersey authorities argue that this kind of activity all happened a long time
ago, and point to their position (alongside nearly every other secrecy
jurisdiction) on the OECD’s failed 2009 white list.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Matters became particularly bad in the
1990s and 2000s amid a phase of management buyouts, whose financial
arrangements meant that the directors of trust companies were under tremendous
and unprecedented pressure to maximise short-term financial performance. This
led to a wave of particularly unscrupulous practices and tolerance of a wave of
financial criminality.<span style="mso-spacerun: yes;"> </span>In more recent
years, however, Jersey has had to respond to changes, which in some cases have
led to reforms of its offshore sector. These pressures have come in several
forms. First, external pressure from the OECD, the Financial Action Task Force,
the European Union and other groupings have forced Jersey to make some changes.
Second, the global financial and economic crisis has impacted Jersey’s
financial sector, although the response has typically be to respond to falling
revenues by increasing taxes on local people. Third, these external pressures
have to some extent weakened the inter-relationships of a previously closely
intertwined and mutually protective élite among the owners of Jersey trust
companies and other offshore firms, somewhat mitigating though not eliminating
a feeling of impunity in the face of potential criminal actions against
them.<span style="mso-spacerun: yes;"> </span>Insiders also tell us that
cultural changes now underway in Jersey have made some practitioners,
particularly younger ones, less tolerant of some of the more egregious and
illegal acts. One other change of the past few years is that the Jersey
Financial Services Commission, previously an unresponsive rubber-stamp, has
started to become more aggressive (and hence more unpopular) in trying to stamp
out some of the more outrageous practices.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">The 2013 Financial Secrecy Index
demonstrates through undisputed legal facts and assessments by international
financial institutions, that these repeated claims of probity and transparency,
don’t hold water. <span style="mso-spacerun: yes;"> </span>Jersey’s sophisticated
wealth management structures, notably its trust industry, keeps the island open
to tax-evading/tax-avoiding and other illicit financial flows from around the
world. </span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">In addition, the OECD-backed </span><b><span lang="EN-US"><a href="http://www.oecd.org/document/33/0,3746,en_21571361_43854757_44200609_1_1_1_1,00.html"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Global Forum on Transparency and
Exchange of Information for Tax Purposes</span></a></span></b><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> in a (leaked) Peer Review report on
Exchange of Information (EOI) shared our view when it started to look at the
detail of how Jersey actually implements tax information exchange:<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">“The highlighted
provisions in some of Jersey’s EOI agreements may limit the effectiveness of
information exchange. Further, in one case to date, the interpretation applied
by Jersey appears to be inconsistent with the definition of ‘criminal tax
matters’, and is preventing the exchange of information under that TIEA.<br />
… <span style="mso-spacerun: yes;"> </span><br />
Jersey’s domestic legislation which provides access powers to obtain
information for exchange contains impediments which may significantly affect
access to relevant information although to date they have not restricted
access.”</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Even less reassuring is the fact that
Jersey chose to remain outside the EU’s automatic information exchange process, even though
fellow Crown Dependencies Guernsey and Isle of Man signed up since 2009.<span style="mso-spacerun: yes;"> </span>Local officials justified this on the grounds
that they felt the need to be “internationally competitive”, though this raises
questions about what they are competing for.<span style="mso-spacerun: yes;">
</span>Legitimate activities have no need to hide behind ineffective tax
information exchange agreements.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-autospace: none;">
<b><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Foundations: a new step backwards</span></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Our concerns that Jersey remains
largely an unreconstructed secrecy jurisdiction have been reinforced by the
recent adoption of foundations into Jersey law.<span style="mso-spacerun: yes;">
</span>Private foundations do sometimes have legitimate purposes, but they can
also provide a particularly malign form of secrecy.<span style="mso-spacerun: yes;"> </span>As an offshore law firm in Panama </span><span lang="EN-US"><a href="http://taxjustice.blogspot.de/2011/05/real-reason-for-jersey-and-guernsey.html"><b style="mso-bidi-font-weight: normal;"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">puts
it</span></b></a></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">:</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<b><i><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">“</span></i></b><i><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Foundations were designed not by the
rich but by the super rich to protect their assets, insulating them from
seizure and confiscation. These </span></i><b><span lang="EN-US"><a href="http://www.panamalaw.org/asset_protection.html"><i><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">asset protection tools</span></i></a></span></b><i><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"> are so good they should be illegal
but they are not illegal. The big difference between a trust and a foundation
is the foundation is a separate judicial person. The term judicial person means
an unnatural person.”</span></i><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">The Jersey Foundations (2009) Law,
which mimics similar laws in Liechtenstein and Panama, appears to be an attempt
in part to move in on Asian wealth management markets, amid rising pressure
from European countries seeking to tackle their own domestic tax evaders. </span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Another angle on the adoption of the
Jersey Foundations Law was provided to us (hat-tip to Richard Murphy at Tax
Research UK) by an experienced and highly qualified industry insider:</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US">. <i style="mso-bidi-font-style: normal;">. . the main
reason for the foundation law was to avoid fiduciary responsibility. A number
of court decisions in Jersey held trustees responsible for the activities of
the corporations they controlled. Obviously this increased trustee risk to a
very high level. When a foundation is involved the new foundation law absolves
the agents creating and managing them from responsibility.</i></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">This interpretation of the rationale
for enacting the Jersey Foundations Law illustrates the insidious nature of the
offshore-led regulatory race to the bottom: when managing agents are
effectively absolved of responsibility for the activities of the legal entities
they create and manage, legal protection of third parties effectively ceases to
exist.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Enactment of this new law has directly
fed through into an increase in the island’s secrecy score and is clear evidence
of the authorities’ commitment to maintaining a development strategy based
largely on providing secrecy and lax regulation to non-residents.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">The </span><b><span lang="EN-US"><a href="http://www.taxjustice.net/cms/upload/pdf/Tourism_07_Christensen_Hampton.pdf"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">lack of an alternative development
strategy</span></a></span></b><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">
should be a cause of great concern, not least for the islanders
themselves.<span style="mso-spacerun: yes;"> </span>Jersey is already highly
dependent on its role as a secrecy jurisdiction and has all the hallmarks of a
captive state.<span style="mso-spacerun: yes;"> </span>The offshore financial
centre in Saint Helier accounts for over 50 per cent of gross value added in
the local economy, and virtually every other sector operates downstream of its
activities.<span style="mso-spacerun: yes;"> </span>In such a monoculture
economy, and without any serious prospects to break free from such extreme
economic dependence, Jersey’s authorities are loath to introduce effective
regulation to curtail illicit financial flows and tax evasion.<span style="mso-spacerun: yes;"> </span>As researchers have </span><b><span lang="EN-US"><a href="http://kent.academia.edu/MarkHampton/Papers/547714/Looking_for_Plan_B_What_next_for_island_hosts_of_offshore_finance"><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">recently argued</span></a></span></b><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">, they are locked into a political
economy over which they have little control:</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">“They have
limited scope for reducing their dependence on offshore financial services.
With approximately one quarter of its economically active population directly
employed in the OFC, and the majority of the remaining workforce employed in
secondary sectors like construction, distributive trades and catering, there is
virtually no alternative skills base on which new industries can draw. This
path dependence has been reinforced by the extraordinary high costs of land and
labour, which have crowded-out pre-existing industries. Taking measures to
diversify the local economy will therefore require politically unpalatable steps
to significantly reduce the domestic cost base.”<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">For all of the above reasons, plus the
continued lack of transparency of Jersey trusts and offshore companies, and
despite the flurry of tax information exchange agreements signed since 2009
(which are highly ineffective anyway), Jersey is assessed with a secrecy score
of 75 and clearly well deserves its position at number nine in the overall
ranking.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Sources and further reading</span></b></div>
<div class="MsoListParagraphCxSpFirst" style="mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -18.0pt;">
<span lang="EN-US" style="mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Hampton, M (1996), <i style="mso-bidi-font-style: normal;">The
Offshore Interface: tax Havens in the Global Economy</i>, Palgrave Macmillan:
Basingstoke.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -18.0pt;">
<span lang="EN-US" style="mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Hampton, M and Abbott, J (eds.) (1999), <i style="mso-bidi-font-style: normal;">Offshore Finance Centres and Tax Havens: The Rise of Global Capitalism</i>,
Palgrave Macmillan: Basingstoke.</span></div>
<div class="MsoListParagraphCxSpLast" style="mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -18.0pt;">
<span lang="EN-US" style="mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN-US" style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Shaxson, N (2012), <i style="mso-bidi-font-style: normal;">Treasure
Islands: Tax Havens and the Men who Stole the World</i>, Vintage Books: London.</span></div>
<div style="mso-element: endnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="edn1" style="mso-element: endnote;">
<div class="MsoEndnoteText" style="margin-bottom: .0001pt; margin-bottom: 0cm;">
<a href="http://www.blogger.com/blogger.g?blogID=24487626#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[i]</span></span></span></span></span></a><span lang="EN-US"> </span><span style="mso-ansi-language: EN-GB;">This narrative report
is based on information up to date at 21<sup>st</sup> October 2013, however all
references to FSI scores or ratings reflect the 2013 results.<span style="mso-spacerun: yes;"> </span></span></div>
</div>
</div>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-40679287851697704842014-01-13T02:28:00.002-08:002014-04-08T10:51:53.740-07:00Offshore Corporate Profits: The Only Thing ‘Trapped’ Is Tax RevenueFrom the <a href="http://www.americanprogress.org/issues/tax-reform/report/2014/01/09/81681/offshore-corporate-profits-the-only-thing-trapped-is-tax-revenue/">Center for American Progress</a> (hat tip: <a href="http://visar.csustan.edu/aaba/jerseypage.html"><b>AABA</b></a>), in the context of news reports of trillions of dollars in U.S. overseas profits "trapped" overseas, just waiting to be invested in the struggling U.S. economy - if only it could somehow be "unlocked" (such as through a corporate tax amnesty.) Our quote of the day:<br />
<blockquote class="tr_bq">
"There is something trapped on the balance sheets of U.S. multinationals. But it is not corporate profits—it is federal tax revenue."</blockquote>
Quite so. It's important to understand what's going on here. This U.S.-focused issue afflicts many other capital-exporting countries too.<br />
<br />
(Update April 2014: For more information on corporate tax see <a href="http://www.taxjustice.net/topics/corporate-tax/">here</a>)TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-23580439905892622002014-01-13T02:24:00.000-08:002014-04-08T10:54:06.096-07:00Just Money: how society can break the power of finance<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiDiNREd7Z0gTZC6GQi3hcUlsvup7sI8LWZumKcpgkhOMquBU67KVqf61-S-y7i-3gufdbIP6_vCnnX8iGkrOFIDsk6oZB8t5v5oJYQy9iky2jPFVsnTA_kBFKBcZViat37A/s1600/justmoney-cover-v2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiDiNREd7Z0gTZC6GQi3hcUlsvup7sI8LWZumKcpgkhOMquBU67KVqf61-S-y7i-3gufdbIP6_vCnnX8iGkrOFIDsk6oZB8t5v5oJYQy9iky2jPFVsnTA_kBFKBcZViat37A/s200/justmoney-cover-v2.jpg" height="200" width="125" /></a></div>
From Commonwealth publishing:<br />
<blockquote class="tr_bq">
An e-book by the acclaimed economist Ann Pettifor, Just Money: How We Can Break the Despotic Power of Finance. In it she explores the role of credit in the economy and its relationship with the money supply. She goes on to set out a set of policies to bring the economy back under substantial democratic control. </blockquote>
This is not, strictly speaking, a core tax justice issue. But we have recently been doing a lot of work on the political economy of financial centres - not least with our Finance Curse analysis. "Breaking the power of finance" is certainly something that interests us.<br />
<br />
Available <a href="http://www.amazon.co.uk/Just-Money-Society-Despotic-Finance-ebook/dp/B00HTAI3YY/ref=sr_1_3?ie=UTF8&qid=1389604028&sr=8-3&keywords=ann+pettifor">here</a> (only, for the time being).<br />
<br />
(Update April 2014: For more information on the Finance Curse see <a href="http://www.taxjustice.net/topics/finance-sector/finance-curse/">here</a>)TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-13853242417042647692014-01-10T06:32:00.000-08:002014-04-08T10:56:26.173-07:00Quote of the day: fracking tax positionsFrom David Quentin's <a href="http://dqtax.tumblr.com/post/72777640360/how-the-tax-profession-and-business-reacted-to-the"><b>Tax and Law blog</b></a>, just mentioned in our <b><a href="http://taxjustice.blogspot.de/2014/01/links-jan-10.html">Links</a></b>:<br />
<blockquote class="tr_bq">
Vodafone’s 2013 “Tax Risk Management Strategy” paper, for example, concedes in its small print that Vodafone happily adopts filing positions which “will not meet the more-likely-than-not standard but would still be tenable”. </blockquote>
<blockquote class="tr_bq">
If the mining of tax risk may be understood in extractive terms, a policy of habitually adopting merely “tenable” filing positions is about as sustainable and responsible as fracking.</blockquote>
Well said. And the whole post is <u>well</u> worth reading.<br />
<br />
(Update April 2014: for more information on tax and corporate responsibility see <a href="http://www.taxjustice.net/topics/corporate-tax/tax-corporate-responsibility/">here</a>).TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-41256127771684384152014-01-10T06:24:00.004-08:002014-04-14T14:37:49.065-07:00Architect behind Eurozone's biggest tax haven wants to be EC presidentThis is a very dangerous development. <a href="http://www.euractiv.com/eu-elections-2014/juncker-steps-forward-barroso-jo-news-532686">From Euractiv</a>:<br />
<blockquote class="tr_bq">
"Former Luxembourg Prime Minister Jean-Claude Juncker, the EU's longest-serving elder statesman, threw his hat into the ring yesterday (9 January) for the presidency of the European Commission to succeed José Manuel Barroso.<br />
<br />
Juncker, 59, who governed for 19 years until a general election defeat last October and also chaired eurozone finance ministers for eight years from 2005 to 2013, told Germany's Inforadio: "I would be willing (to do the job), in principle, if the election programme and other things work out."</blockquote>
That is a declaration of intent, if ever there was one.<br />
<br />
Juncker has been an appalling defender of financial secrecy in Europe, cosying up with Switzerland to help kill emerging European transparency initiatives, as we have documented on many occasions.<br />
<br />
It would be appalling if Europe were led by an apologist for - indeed an architect of one of the world's most pernicious tax havens. Number two on our Financial Secrecy Index: just <a href="http://www.financialsecrecyindex.com/PDF/Luxembourg.pdf"><b>look at its record</b></a>.<br />
<br />
(Update April 2014: For background in Offshore History see <a href="http://www.taxjustice.net/topics/more/offshore-history/">here</a>.)TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-60861846502894593802014-01-10T05:58:00.001-08:002014-01-10T06:04:05.262-08:00Links Jan 10<div>
<a href="http://dqtax.tumblr.com/post/72777640360/how-the-tax-profession-and-business-reacted-to-the">How the tax profession and business reacted to the wider tax avoidance debate in 2013</a> David Quentin's tax & law blog<br />
<br />
<a href="http://www.businessweek.com/news/2014-01-08/swiss-court-blocks-julius-baer-client-data-transfer-to-u-dot-s">Swiss Court Blocks Julius Baer Client Data Transfer to U.S.</a> Bloomberg Businessweek<br />
<i>See also:</i> <a href="http://www.step.org/baer-clients-reprieved-swiss-court">Baer clients reprieved by Swiss court</a> STEP, <i>and</i> <a href="http://thinkprogress.org/economy/2014/01/09/3142951/switzerland-tax-dodging-crackdown/">Swiss Bank Helped 400 Americans Dodge Taxes On $600 Million</a> ThinkProgress<br />
<br />
<a href="http://www.swissinfo.ch/eng/business/Glencore_boss_speaks_out_over_tax_windfalls.html?cid=37703758">Glencore boss speaks out over tax windfalls</a> swissinfo<br />
<br />
<a href="http://www.india-briefing.com/news/india-talks-mauritius-cyprus-prevent-tax-base-erosion-7633.html/">India in Talks with Mauritius and Cyprus to Prevent Tax Base Erosion</a> India Briefing<br />
<i>See also:</i> <a href="http://smartinvestor.business-standard.com/mf/mfNewsFeature-mfnews-216462-End_of_tax_treaty_shopping_for_India.htm#.Us_0j2RdUt0">End of tax treaty shopping for India?</a> smartinvestor<br />
<br />
<a href="http://cphpost.dk/news/denmark-billed-as-perfect-tax-haven.8286.html">Denmark billed as perfect tax haven</a> The Copenhagen Post<br />
<br />
<a href="http://dalje.com/en-croatia/govt-intensifies-intl-cooperation-in-exchanging-tax-info/494092">Croatia: Government intensifies international cooperation in exchanging tax information</a> dalje<br />
<br />
<a href="http://uk.reuters.com/article/2014/01/10/uk-germany-tax-avoidance-idUKBREA090IO20140110">German minister wants speedy crackdown on tax avoidance</a> Reuters<br />
<br />
<a href="http://hetq.am/eng/news/31897/offshore-scandal-more-than-a-mere-chain-of-coincidences.html">Armenia: Offshore Scandal: More Than a Mere "Chain of Coincidences"</a> hetq<br />
<br />
<a href="http://www.arabnews.com/news/505486">Pakistan’s politicians set a poor example</a> arab news<br />
<br />
<a href="http://allafrica.com/stories/201401091182.html">Gambia: Let's Pay Tax</a> allAfrica / The Daily Observer<br />
<br />
<a href="http://taxprof.typepad.com/taxprof_blog/2014/01/jpmorgan-chase.html">JPMorgan Chase Cannot Deduct $1.7 Billion Madoff Settlement Payment</a> TaxProf<br />
<br />
<a href="http://www.forbes.com/sites/irswatch/2014/01/07/irs-continues-to-attack-offshore-captive-insurance/">U.S. IRS Continues To Attack Offshore Captive Insurance</a> Forbes</div>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-69065299347996025772014-01-10T03:32:00.003-08:002014-04-14T14:42:02.609-07:00The twilight of the international tax consensusThat's the headline of a provocative article by U.S. <a href="http://www.nytimes.com/2007/08/31/business/31tax.html">rock star</a> tax expert Lee Sheppard, which states boldly in the opening column:<br />
<blockquote class="tr_bq">
"Someone else’s multinationals are unfairly skipping out on their corporate tax obligations to OECD member and observer countries. That was the genesis of the OECD base erosion and profit-shifting project, which has produced an action plan that is designed to repair and preserve the fragile international consensus in the short run, but may end up upsetting it in the long run.<br />
<br />
In the long run, the international consensus is dead, and everyone knows it, but BEPS has to be tried and allowed to fail first."</blockquote>
Fiery stuff, and almost certainly correct. What will replace it?<br />
<br />
Well, there is a long-running campaign to abolish the corporate tax altogether, based on particularly pathetic evidence and analysis - plus massive lobbying firepower. That can't be allowed to succeed, as a first order of priority.<br />
<br />
What is the international consensus? Sheppard answers:<br />
<br />
It is a century old, mostly European gentlemen’s agreement to give residence countries tax jurisdiction over income earned by their residents in source countries. Legally, the source country has the superior right to tax income earned within its borders, so the consensus required countries to agree to be deprived of tax jurisdiction.<br />
<br />
For "residence countries" read rich, OECD countries (where multinationals are resident) and for 'source countries" read all countries where income is really earned, including developing countries. She continues:<br />
<blockquote class="tr_bq">
"It has been an open secret for some time that multinationals — led by the Americans and their huge tax departments — have abused these privileges. The affected countries are no longer limited to corrupt, badly governed, resource-exporting countries. They now include European states with sophisticated tax administrations and the home governments of multinationals.<br />
<br />
Every country is just another country to be exploited."</blockquote>
We could not have said it better ourselves. And then there's this:<br />
<blockquote class="tr_bq">
"The United States and its overbanked crony, the United Kingdom, used the OECD as a vehicle to push their agendas. . . . The United States and Europe still think they run the world."</blockquote>
And to cut a long story short:<br />
<blockquote class="tr_bq">
"A new consensus cannot be built until the old one dies, weakened by<br />
impossibility of administration.<br />
<br />
In the short run, U.S. multinationals will pay some more tax to some foreign governments, but not the U.S. government. In the long run, we already know what the outcome will be — apportionment of multinationals’ profits based on sales.<br />
. . . <br />
The old order has to fail completely first."</blockquote>
Radical stuff. <a href="http://www.taxjustice.net/cms/upload/pdf/Towards_Unitary_Taxation_1-1.pdf"><b>Unitary taxation</b></a> (profit allocation with formula apportionment) is on its way - though not just yet. We'd argue that it's worth engaging to try and improve the OECD's fatally flawed model, as an interim step before unitary comes. But, we think, we will see it in our lifetimes. We just need the OECD and others to accept that fact.<br />
<br />
In fact, of course, it's already here: lots of places are already using it, and as <a href="http://www.taxjustice.net/cms/upload/pdf/Towards_Unitary_Taxation_1-1.pdf"><b>Prof. Picciotto notes</b></a>, it's even tacitly part of the OECD toolkit - even if their aversion to the concept is so extreme that they'd never admit it.<br />
<br />
<i>Update: more from Andrew Goodall on this issue just out, <a href="http://andrewgoodallcta.com/2014/01/10/taxing-multinationals-the-trouble-with-transfer-pricing/"><b>here</b></a>. </i><br />
<i><br /></i>
(Update April 2014: For resources on transfer pricing, and on unitary taxation, see <a href="http://www.taxjustice.net/topics/corporate-tax/transfer-pricing/">here</a>.)TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-51076098894861680042014-01-09T23:26:00.001-08:002014-04-14T14:46:10.810-07:00Do tax cuts promote growth? Part MCXIV<div class="separator" style="clear: both; text-align: center;">
</div>
The world's economists have been arguing over this question for decades. Which is odd, because the evidence is rather clear on this point. Corporate tax cuts, or overall tax cuts (or hikes) just seem to have a neutral effect on economic growth.<br />
<br />
Which is quite unsurprising, given that (as we never tire of reminding people) taxes are not a cost to an economy, but a transfer within it. Why should an internal transfer necessarily change overall growth. It might, but there's no obvious reason at the outset why it should. But whole swathes of the learned economics profession start out with this 'fact', and then create studies to prove it. The evidence-tickling out there is a sight to behold.<br />
<br />
Let's start with a little graph we just made, which updates earlier work by others. This takes the prosperous western democracies, above a certain income level (so that we're not comparing apples with oranges), and compares their per capita GDP growth with their absolute levels of tax in GDP. Here it is.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCFC7TpMebzpHl1CzTm1TAHBiwO01DMJCfIPPTn3LVmAcuGpkCpPUXEM5YkiAm0RT4OQbyEajujRBkJ_UnCxmJVmaR17iZJneggwp3zWfVNp_ogXMLSAL5GkMuDi3FBOuazg/s1600/AGRev+vs+GDP+growth+small.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCFC7TpMebzpHl1CzTm1TAHBiwO01DMJCfIPPTn3LVmAcuGpkCpPUXEM5YkiAm0RT4OQbyEajujRBkJ_UnCxmJVmaR17iZJneggwp3zWfVNp_ogXMLSAL5GkMuDi3FBOuazg/s1600/AGRev+vs+GDP+growth+small.jpg" height="187" width="400" /></a></div>
<br />
That trend line is, for all intents and purposes, as flat as a pancake. Ireland is an outlier, as is Luxembourg - but these are small tax havens with their own special dynamics so we should probably have excluded them. Anyway, the flatness of this graph is quite striking: despite truly massive differences in tax revenues per capita from below 30 percent to nearly 55 percent, they've nearly all grown at roughly the same speed.<br />
<br />
This isn't definitive proof of anything, but it's a bulwark against the tax-cutters' arguments. Perhaps an even bigger bulwark - though still far from definitive proof - is that economic growth during the 'golden age of capitalism' quarter century after the Second World War, a very high-tax era, was much higher around the world than in the tax-cutting era that followed. For example in the 1950s top marginal tax rates in the U.S. were 90 percent and real per capita GDP increased annually by 2.4%; in the 2000s that tax rate had fallen to 35 percent and real GDP per capita was less than one percent.<br />
<br />
But there is plenty more. Not least our two recent blogs on the importance of the corporate income tax, <a href="http://taxjustice.blogspot.de/2014/01/learned-us-professor-creates-huge-tax.html">Part 1</a> and <a href="http://taxjustice.blogspot.de/2014/01/time-to-abolish-corporate-tax-part-2.html">Part 2</a> which provide a whole slew of insurmountable factors that simply <i><u>have</u></i> to be taken into account in any study of the effects of corporate tax-cutting - and which conveniently <i>aren't</i> considered in <i>any</i> of those studies that purport to show that tax-cutting is the golden elixir of growth. <br />
<br />
Now take this <a href="http://www.ctj.org/taxjusticedigest/archive/2014/01/congressional_research_service.php#.Us-fFP3SRFw">latest article from Citizens for Tax Justice</a> in the U.S., veterans of this scene. (We have just <a href="http://taxjustice.blogspot.de/2014/01/learned-us-professor-creates-huge-tax.html">quoted them</a> on a rebuttal they did to an appalling campaign in the New York Times claiming -- on the basis of a huge and unworldly mess of an economic model -- that it's a great idea to abolish the corporate income tax.) CTJ point to new reports from the nonpartisan U.S. Congressional Research Service (CRS), which “summarizes the evidence on the relationship between tax rates and economic growth” and finds “little relationship with either top marginal rates or average marginal rates on labor income.” It also finds that work effort and savings are “relatively insensitive to tax rates.”<br />
<br />
<br />
Some of the reports they cite aren't online, though <a href="https://www.fas.org/sgp/crs/misc/R42729.pdf">this one</a> is. CTJ pokes fun at of some of the tax-cutters' ridiculous and unworldly models and notes:<br />
<blockquote>
"While many advocates of tax cuts claim that a high top marginal personal income tax rate hinders investment by the wealthy, the report finds that “periods of lower taxes are not associated with higher rates of economic growth or increases in investment.”</blockquote>
<br />
So how much did the Bush tax cuts help? They cite CRS:<br />
<blockquote class="tr_bq">
“The models with responses most consistent with empirical evidence suggest a revenue feedback effect of about 1% for the 2001-2004 Bush tax cuts,” meaning the effects that the tax cuts had on the economy and on behavior of taxpayers offset just 1 percent of their total cost. And much of this effect may have taken the form of taxpayers changing how many deductions they take, and other tax planning changes, rather than actual economic growth. </blockquote>
The reports debunk (yet again) the <a href="http://www.nytimes.com/2007/09/23/books/review/Lowenstein-t.html?_r=0">laughable Laffer curve</a> (pictured, at top), and also refutes the ill-advised 'incidence' argument which is wielded by the shriller tax-cut shills as in their campaign to abolish the corporate income tax. (Or, as one <a href="http://mwsances.scripts.mit.edu/blog/?p=493">blogger summarises</a>: "<i>CRS teaches the American Enterprise Institute how to do panel regressions"</i>.)<br />
<br />
CTJ also makes another important point about bamboozlement:<br />
<blockquote class="tr_bq">
These studies are often mind-numbingly complicated and it is rare that policymakers or their aides have the time and ability to go through these studies to understand whether or not they actually make sense. Thankfully, the Congressional Research Service has done that job for everyone. </blockquote>
In fact, there's so much in the short CTJ article worth reading, that we would urge you simply to <a href="http://www.ctj.org/taxjusticedigest/archive/2014/01/congressional_research_service.php#.Us-fFP3SRFw">go there</a>. <br />
<br />
(Update April 2014: for resources on taxing corporations see <a href="http://www.taxjustice.net/topics/corporate-tax/taxing-corporations/">here</a>).TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-92150699154888448802014-01-09T07:24:00.001-08:002014-01-09T07:26:43.243-08:00Links Jan 9<div>
<a href="http://www.cleanupbarclays.co.uk/?q=so3545">Tell Barclays To Clean Up its Act</a> ActionAid<br />
<br />
<a href="http://theconversation.com/the-g20-and-the-taxing-issue-of-making-big-business-pay-21466">The G20 and the taxing issue of making big business pay</a> The Conversation<br />
<br />
<a href="http://www.economist.com/news/international/21591879-forum-rich-countries-issues-overdue-mea-culpa-rich-smell" target="_blank">Dirty Money, Rich Smell</a> The Economist<br />
<br />
<a href="http://www.icij.org/blog/2014/01/us-efforts-fight-offshore-secrecy-hit-snags?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+GlobalMuckraker+%28The+Global+Muckraker%29">In U.S., efforts to fight offshore secrecy hit snags</a> ICIJ<br />
<br />
<a href="http://www.swissinfo.ch/eng/business/Court_ruling_outlines_US_case_against_Julius_Baer.html?cid=37696806">Court ruling outlines US case against Julius Baer</a> swissinfo<br />
<i>See also:</i> <a href="http://www.swissinfo.ch/eng/business/Ex-UBS_banker_pleads_not_guilty_in_US_tax_case.html?cid=37687726">Ex-UBS banker pleads not guilty in US tax case</a> swissinfo<br />
<br />
<a href="http://financialsecrecymediamonitor.wordpress.com/2014/01/06/switzerland-news-bribes-in-greek-defense-corruption-scandal-deposited-in-swiss-banks/">Switzerland news: Bribes in Greek defense corruption scandal deposited in Swiss banks</a> Financial Secrecy Media Monitor<br />
<br />
<a href="http://financialsecrecymediamonitor.wordpress.com/2014/01/08/switzerland-news-financial-roundtable-of-banking-experts-manages-not-to-discuss-tax/">Switzerland news: Financial roundtable of banking experts manages not to discuss tax</a> Financial Secrecy Media Monitor<br />
<br />
<a href="http://www.tribune242.com/news/2014/jan/07/bahamas-enjoys-swiss-private-wealth-influx/?news">Bahamas Enjoys Swiss Private Wealth 'Influx'</a> Tribune242<br />
<br />
<a href="http://economictimes.indiatimes.com/news/economy/policy/unable-to-bank-on-switzerland-india-intensifies-pressure-for-information-on-tax-evaders-account-holders/articleshow/28568388.cms">Unable to bank on Switzerland, India intensifies pressure for information on tax evaders, account holders</a> The Economic Times<br />
<i>Switzerland promises India transparency - then offers peanuts. Possibly in discretionary trusts so assets not technically "Indian"</i><br />
<br />
<a href="http://www.tax-news.com/news/Nokias_Indian_Tax_Row_Escalates____63249.html">Nokia's Indian Tax Row Escalates</a> Tax-News<br />
<br />
<a href="http://www.irishtimes.com/business/sectors/technology/google-faces-24m-british-tax-bill-over-share-scheme-routed-through-ireland-1.1645070#.UsvOMj9Fifg.twitter">Google faces £24m British tax bill over share scheme routed through Ireland</a> The Irish Times<br />
<br />
<a href="http://www.ft.com/cms/s/0/af8fbee4-7144-11e3-8f92-00144feabdc0.html?siteedition=uk#axzz2ppju9XMg" target="_blank">Pressure to end digital ‘tax bonanza’</a> Financial Times<br />
<i>"Seven US technology giants, including Appleand eBay, paid just £54m in UK corporate tax in 2012"</i><br />
<br />
<a href="http://financialsecrecymediamonitor.wordpress.com/2014/01/09/british-virgin-islands-latest-data-confirms-downward-trend-in-company-incorporations/">British Virgin Islands: Latest data confirms downward trend in company incorporations</a> Financial Secrecy Media Monitor<br />
<br />
<a href="http://www.dailymail.co.uk/money/comment/article-2534610/British-oil-gas-companies-need-come-clean-reveal-profits-taxes-says-Christian-Aid-chief-economic-justice.html">It's
time Britain made mining giants reveal their hidden profits and owners
to help end this $160billion tax rip-off of poor countries</a> Daily Mail<br />
<br />
<a href="http://uk.reuters.com/article/2014/01/07/uk-spain-corruption-royals-idUKBREA0609V20140107">Spain's Princess Cristina charged with tax fraud, money-laundering</a> Reuters<br />
<br />
<a href="http://euobserver.com/economic/122210">The year that almost saw a clampdown on tax evasion</a> EUObserver<br />
<br />
<a href="http://www.euractiv.com/euro-finance/paris-wants-remove-bermuda-jerse-news-532587">Paris wants to remove Bermuda and Jersey from tax haven list</a> EurActiv<br />
<br />
<a href="http://o.canada.com/news/national/federal-governments-tax-evaders-whistleblower-program-delayed/">Federal government’s tax evaders whistleblower program delayed</a> Canada.com<br />
<br />
<a href="http://qz.com/165207/singapore-figured-out-how-to-tax-bitcoin-treat-it-like-a-product-not-money/">Singapore figured out how to tax bitcoin—treat it like a product, not money</a> Quartz<br />
<br />
<a href="http://www.nakedcapitalism.com/2014/01/simon-johnson-reminds-us-banks-quiet-coup-still-place.html">Simon Johnson Reminds Us That the Banks’ Quiet Coup is Still Very Much in Place</a> naked capitalism<br />
<br />
<a href="http://theconversation.com/drugs-and-the-city-an-open-secret-so-why-no-testing-21713" style="font-family: Optima, Arial, Candara, sans-serif; font-size: 14px; line-height: 1.2em;">Drugs and the city: an open secret, so why no testing?</a><span style="color: #333333; font-family: Optima, Arial, Candara, sans-serif; font-size: 14px; line-height: 1.2em;"> The Conversation</span><br />
<br />
<a href="http://www.thisismoney.co.uk/money/news/article-2533741/Hedge-funds-Co-op-Bank-tax-havens.html">UK: Hedge funds that now own 30% of Co-op Bank channel majority of their investments through offshore tax havens</a> This Is Money</div>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-29979401649197814942014-01-08T08:43:00.001-08:002014-04-24T09:54:24.309-07:00New report: how Finnish multinationals use tax havens<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2FnBKgL1gWlucz9ehhEe0DLnefXmb-FzIcTdRhENZYdFkGt18OwYrsG6B_kfuFF7cCGWMBPAUsYDp2F100HRMZMJwYVNWQ8CECAzNpDJPC69uUDXCiTkBjnhEBL3bLHmHFA/s1600/Finnwatch.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2FnBKgL1gWlucz9ehhEe0DLnefXmb-FzIcTdRhENZYdFkGt18OwYrsG6B_kfuFF7cCGWMBPAUsYDp2F100HRMZMJwYVNWQ8CECAzNpDJPC69uUDXCiTkBjnhEBL3bLHmHFA/s1600/Finnwatch.jpg" height="131" width="200" /></a></div>
Our partners at Finnwatch have just published an <b><a href="http://www.finnwatch.org/images/vero_final.pdf">important new report</a></b> looking at the activity of Finnish multinational corporations in tax havens. The report is in Finnish, but they have provided an abstract in English, below. It conforms to the pattern, seen elsewhere, of large numbers of subsidiaries in tax havens - particularly the Netherlands, Belgium and Luxembourg - as well as some good evidence on round-tripping, and on the limits of voluntary company reporting.<br />
<blockquote class="tr_bq">
<b>Abstract</b><br />
<br />
Holding companies or shell companies are established by multinational companies to govern their other companies and financing. Motive for this is often tax planning, and shell companies have rarely any substantial business activities.<br />
<br />
The Netherlands is a country that offers several possibilities for big companies to avoid taxes and return thus acquired profits back to their home countries. One of the OECD’s four criteria for a tax haven is the absence of a require- ment that the activity be substantial, and in the Netherlands there are more foreign-owned holding companies than anywhere in Europe.<br />
<br />
We found that the twenty biggest Finnish companies, measured by turnover, have 225 subsidiaries in the Netherlands, Belgium, Luxembourg, and in other tax havens that offer services for foreign companies. Of those, 124 companies are not situated in Belgium or the Netherlands.<br />
<br />
In this report, we used the tax haven list prepared by NBER research institute into which we added Belgium and the Netherlands that are important places for Finnish companies’ holding companies operations. This same list is used by the US authorities.<br />
<br />
Furthermore, we traced subsidiary companies in tax havens through Orbis financial database. From there, we listed 438 Finnish companies that had a subsidiary in a tax haven. Nearly half of those, 205 companies, were situated in the Netherlands or Belgium.<br />
<br />
According to the companies’ accounts and Orbis database, Finnish companies have also many subsidiaries in the small tax haven islands, like the Cayman Islands, Cyprus and British Virgin Islands. There is hardly any public information available from subsidiaries situated in those mini states.<br />
<br />
International and Finnish investment statistics support the picture given by the account analysis. We will present the Bank of Finland’s statistics from 2008 to 2012 concerning the use of holding companies. In addition, we ordered from the National Bank of the Netherlands (DNB) previously unpublished records of holding company investments in the years 2008–2012.<br />
<br />
Statistics reveal that almost 90 percent of the direct investments from Finland to the Netherlands are done into holding companies. In practice, these investments are just bypassing the holding companies on their way to the final investment targets. Same phenomenon is repeated in the direct investments from the Netherlands to Finland - out of which more than 70 percent comes from holding companies. This is a major issue for Finnish national economy because the Netherlands is one of our biggest trading partners.<br />
<br />
According to the Bank of Finland, by 2012 there were done into various holding companies in different countries 5.8 billion euros worth of such investments that were routed back to Finland. There is little research on this kind of ”round tripping” but international examples suggest that part of this involves tax evasion.<br />
<br />
We will furthermore examine the tax reports from Fortum and Terveystalo, the two com- panies that published their own voluntary tax reports. Even though the voluntary tax reporting is a welcome opening, the reports by these two companies show the limits of voluntary reporting. Fortum does not include in its report the holding companies in the Netherlands, Luxembourg and Belgium that have tens of millions of euros of business activities.<br />
<br />
In Terveystalo’s tax report, there is no mention of what the company did to its tax schemes that gained large publicity in 2012. In any case, these voluntary reports offered narrow basis to asses how responsible these two companies were in their tax planning.<br />
<br />
The European Union is reforming the Parent-Subsidiary directive in 2014. Finland should press in the negotiations effective interference into aggressive tax planning. Furthermore, we need a legally binding country-by-country reporting on companies’ central financial data, and before that a broad voluntary tax reporting by the state-owned companies. This must be done more thoroughly than in the present models. <br />
<br /></blockquote>
(Update April 2014: for information on corporate tax see <a href="http://www.taxjustice.net/topics/corporate-tax/">here</a>.)<br />
<br />TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-3201289897998922682014-01-08T01:21:00.000-08:002014-04-24T09:56:32.171-07:00If Ireland is not a tax haven, what is it? A bagel?<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg11uz9rdB_k3OnOSRVgIMtf9kRoT9uoCyEi_LINMsW5AM1m2xNNGsKqoypihRjl9uPBaKotASShOU_FkKfBOAuWHAgL27sUa6cslaJjdX3XSQQGIxaN9Iuq1PVzcAlFfyUWA/s1600/images.jpeg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg11uz9rdB_k3OnOSRVgIMtf9kRoT9uoCyEi_LINMsW5AM1m2xNNGsKqoypihRjl9uPBaKotASShOU_FkKfBOAuWHAgL27sUa6cslaJjdX3XSQQGIxaN9Iuq1PVzcAlFfyUWA/s1600/images.jpeg" height="132" width="200" /></a><i>From the <a href="http://treasureislands.org/if-ireland-is-not-a-tax-haven-what-is-it-a-bagel/"><b>Treasure Islands blog</b></a>, reposted with permission.</i></div>
Ireland continues to annoy me. Not Ireland the country, of course:
it's just the tax haven industry that has grown up there. It annoys me
because there are so many influential voices there that deny Ireland is a
tax haven. All tax havens <a href="http://taxjustice.blogspot.de/2008/09/we-are-not-tax-haven.html">deny being tax havens</a>,
but Ireland seems to have taken it to extremes of huffing and puffing: a
veritable industry of tax haven deniers has grown up there. I guess it
is the sheer scale of the dishonesty that riles me.
<br />
All this exactly fits a pattern I describe in Treasure Islands:<br />
<blockquote>
“Skittish financiers dislike places that are chaotically
corrupt, as do onshore regulators. Secrecy jurisdictions steeped in
sleaze confront this by putting on a strenuous performance of rectitude, a
theatre of probity that involves repeatingly projecting the essential
message – ‘We are a clean, well-regulated, transparent and cooperative
jurisdiction’ – burnished by carefully selected comments and praise from
toothless offshore watchdogs."</blockquote>
Now I've just spotted an article from Marty Sullivan, a <a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/26/marty-sullivan-figured-out-how-the-worlds-biggest-companies-avoided-billions-in-taxes-heres-how-he-wants-to-stop-them/">rock star in the world of U.S. tax experts</a> (alongside <a href="http://www.taxanalysts.com/www/website.nsf/web/internationaltaxnews/$file/tnisample.pdf">Lee Sheppard</a>), entitled <a href="http://www.forbes.com/sites/taxanalysts/2013/11/06/if-ireland-is-not-a-tax-haven-what-is-it/">If Ireland Is Not A Tax Haven, What Is It?</a> It's from 2013, but perfectly valid today. It begins:<br />
<blockquote>
"It would be hard to overstate the importance of
reputation in international tax. Cross-border tax planning involves
extremely arcane and technical rules that only brainy experts can
understand. But the opinion of regular people matters, too. If, as in
the United Kingdom, the general public perceives that corporations are
abusing tax rules, then democratically elected governments may have to
stop pandering to footloose multinational businesses and start cracking
down on them. And as much as corporate CEOs fear reporting lower
after-tax profits to Wall Street, they fear even more that their
company’s name will appear in a Wall Street Journal article implying
that they’re not paying their fair share.</blockquote>
That theatre of probity. Sullivan continues:<br />
<blockquote>
No jurisdiction, except perhaps Bermuda, has more at
stake per capita in the international tax game than Ireland. Again,
reputation is central. Corporate boards and CEOs don’t want their
prestigious brands smeared by association. They cannot have their
regional headquarters located in a jurisdiction that–whether fairly or
unfairly–has obtained a reputation for less-than-aboveboard business
dealings. The label “tax haven” implies sunny beaches and shady
business. If Ireland wants to continue to attract investment by the
world’s most respected companies, it desperately needs to avoid the tax
haven label. It must also avoid incurring the wrath of the citizenry of
the European Union, who want Ireland to stop using low-tax rates to
steal jobs and investment from their countries."</blockquote>
And then he nails the performance of rectitude very nicely:<br />
<blockquote>
"Irish politicians, business leaders, and newspapers are
ardent defenders of the country’s corporate tax regime. And any hint
that you think Ireland is a tax haven will set off a storm of protest.
They point out that Ireland does not meet the OECD’s definition of tax
haven. Well, that’s a low standard if there ever was one."</blockquote>
Look back at that paragraph from Treasure Islands, and see how close
that is to the above paragraph. Not only that, but look how close this
is to the 'captured state' phenomenon I describe in the 'Ratchet'
chapter of Treasure Islands, or in my more recent work on the <a href="http://www.taxjustice.net/cms/front_content.php?idcat=150">Finance Curse</a>. And there are some remarkable further insights and research into the theatre of probity, from the horse's mouth, <a href="http://treasureislands.org/what-can-tax-havens-do-to-clean-up-their-image/">here</a>. And if you want to know how Ireland became a tax haven, <a href="http://www.financialsecrecyindex.com/PDF/Ireland.pdf">read this</a><a href="http://www.financialsecrecyindex.com/PDF/Ireland.pdf"> sorry tale</a>.<br />
<br />
Sullivan's article goes on at some length explaining why Ireland is a
tax haven, and I could basically paste it all up here: but go off and
<a href="http://www.forbes.com/sites/taxanalysts/2013/11/06/if-ireland-is-not-a-tax-haven-what-is-it/">read it</a>. It's fairly easy to understand. He finishes:
<br />
<blockquote>
We all understand perfectly well why the Irish will
never accept their country being called a tax haven. But if we cannot
use that label we must have a term for a country whose extremely
generous tax rules allow it to attract enormous amounts of foreign
capital. Hmmm, if not a tax haven, let’s just say Ireland is a bagel.</blockquote>
Or perhaps merely a <a href="http://www.openculture.com/2013/07/classic-monty-python-oscar-wilde-and-george-bernard-shaw-engage-in-a-hilarious-battle-of-wits.html">big jam doughnut</a>.<br />
<br />
(Update April 2014: for information on the Race To The Bottom see <a href="http://www.taxjustice.net/topics/race-to-the-bottom/">here</a>.)<br />
<br />TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-56395019691865447042014-01-07T08:54:00.000-08:002014-01-07T09:25:19.238-08:00Seminar - Tax Havens Against Development<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIEMCLDp-jRzYAI2Mh6RNOrcocXfOg344R2FE5AO9f9PsVN3kV8zDShQ2dL4TvsjZHPZhWMnx92f5sNuddf1oOKx9yQa4Qi3TmulO4GFAunBQ-PXdUX2MMmJuSRITYUvFb2g/s1600/x.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIEMCLDp-jRzYAI2Mh6RNOrcocXfOg344R2FE5AO9f9PsVN3kV8zDShQ2dL4TvsjZHPZhWMnx92f5sNuddf1oOKx9yQa4Qi3TmulO4GFAunBQ-PXdUX2MMmJuSRITYUvFb2g/s1600/x.jpg" height="303" width="320" /></a></div>
<br />
<div align="center" style="margin: 0; text-align: center;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="fr" style="font-size: 12pt;"><b>Seminar by CNCD-11.11.11, 11.11.11 Koepel
van de Vlaamse Noord-Zuidbeweging, ABVV-FGTB, ACV-CSC, EURODAD et CADTM</b></span></span></span></span></div>
<div align="center" style="margin: 0; text-align: center;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>« Tax havens against development »</b></span></span></span></span></div>
<div align="center" style="margin: 0; text-align: center;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>January 30th 2014</b></span></span></span></span></div>
<div align="center" style="margin: 0; text-align: center;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>31 Rue de Trêves, 1040 Bruxelles</b></span></span></span></span></div>
<div style="margin: 0;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>9h30 – Welcome and coffee</b></span></span></span></span></div>
<div style="margin: 0;">
<u><br /></u>
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>10h00-11h00 – Introduction panel</b></span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Moderator: Arnaud Zacharie, CNCD-11.11.11</span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Jean-Pascal Labille, Minister for Dev elopement cooperation : Tax issues in
Belgian development cooperation policy </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Jesse Griffiths, Eurodad : Illicit financial flows and financing for development
</span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Jérémie Cravatte, CADTM : The debt crisis and tax justice</span></span></span></span></div>
<div style="margin: 0;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>11h00-11h15 Coffee break</b></span></span></span></span></div>
<div style="margin: 0;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>11h15 – 13h00 - Multinationals and their tax privileges</b></span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Moderator: Rudy De Meier, 11.11.11</span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Ruth Kelly, Action Aid: the SAB Miller case in Ghana </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Anne-Sophie Simpere, Oxfam France: the Glencore Mopani in Zambia and Areva
in Niger cases </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>-</b></span></span><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Renata
Fontana</span></span><span style="color: #222222; font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>, </b></span></span><span style="color: #222222; font-size: small;"><span lang="en-GB" style="font-size: 12pt; font-weight: normal;">OECD
Centre for Tax Policy and Administration</span></span><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">: BEPS plan presentation </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Pierre Habbard, TUAC (Trade Union Advisory Committee to the OECD) </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Tove Maria Ryding, EURODAD </span></span></span></span></div>
<div style="margin: 0;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>13h00 – 14h00 – Lunch</b></span></span></span></span></div>
<div style="margin: 0;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>14h00 – 15h45 – Belgium external tax policy – Tax treaties for whose benefit ?
</b></span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">Moderator: Nicolas Van Nuffel, CNCD-11.11.11</span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Katrin McGauran, SOMO : the impact of Netherland’s tax treaties on developing
countries tax revenue </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Renaud Fossard, Latindad : the impact of tax treaties on Latin America’s tax
revenue </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Tove Maria Ryding, EURODAD </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"> - Dirk Vandermaelen : MP for the SPA and member of the Council of Europe parliamentary
assembly </span></span></span></span></div>
<div style="margin: 0;">
<br />
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;"><b>15h45 – 16h45 – Conclusions</b></span></span></span></span></div>
<div align="justify" style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Anne Demelenne, FGTB General secretary, trade unions for international
tax justice </span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Marie-Hélène Ska, CSC National secretary, the issue of tax justice in Belgium
</span></span></span></span></div>
<div style="margin: 0;">
<span style="font-size: x-small;"><span style="font-size: 11pt;"><span style="font-size: small;"><span lang="en-GB" style="font-size: 12pt;">- Bogdan Vanden Berghe, 11.11.11 : 2014 elections and the challenge of international
tax justice </span></span></span></span></div>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-69278674853856998592014-01-07T00:09:00.000-08:002014-04-24T09:59:55.837-07:00U.S. corporate taxes: and now for some tax-deductible abuses<i>Update April 2014 - for information on Enablers and Intermediaries see <a href="http://www.taxjustice.net/topics/finance-sector/enablers-and-intermediaries/">here</a>.</i><br />
<br />
In the context of our <a href="http://taxjustice.blogspot.de/2014/01/learned-us-professor-creates-huge-tax.html"><b>first</b></a> and <a href="http://taxjustice.blogspot.de/2014/01/time-to-abolish-corporate-tax-part-2.html"><b>second </b></a>blogs on the U.S. corporate income tax, it's worth pointing out a statement from U.S. Public Interest Research Group that just has to get a mention:<br />
<blockquote class="tr_bq">
<b>Statement: No Madoff Write-Off for JPMorgan</b> <i><br />Taxpayers Could Shoulder $700 Million Hidden Tax Subsidy Unless Agencies Prevent JPMorgan from Deducting Expected $2 Billion Settlement for Allegedly Enabling Madoff Ponzi Scheme </i></blockquote>
<blockquote class="tr_bq">
Statement by Francisco Enriquez, U.S. Public Interest Research Group Tax & Budget Associate, on the reported $2 billion settlement JPMorgan is <a href="http://dealbook.nytimes.com/2014/01/05/jpmorgan-chase-nears-a-2-billion-deal-in-a-case-tied-to-madoff/"><b>reportedly</b></a> close to reaching with regulators over allegations that it ignored signs of Bernard Madoff’s huge Ponzi scheme.<br />
<br />
“It’s commendable that agencies seek to hold JPMorgan accountable for allegedly ignoring signs of the Ponzi scheme by which Bernard Madoff swindled investors across the nation. But regulators must also protect taxpayers against JPMorgan taking a massive tax windfall for its misbehavior.<br />
<br />
“Unless regulators explicitly forbid it, taxpayers could end up shouldering $700 million of JPMorgan’s $2 billion settlement by writing off these payments on their taxes as an ordinary cost of doing business.<br />
<br />
“Americans don’t deduct their parking tickets or library fines from their taxes. Corporations like JPMorgan shouldn’t be able to deduct their settlements for wrongdoing either.<br />
<br />
“Once JPMorgan reaches an agreement with regulators, it will have paid $20 billion in the last 12 months to settle a wide array of criminal and civil charges. But, how many billions will taxpayers be on the hook for as a result of these settlements?<br />
<br />
“While federal law forbids companies from deducting public fines and penalties from their taxes, payments made as part of a settlement can be treated differently. Companies that cut deals with an agency to resolve charges through a legal settlement typically manage to deduct the penalties as a tax write-off unless specifically forbidden from doing so. In essence, companies are allowed to receive a tax break for their wrongdoing.<br />
<br />
“Unfortunately, this ‘settlement loophole’ is far from rare. In fact, <a href="http://www.irs.gov/Businesses/Attachment-I-to-Industry-Director-Directive-on-Government-Settlements-Directive-%231"><b>according to the IRS</b></a>, experience has shown ‘almost every defendant/taxpayer deducts the entire amount’ as a business expense unless doing so is explicitly forbidden in the settlement agreement. It costs taxpayers many billions of dollars each year.<br />
<br />
“Thankfully, Congress has begun to show bipartisan interest in addressing this outrage. Sens. Jack Reed (D-RI) and Chuck Grassley (R-IA) recently introduced the Government Settlement Transparency and Reform Act (S. 1654) that would restrict the tax deductibility of future corporate settlements.”<br />
<br />
You can read U.S. PIRG’s research report on the tax implications of legal settlements, “<a href="http://www.uspirg.org/reports/usp/subsidizing-bad-behavior"><b>Subsidizing Bad Behavior: How Corporate Legal Settlements for Harming the Public Become Lucrative Tax Write-Offs</b></a>."<br />
<br />
See also U.S. PIRG’s <a href="http://www.uspirg.org/reports/usp/fact-sheet-end-tax-write-offs-wrongdoing"><b>fact sheet</b></a> for more information about how companies like JPMorgan Chase take advantage of the settlement loophole.</blockquote>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-24465988791518445282014-01-06T23:26:00.003-08:002014-04-24T10:01:41.238-07:00Time to abolish the corporate tax? Part 2: Only fools or shills would agree <div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEix-7UdZ7YGCA1irQXhd7TcwqFrn8jQ_pWnDPRS0FM0ISnq5I1jgnky7YJy17bi65UYYE4AW0W9T2LFhrK-Loa5PNdxp9kuM72E4ryyD40OC_ltkkiRMd9Bpb2Gp-LKRUmVhw/s1600/tax.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEix-7UdZ7YGCA1irQXhd7TcwqFrn8jQ_pWnDPRS0FM0ISnq5I1jgnky7YJy17bi65UYYE4AW0W9T2LFhrK-Loa5PNdxp9kuM72E4ryyD40OC_ltkkiRMd9Bpb2Gp-LKRUmVhw/s1600/tax.jpg" height="200" width="200" /></a></div>
Yesterday we <a href="http://taxjustice.blogspot.de/2014/01/learned-us-professor-creates-huge-tax.html"><b>posted a blog </b></a>looking at a New York Times editorial entitled <a href="http://www.nytimes.com/2014/01/06/opinion/abolish-the-corporate-income-tax.html?hpw&rref=opinion&_r=1&"><b>Abolish the Corporate Income Tax</b></a>, exposing many of the numerous fallacies and misunderstandings at the base of it. Forgive us for going on about this, but it is important.<br />
<br />
Now Citizens for Tax Justice in the U.S. has produced <a href="http://www.ctj.org/taxjusticedigest/archive/2014/01/corporate_income_tax_repeal_is.php"><b>an article of their own</b></a>, which complements ours and adds several more important points. It starts like this:<br />
<blockquote class="tr_bq">
Another year, another campaign to give even bigger breaks to corporations and claim that this will create jobs. In 2014, the campaign opened with a January 5 op-ed by Laurence Kotlikoff in the New York Times titled, “Abolish the Corporate Income Tax.” </blockquote>
And it is a campaign: in the United States, the United Kingdom - everywhere, really. It's based on ideology, not practical realities. A U.S.-based correspondent to TJN, with many connections in U.S. tax circles, added in an e-mail yesterday:<br />
<blockquote class="tr_bq">
"Larry is a leading right-wing Boston U economist who is otherwise best known as a former Reagan Council of Econ advisor and a deficit hawk. He means well, but he is generally clueless when it comes to the Real World. Unfortunately his piece is only the latest in a crescendo of right wing voices calling for abolition in the US. And the idea is gaining traction in business circles."</blockquote>
Our arguments yesterday - and CTJ's arguments to follow - illustrate that if you support the abolition of the corporate income tax you either have no idea what you are talking about, or you are a shill. We can't think of another explanation (apart from where you are a mix of both.)<br />
<br />
Our correspondent reminded us, as we suggested yesterday:<br />
<blockquote class="tr_bq">
Such a move by the world's largest economy would badly hurt developing countries like Argentina that count on corporate income taxes and MNCs for a large share of their revenue base. It would dramatically accelerate global tax competition -- the race to the bottom. </blockquote>
(We at TJN have decided to stop using the term 'tax competition' and instead use the more accurate term 'tax wars' - which is what we are talking about here. Occasionally, if we do use the more common term, we will put 'competition' in quote marks.)<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEic-oYuZGl7MkpIwg5mX5G3LXRqjkeMybuCZ8dPH_K_k8WnKuMK5wgysbDwowoU1w3TaboPZfJHPRMO_ULP5PQ9qKwLy9OO9RrSa9vydZpBSwEtfdKV4noQRwAC4dDJ83hvWQ/s1600/CTJ.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEic-oYuZGl7MkpIwg5mX5G3LXRqjkeMybuCZ8dPH_K_k8WnKuMK5wgysbDwowoU1w3TaboPZfJHPRMO_ULP5PQ9qKwLy9OO9RrSa9vydZpBSwEtfdKV4noQRwAC4dDJ83hvWQ/s1600/CTJ.jpg" height="91" width="200" /></a></div>
Back to CTJ. Their article continues by explaining, as we did, how the corporate income tax serves as an essential backstop to the personal income tax.<br />
<blockquote class="tr_bq">
"First, the personal income tax would have an enormous loophole for the rich if we didn’t also have a corporate income tax. A business that is structured as a corporation can hold onto its profits for years before paying them out to its shareholders, who only then (if ever) will pay personal income tax on the income. With no corporate income tax, high-income people could create shell corporations to indefinitely defer paying individual income taxes on much of their income.<br />
<br />
Second, even when corporate profits are paid out (as stock dividends), only a third are paid to individuals rather than to tax-exempt entities not subject to the personal income tax. In other words, if not for the corporate income tax, most corporate profits would never be taxed."</blockquote>
Crucial points. They then expand on our point about tax 'incidence':<br />
<blockquote class="tr_bq">
"The corporate income tax is ultimately borne by shareholders and therefore is a very progressive tax, which means repealing it would result in a less progressive tax system.<br />
<br />
This last point deserves emphasis. Proponents of corporate tax breaks argue that in the long-term the tax is actually borne by labor — by workers who ultimately suffer lower wages or unemployment because the corporate tax allegedly pushes investment (and thus jobs) offshore. But most experts who have examined the question believe that investment is not entirely mobile in this way and that the vast majority of the corporate tax is borne by the owners of capital (owners of corporate stocks and business assets), who mostly have high incomes. This makes the corporate tax a very progressive tax.<br />
<br />
For example, the Department of the Treasury concludes that 82 percent of the corporate tax is borne by the owners of capital. As a result, the richest one percent of Americans pay 43 percent of the tax, and the richest 5 percent pay 58 percent of the tax."</blockquote>
And then they make another argument that we didn't make.<br />
<blockquote class="tr_bq">
"Kotlikoff argues that our corporate income tax chases investment out of the U.S. and his simplistic answer is to repeal the tax altogether. He writes that, “To avoid our federal corporate tax, they [corporations] can, and often do, move their operations and jobs abroad,” and cites the well-known case of Apple booking profits offshore.<br />
<br />
But Apple is a perfect example of a corporation that does not actually move many jobs offshore but rather is engaging in accounting gimmicks to make its U.S. profits appear to be generated in offshore tax havens. These gimmicks take advantage of the rule allowing American corporations to “defer” (delay indefinitely) paying U.S. corporate income taxes on the profits they claim to earn abroad. Lawmakers will end these abuses when they see that voters’ anger over corporate tax loopholes is even more powerful than the corporate lobby."</blockquote>
And, as we also mentioned:<br />
<blockquote class="tr_bq">
"Kotlikoff has constructed a computer model that purports to prove that the economy would benefit greatly from cuts in the corporate income tax. But any such model relies on assumptions about how corporations would respond to changes in tax policy. Economists have <a href="http://www.epi.org/publication/ib364-corporate-tax-rates-and-economic-growth/"><b>failed to demonstrate</b></a> a link between lower corporate taxes and economic growth over the past several decades that would justify the assumptions Kotlikoff uses."</blockquote>
And let's not forget something else that that last report CTJ cites mentions:<br />
<br />
<blockquote class="tr_bq">
"The Corporate Income Tax raises a significant amount of revenue for the federal government—$242.3 billion in fiscal 2012, or almost 10 percent of total federal revenues. However, the corporate income tax is less important now than in the 1950s, when it accounted for about 30 percent of total revenues."</blockquote>
<br />
Our last blog cited a range of reasons why we need the corporate income tax - and why, in fact, it is a particularly precious tax. CTJ also has its own overlapping, but different, list. It's <a href="http://www.ctj.org/ctjreports/2013/06/fact_sheet_why_we_need_the_corporate_income_tax.php#.UsurXf3SRFw"><b>here</b></a>. And it's well worth reading.<br />
<br />
A final note: back to our correspondent, who makes a rather sobering observation:<br />
<blockquote class="tr_bq">
"Some of us are taking the international corporate income tax for granted, and are trying to improve it -- by, for example, refining the OECD's recent attempts to fix digital tax regimes and the the arms-length pricing approach to international corporate taxation, or by pursuing longer term objectives like country by country reporting or formulary apportionment. <br />
<br />
These are worthy long term objectives. But let us not forget that they PRESUME that countries still have corporate income tax regimes to enforce in the first place. So it is time to take seriously this latest very aggressive strategy by the US Right and respond to it vocally." </blockquote>
And let's not forget: this doesn't just affect the United States. This affects everyone in the whole world. And it's potentially a very, very dangerous move that would have horrific effects on income and wealth economy, rent-seeking and much more. This campaign must be stopped.<br />
<br />
Update April 2014: for information on corporate tax see <a href="http://www.taxjustice.net/topics/corporate-tax/">here</a>.<br />
<br />
<br />TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-23130903171734988362014-01-06T09:37:00.001-08:002014-01-06T10:18:02.195-08:00Is Federal Tax Avoidance the Biggest Threat to Social Security in the U.S./Post-xmas blues? Don't get depressed: get angry. Start by reading <a href="http://www.nationofchange.org/retirement-theft-four-despicable-steps-1389019806"><span style="color: #660000;"><b>this article by Paul Buchheit </b></span></a>about the ways in which corporate America deprives citizens of their pensions and social security. The sums involved, according to Buchheit, are astonishing:<br />
<blockquote class="tr_bq">
For every dollar they paid relative to payroll tax in the 1950s, they (<i>companies</i>) <a href="http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203">now pay</a> <b><i>ten cents</i></b>. In just the past ten years they've cut their tax rate <a href="http://www.payupnow.org/CorpTaxByYear.xls">in half</a>. The sum total of tax underpayments, tax haven losses, corporate tax
avoidance, and tax expenditures (most of which benefit the very rich)
is <a href="http://www.nationofchange.org/tax-avoidance-rise-it-s-twice-amount-social-security-and-medicare-1357569601">over $2 trillion</a>. Although Social Security costs <a href="http://en.wikipedia.org/wiki/2013_United_States_federal_budget">less than half</a> of that, Congress is targeting Americans who have paid into it at the highest rate, while tax avoiders are left undisturbed.</blockquote>
And it doesn't stop with tax avoidance. Increasingly scared of the potential reputation damage caused by avoiding taxes, companies have switched their focus to lobbying harder for tax breaks, subsidies and (their ultimate goal) abolition of the corporate income tax. Tax "competition" is completely out of control, yet politicians scramble to accelerate this race-to-the-bottom. According to Buchheit:<br />
<blockquote class="tr_bq">
On the pretense that their presence enriches the people of their home
states, and that subsidy-green pastures lie right across the border,
companies have cunningly negotiated tax-cutting deals in return for the
promise to stay. A Good Jobs First <a href="http://www.goodjobsfirst.org/sites/default/files/docs/pdf/shellgame.pdf">report</a> describes the process, which costs state and local governments up to <a href="http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html">$80 billion</a> a year.</blockquote>
<blockquote class="tr_bq">
Dozens of <a href="http://www.goodjobsfirst.org/sites/default/files/docs/pdf/megadeals_report.pdf">deals</a> have
been contrived, at least ten each in Michigan, New York, Ohio, Texas,
Louisiana, Tennessee, Alabama, Kentucky, and New Jersey. Sixteen states
have enacted the <a href="http://www.workplacebullying.org/2012/11/06/pit/">Private Income Tax</a> (PIT)
diversion, by which EMPLOYERS rather than governments get to withhold
state income taxes from employee paychecks and to keep all or some
portion of the funds.</blockquote>
<blockquote class="tr_bq">
Illinois' pension mess has its <a href="http://workplacebullying.org/multi/pdf/taxestotheboss.pdf">roots</a> in
corporate threats to bolt the state: $100 million to Motorola; $150
million to Sears; $56 million to Boeing to bring its headquarters to
Chicago; and nearly $200 million to <a href="http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html?ref=louisestory">Caterpillar</a>, which paid only <a href="http://payupnow.org/TaxPercentsIL2.htm">2 percent</a> of its U.S. income in state taxes in 2011-12, and whose CEO <a href="http://www.foxbusiness.com/industries/2011/03/30/caterpillar-ceo-illinois-unfriendly-business/">called</a> Illinois "unfriendly to business." </blockquote>
This phenomenom is not peculiar to the U.S. Similar processes are underway in Europe, and the situation in other parts of the world is arguably worse.<br />
<br />
Like we said: don't get depressed, get angry. Take action by pressing your political leaders to abandon this insane competition in corporate subsidy.TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-91469587499041206582014-01-06T08:52:00.000-08:002014-01-06T23:51:34.740-08:00Time to abolish the corporate tax? Learned professor creates huge tax model to illustrate . . . nothingProfessor Laurence Kotlikoff, a professor of economics at Boston University, has written an opinion article in the New York Times headlined <a href="http://www.nytimes.com/2014/01/06/opinion/abolish-the-corporate-income-tax.html?hpw&rref=opinion&_r=0"><b>Abolish the Corporate Income Tax</b></a>. It begins:<br />
<blockquote class="tr_bq">
"In recent decades, American workers have suffered one body blow after another: the decline in manufacturing, foreign competition, outsourcing, the Great Recession and smart machines that replace people everywhere you look. Amazon and Google are in a horse race to see how many humans they can put out of work with self-guided delivery drones and driverless cars. You wonder who will be left with incomes to buy what these robots deliver. What can workers do to mitigate their plight? One useful step would be to lobby to eliminate the corporate income tax."</blockquote>
And on what basis does he make this claim?<br />
<blockquote class="tr_bq">
Making, rather than just stating, this case requires constructing a large-scale computer simulation model of the United States economy as it interacts over time with other nations’ economies, and then seeing how the model reacts when you change the American corporate income tax. I’ve developed such a model with three colleagues through the Tax Analysis Center, a nonpartisan research group. Our findings make a very strong, worker-based case for corporate tax reform.</blockquote>
A worker-based case for abolishing the corporate tax? Interesting.<br />
<br />
There is just one teeny problem with his learned analysis. It's pointless.<br />
<br />
How do we know this? Well, there's this, for starters.<br />
<blockquote class="tr_bq">
"Fully eliminating the corporate income tax and replacing any loss in revenues with somewhat higher personal income tax rates leads to a huge short-run inflow of capital, raising the United States’ capital stock (machines and buildings) by 23 percent, output by 8 percent and the real wages of unskilled and skilled workers by 12 percent."</blockquote>
This sentence reveals that Kotlikoff has overlooked one of the most basic aspects of the corporate income tax: that it's an essential backstop for the personal income tax. The more you cut corporation taxes, the more wealthy individuals will re-classify their income as corporate income, so as to pay the lower rate. And once they start doing that, then you have to cut your top marginal personal income tax rates to prevent this. The fact that he is advocating higher personal income tax rates demonstrates that he hasn't considered this unalterable fact.<br />
<br />
Actually, there isn't just one teeny problem with this article. There is a multitude of them. Let's now look at the abstract from the paper on which he bases his article:<br />
<blockquote class="tr_bq">
We simulate corporate tax reform in a single good, five-region (U.S., Europe, Japan, China, India) model, featuring skilled and unskilled labor, detailed region-specific demographics and fiscal policies. Eliminating the model’s U.S. corporate income tax produces rapid and dramatic increases in the model’s level of U.S. investment, output, and real wages, making the tax cut self-financing to a significant extent.</blockquote>
This tells us two things. First, it is just a "five-region model" - and recent experience has taught us to treat such things with great caution. Give us the real world, please! Second, by saying that the tax cut is self-financing, he is advocating the Laffer Curve! And the Laffer Curve, as we know, has been so thoroughly debunked by the evidence - particularly in the United States - as to make its adherents a laughing stock. Former president George H.W. Bush called it "Voodoo Economics" - and his son's council of economic advisers, Greg Mankiew, called its adherents "charlatans and cranks." For an irreverent look at the history of the Laffer Curve, see <a href="http://www.nytimes.com/2007/09/23/books/review/Lowenstein-t.html?_r=0&adxnnl=1&adxnnlx=1387443841-wukL+2/NPIux7eCAzBdQpw"><b>Deep Voodoo</b></a>, an earlier article in the New York Times.<br />
<br />
Just for example, a <a href="https://www.fas.org/sgp/crs/misc/R42729.pdf"><b>2012 study</b></a> by the nonpartisan US Congressional Research Services (CRS) concluded:<br />
<blockquote class="tr_bq">
“Changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth.<br />
. . . <br />
However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”</blockquote>
We could go on at length about the numerous flaws in this article. There is the fact that the corporate income tax prevents corporations (and those wealthy who have turned themselves into corporations) from free-riding on the backs of other taxpayers. Or there's the fact that abolishing corporate income tax would require an increase in other taxes especially VAT and similar indirect taxes, as well as payroll taxes - further widening inequality gaps and reducing job creation as the tax charge falls away from capital and onto labour - making labour relatively more expensive and reducing employment.<br />
<br />
Oh, and there's the small matter that U.S. corporations are sitting on oceans of idle cash at the moment -<a href="http://www.stlouisfed.org/publications/re/articles/?id=2314"><b> $5 trillion in 2011</b></a> and surely more than that now - and they aren't investing it. What on earth would make anyone think that adding to their prodigious cash piles through corporate tax cuts would add a single job to the U.S. economy? What kind of unworldly model disregards five trillion dollars? See these arguments discussed <a href="http://blogs.lse.ac.uk/politicsandpolicy/archives/21036"><b>here</b></a>, for instance.<br />
<br />
And let's not forget the horrific effects that abolition of U.S. corporate taxes would have on the tax systems of other countries, elsewhere - which would feel pressured to follow suit, thus making all those supposed benefits to the U.S. disappear in any case.<b> </b>Not to mention all these <a href="http://www.theguardian.com/commentisfree/2011/mar/15/tax-corporations-treasury-large-companies"><b>other reasons</b></a>.<br />
<br />
(And don't try the <a href="http://taxjustice.blogspot.de/2013/01/tax-incidence-is-corporate-income-tax.html"><b>tax 'incidence' </b></a>argument with us: it won't wash.)<br />
<br />
We wish learned professors would sometimes get out into the real world. Or at least if they don't - please keep their research to themselves, and not go blasting their unbalanced, ethereal curiosities into the pages of the New York Times.<br />
<br />
We expect that U.S. organisations will weigh in on this shortly; we'll provide links as and when they appear.TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-89033496815299716402014-01-06T04:14:00.001-08:002014-04-24T10:08:10.007-07:00Bill Gates: Is he just a hypocrite?<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY7sZt3RsaPmQahnK5YBV38As8EfcrFLZZs1873n49jL9k9Ua4fqpVsyx5py_Tnk9A5tpd0IbMdsahZcMn-kWDUmiTEnMvQcqAskm_GgmNCxE4lJISJL0ZVaw4b6wjzdJovA/s1600/bill-gates_1.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY7sZt3RsaPmQahnK5YBV38As8EfcrFLZZs1873n49jL9k9Ua4fqpVsyx5py_Tnk9A5tpd0IbMdsahZcMn-kWDUmiTEnMvQcqAskm_GgmNCxE4lJISJL0ZVaw4b6wjzdJovA/s1600/bill-gates_1.jpg" height="200" width="181" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><b>Talks the talk on development</b></td></tr>
</tbody></table>
Today’s edition of <i><a href="http://www.theguardian.com/commentisfree/2014/jan/06/bill-gates-preaches-fighting-poverty-hypocrite-microsoft-tax"><span style="color: #660000;"><b>The Guardian</b></span></a> </i>has an article challenging Bill Gate’s image
as a secular saint of development and poverty alleviation.<span style="mso-spacerun: yes;"> </span>While acknowledging the enormity of Gate’s
financial contribution, which is, after all, no more than rental incomes from
Microsoft’s global monopoly, author Ian Birrell questions the intellectual coherence of a
man who talks the talk of tackling poverty while taking extreme measures
to avoid paying tax.<span style="mso-spacerun: yes;"> </span>As Birrell puts it:<br />
<blockquote class="tr_bq">
But like those other aid apostles Bono and Bob Geldof, he risks being
perceived as a rank hypocrite. For he sees nothing wrong in complex tax
avoidance schemes while telling nations how to spend their revenues, notwithstanding
the growing body of opinion that aid undermines development and democracy by
propping up poorly run regimes. </blockquote>
<a href="http://www.taxjustice.net/cms/front_content.php?idcatart=122&lang=1"><span style="color: #660000;"><b>Tax avoidance harms development processes</b></span></a>.<span style="mso-spacerun: yes;">
</span>The ability of transnational companies to shift their profits to tax havens
(largely the fault of the <a href="http://www.taxjustice.net/cms/upload/pdf/Durst_1001_OECD_-_not_just_academic.pdf"><span style="color: #660000;"><b>OECD’s hopeless rules on taxation of TNCs</b></span></a>) puts them into the position of being able to reduce their effective tax
rates to single figures.<span style="mso-spacerun: yes;"> </span>Microsoft
provides a case study in this area:<br />
<blockquote class="tr_bq">
Microsoft . . . <b><a href="http://www.theguardian.com/business/taxavoidance" title="">uses sophisticated systems to shift paper profits around the planet</a></b>
and evade the designs of governments. Indeed, so extreme are its methods the
company was used as a case study in a <b><a href="http://www.levin.senate.gov/newsroom/press/release/subcommittee-hearing-to-examine-billions-of-dollars-in-us-tax-avoidance-by-multinational-corporations/" title="">Senate investigation into US corporate tax avoidance</a></b>, which found
one example of offshoring profits through a tiny Puerto Rico office alone
saved it $4m a day in taxes.</blockquote>
This has led to the absurd situation whereby tax havens appear to be
generators of far more wealth than is actually the case, boosting the
nonsensical idea that the most effective way of promoting development is
through <a href="http://www.telegraph.co.uk/news/politics/georgeosborne/10552454/George-Osborne-to-cut-taxes-by-extending-austerity-and-creating-smaller-state.html"><span style="color: #660000;"><b>tax cuts</b></span></a> and<a href="http://www.taxjustice.net/cms/upload/pdf/TJN_NEF_130418_Tax_competition.pdf"><span style="color: #660000;"><b> tax “competition”</b></span></a>:<span style="mso-spacerun: yes;"> </span><br />
<blockquote class="tr_bq">
A Harvard <b><a href="http://www.economist.com/blogs/schumpeter/2012/09/corporate-tax-avoidance" title="">law professor pointed out</a></b> that Microsoft's divisions in three
low-tax nations employed fewer than 2,000 people, but supposedly recorded about
£9.4bn of pre-tax profit in 2011 – more than the 88,000 employees working in
all its other global divisions.</blockquote>
In practice, of course, tax havens like Puerto Rico and Ireland are
mostly used to book profits for tax purposes, and the super-productivity
of their workforces employed in such places is largely if not entirely
chimerical.<br />
<br />
TJN does not take issue with Bill Gate’s commendable interest in tackling the symptons of poverty.<span style="mso-spacerun: yes;"> </span>But we do take issue with
the idea that philanthropy is a substitute for paying taxes, and we reject outright any suggestion that tax avoidance is acceptable because it is not proven
to be illegal.<span style="mso-spacerun: yes;"> Whether legal or illegal, the end result is the same: either public services are cut, or public debt increases as governments borrow to substitute for lost revenues, or someone else, typically far poorer, ends up paying more tax. Very often its a combination of all three, and the development outcome is nothing short of disastrous (take a <a href="http://taxjustice.blogspot.co.uk/2014/01/inequality-watch-top-tenth-of-uk.html"><span style="color: #660000;"><b>look at Britain</b></span></a> for example).</span><br />
<br />
<span style="mso-spacerun: yes;">G</span>ates should publicly
acknowledge that the most sustainable way of financing education, health, and
other public services is through paying tax to a democratically accountable government.<span style="mso-spacerun: yes;"> </span>As Birrell concludes:<br />
<blockquote class="tr_bq">
His determination to push vaccinations and prevent malaria is laudable. But
if he wants to discuss development, preach about poverty and tell nations how
to spend taxpayers' money, he should put his own house in order first.</blockquote>
Read the <i>Guardian</i> article <a href="http://www.theguardian.com/commentisfree/2014/jan/06/bill-gates-preaches-fighting-poverty-hypocrite-microsoft-tax"><span style="color: #660000;"><b>here</b></span></a>.<br />
<br />
Update April 2014: read on tax and corporate responsibility <a href="http://www.taxjustice.net/topics/corporate-tax/tax-corporate-responsibility/">here</a>.TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-78362797929796023612014-01-06T01:58:00.002-08:002014-04-24T10:09:55.367-07:00Inequality watch: top tenth of UK population have 850 times the share of the bottom tenth <i>Update April 2014: for information on Inequality and Democracy see <a href="http://www.taxjustice.net/topics/inequality-democracy/">here</a>.</i><br />
<br />
The true shocker is in the headline. From a blog by <a href="http://www.discoversociety.org/focus-the-distribution-of-wealth-what-we-think-and-how-it-is/"><b>John Hills</b></a> at the London School of Economics (hat tip: <a href="https://twitter.com/CRESC4"><b>CRESC</b></a>), a survey on how people think ten trillion pounds of personal wealth is distributed in the UK: <br />
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyiaYrc5Jav2yZGSvem6vK8qUltdJ1DAT14Voq4aT4JLDFBjGTiPmG9UL5X5f8sC9qPMpT2TGpD_VkeGiB95mKP7_vM-Bkxx_lQb5UVF91a-MZfVYBGh1Q45AJwj5vkhRbIg/s1600/Hills2A.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyiaYrc5Jav2yZGSvem6vK8qUltdJ1DAT14Voq4aT4JLDFBjGTiPmG9UL5X5f8sC9qPMpT2TGpD_VkeGiB95mKP7_vM-Bkxx_lQb5UVF91a-MZfVYBGh1Q45AJwj5vkhRbIg/s1600/Hills2A.jpg" height="203" width="400" /></a></div>
<br />
Second, how it actually is distributed.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvsiT2toiJRI8LIbrpTygHAF_g5mDLtB0GdSSuupg3ATR2z6pAVVqQJoJCykwpm9jADbmHdt2hbis0iJ18iIbQpZwSn1xp0lClGszAY12vM2yDwcakzaEEXiQ2Vr21uqoUZQ/s1600/hills31.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvsiT2toiJRI8LIbrpTygHAF_g5mDLtB0GdSSuupg3ATR2z6pAVVqQJoJCykwpm9jADbmHdt2hbis0iJ18iIbQpZwSn1xp0lClGszAY12vM2yDwcakzaEEXiQ2Vr21uqoUZQ/s1600/hills31.jpg" height="180" width="320" /></a></div>
<br />
Hills:<br />
<blockquote class="tr_bq">
The bottom fifth in fact has hardly any wealth to speak of – less than a tenth of a per cent of the total. Some have ‘negative wealth’ – debts that outweigh their assets, even including personal possessions. The next fifth doesn’t have much either – just 4 per cent of it. But the top fifth have 62 per cent – half as much again as people think and nearly double what they say they think is fair.</blockquote>
And concluding: <br />
<blockquote class="tr_bq">
"The overall share of the top tenth in total wealth was 850 times the share of the bottom tenth. Even the least wealthy of the top tenth had 75 times the wealth of the household just at the top of the poorest tenth." </blockquote>
Tax, of course, <a href="http://www.theguardian.com/commentisfree/2013/oct/24/1percent-pay-tax-rate-80percent"><b>plays a major role in all this</b></a>. And remember: this is probably an <a href="http://www.taxjustice.net/cms/upload/pdf/Inequality_120722_You_dont_know_the_half_of_it.pdf"><b>under-estimate</b></a> - for these reasons.<br />
<br />
All of which raises an interesting question: how soon will we see <a href="http://taxjustice.blogspot.de/2013/12/are-we-heading-for-worlds-first.html"><b>the world's first trillionaire</b></a>?TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0tag:blogger.com,1999:blog-24487626.post-63771002186339783402014-01-06T00:55:00.000-08:002014-01-06T04:57:41.014-08:00Lebanon: a re-emerging Middle Eastern secrecy jurisdiction<!--[if !mso]>
<style>
v\:* {behavior:url(#default#VML);}
o\:* {behavior:url(#default#VML);}
w\:* {behavior:url(#default#VML);}
.shape {behavior:url(#default#VML);}
</style>
<![endif]-->This is part of a series of blogs highlighting the narrative reports from a number of secrecy jurisdictions around the world, explaining how they became offshore financial centres. <br />
<br />
<span style="mso-ansi-language: EN-GB;">Lebanon is ranked at seventh position on the
2013 Financial Secrecy Index with 79 secrecy
points out of a potential 100, which places it near the top end of the secrecy
scale. </span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgs6ABHX0l0B0aZEVYfMxtyHhU-lLyKzVyiWjbpy36o9pLrEtgBDhDmOHIy6-z3O9L0KJz3Webf5FuY4M-w1NXI4YvQqqUE9BHdWDPJ7LztG2YxcTV60iX52wC-SmC8wGhJRg/s1600/lcb.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgs6ABHX0l0B0aZEVYfMxtyHhU-lLyKzVyiWjbpy36o9pLrEtgBDhDmOHIy6-z3O9L0KJz3Webf5FuY4M-w1NXI4YvQqqUE9BHdWDPJ7LztG2YxcTV60iX52wC-SmC8wGhJRg/s1600/lcb.jpg" /></a></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; text-align: justify;">
<span style="mso-ansi-language: EN-GB;"><br /></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; text-align: justify;">
<b><span style="mso-ansi-language: EN-GB;">Telling the story </span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">The earliest roots of Lebanon’s status as an offshore financial centre
date back a century or so. Between the First and Second World Wars, many
Lebanese </span><b><span lang="EN-US"><a href="http://books.google.de/books?id=tSv9Boomo4AC&pg=PA396&dq=lebanese+traders+africa+history&hl=en&sa=X&ei=0_hwUuDPBMHwhQfR44CYAQ&ved=0CDAQ6AEwAA#v=onepage&q=lebanese%20traders%20africa%20history&f=false"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">emigrated</span></a></span></b><span style="mso-ansi-language: EN-GB;"> to parts of the developing world, particularly
to Latin America and to Africa, especially to French African colonies. This
disparate group soon began to develop as a classic successful trading diaspora,
initially operating as middlemen beneath colonial Europeans in the trading
hierarchy, but above indigenous locals – and then, amid decolonisation, becoming
increasingly powerful in many economies, tapping the diaspora’s large
international trading networks, and expanding into diamond mining and many other
sectors. These international networks remain substantially in place today and
are a ‘patriotic’ cornerstone of Lebanon’s surprisingly resilient offshore
banking sector.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">Lebanon itself first became a trading nation of note following the
creation of Israel in 1948, which saw Beirut supplant Israel’s commercial port
of Haifa as the commercial centre of the Middle East. According to financial
historian Tom Naylor <b>(</b></span><b><span lang="EN-US"><a href="http://books.google.de/books?id=78UhNfUIFC8C&pg=PA34&lpg=PA34&dq=lebanon+yousef+beidas+financial+centre&source=bl&ots=701BxOur2D&sig=bVtng3lyXHOWXS2BD2anRUyibE0&hl=en&sa=X&ei=9-5wUqm9FI6UhQftk4HQDg&ved=0CCsQ6AEwAA#v=onepage&q&f=false"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">p34</span></a></span></b><span style="mso-ansi-language: EN-GB;">), the subsequent Suez crisis of 1956 boosted Beirut,
helping it displace Cairo as the beachhead for European business into that
region of the Middle East. That same year, Lebanon created its banking secrecy
law, a major factor that helped cement Lebanon’s role as a secrecy
jurisdiction.<span style="mso-spacerun: yes;"> </span>During that period, and
afterwards, Beirut sought to position itself as a commercial and financial
entrepôt for the region, much as Dubai has done more recently. As one account
puts it, Lebanon</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt;">
<span lang="EN-US">“was committed,
to an unusual degree, to a flexible, free wheeling form of laissez faire
capitalism.”<b><a href="https://www.blogger.com/blogger.g?blogID=24487626#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[i]</span></span></span></span></a></b></span></div>
<div class="MsoNormal">
<span style="mso-ansi-language: EN-GB;">The original architect
of Lebanon’s financial centre was a Palestinian Lebanese banker, Yousef Beidas,
who set up the now notorious Intra Bank in 1951, which has been described as:<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt;">
<span lang="EN-US">“</span><span style="mso-ansi-language: EN-GB; mso-bidi-language: AR-SA;">one of the Middle
East's greatest financial success stories and later one of its most disastrous
financial collapses.”</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<span style="mso-ansi-language: EN-GB;">By the time of the bank’s collapse in 1966, the bank’s holding company
controlled the Port Authority, Middle East Airlines, the Casino du Liban – the
world’s largest – the main radio station, and much more: a variant of the
financially ‘</span><b><span lang="EN-US"><a href="http://www.financialsecrecyindex.com/faq/whatisasj"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">captured state</span></a></span></b><span style="mso-ansi-language: EN-GB;">’ that we have encountered in secrecy
jurisdiction after jurisdiction - with echoes of the financial ‘capture’ of
Dubai that we have noted in that jurisdiction’s </span><b><span lang="EN-US"><a href="http://www.financialsecrecyindex.com/PDF/UnitedArabEmirates_Dubai.pdf"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">narrative report</span></a></span></b><span style="mso-ansi-language: EN-GB;">. Beidas, of course, played a central role in
the setting up of the 1956 banking secrecy law. However, his political links,
including his role as a major funder of the Palestinian Fatah movement, are
believed to have been a key factor in the bank’s demise when it ran into
liquidity difficulties in 1966, and his creditors would not bail him out. As
Naylor notes: </span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-margin-bottom-alt: auto;">
<span style="mso-ansi-language: EN-GB;">“Although the bank’s rise and subsequent fall
could be ascribed at least partly to ‘political’ factors, the situation should
have highlighted the dangers inherent in financial institutions relying on hot
and homeless money for funding their lending and investment.” </span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">But by the time of the OPEC oil embargoes of the 1970s and the gigantic ensuing
financial windfalls into Arab treasuries, Lebanon was well established as a
financial centre for the region – and it was so successfully ring-fenced
against domestic turmoil that deposits reportedly doubled between 1975 and 1980
– an astonishing feat given that Lebanon was in the grip of civil war during
the period. The fact that Lebanon has a history of setting its banks up with
large capital buffers – itself probably due to the history of political turmoil
– is also a major factor in preventing the flight of deposits. </span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">The civil war lasted until 1991 and although there was some eventual
damage to the financial sector, it rebounded again quickly in the 1990s, helped
not only by the fact that Lebanon did not default on its debts during the war, but
also by the constant flow of remittances from the powerful Lebanese diaspora
which, at 21 percent of GDP in 2007, is among the highest rates in the world <b>(</b></span><b><span lang="EN-US"><a href="http://www.imf.org/external/pubs/ft/wp/2009/wp09195.pdf"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">pp4-5</span></a></span></b><span style="mso-ansi-language: EN-GB;"><b>)</b>. The banking system largely shrugged off the
global financial crisis of 2008 onwards, with deposit inflows continuing </span><b><span lang="EN-US"><a href="http://www.imf.org/external/pubs/ft/survey/so/2009/car081109a.htm"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">to grow</span></a></span></b><span style="mso-ansi-language: EN-GB;"> at 20 percent annually. </span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<b style="mso-bidi-font-weight: normal;"><span style="mso-ansi-language: EN-GB;">Lebanon's offshore centre
today</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">Nearly half a century after the introduction of Lebanon’s banking
secrecy law, secrecy remains an important pillar of Lebanon’s financial centre
today. While there is some exaggeration in one offshore practitioner’s </span><b><span lang="EN-US"><a href="http://www.mattarlaw.com/offshore-company-lebanon-creation-reasons.htm"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">boast</span></a></span></b><span style="mso-ansi-language: EN-GB;"> that Lebanon’s banking secrecy is </span><span lang="EN-US">“the strongest in the world,” it does offer a range of secrecy
facilities, and its secrecy score of 79 is very high indeed.</span><span style="mso-ansi-language: EN-GB;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">Although official statistics suggest that non-residents account for only
a small share of Lebanese deposits, this classification is not taken seriously<b><a href="https://www.blogger.com/blogger.g?blogID=24487626#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[ii]</span></span></span></span></a></b>,
and the IMF notes that </span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-margin-bottom-alt: auto;">
<span style="mso-ansi-language: EN-GB;">“Banks fund their positions from deposits,
which reached 267 percent of GDP in 2006, a large part of which held by
non-residents.”</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">It adds that:</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">“Anecdotal evidence from local banks suggests
that the Lebanese Diaspora (most of whom have a Lebanese address) is the
largest group of depositors. This Diaspora includes a significant share of high
net worth individuals, many doing business in countries with underdeveloped
banking systems. Depositors from other Arab countries reportedly hail mostly
from Syria, West Bank and Gaza, Iraq, Jordan, Saudi Arabia, Kuwait, and UAE.”</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">Most astonishingly, it adds that while Lebanon’s population is four
million, the Lebanese Diaspora is estimated at anywhere between 5 million and
16 million-strong; the World Bank </span><b><span lang="EN-US"><a href="http://www.state.gov/j/inl/rls/nrcrpt/2013/vol2/204066.htm"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">estimated</span></a></span></b><span style="mso-ansi-language: EN-GB;"> these remittances at $7.6 billion annually in
2010-2012. Many members of the Lebanese diaspora are high-net
worth individuals and they </span><b><span lang="EN-US"><a href="http://www.economist.com/news/business/21573584-business-people-lebanon-fare-better-abroad-home-tale-two-traders"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">include</span></a></span></b><span style="mso-ansi-language: EN-GB;"> the Lebanese-Mexican telecoms tycoon Carlos
Slim, the world’s richest man, as well as Carlos Ghosn, the French</span><span lang="EN-US">-Lebanese-Brazilian boss of carmakers Renault and Nissan. Nicholas
Hayek, a Swiss-Lebanese, runs Swatch, the biggest maker of Swiss watches.</span><span style="mso-ansi-language: EN-GB;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">The role of the diaspora makes Lebanon a very particular kind of
offshore financial centre.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<span style="mso-ansi-language: EN-GB;">According to a<b> </b></span><b><span lang="EN-US"><a href="http://www.state.gov/j/inl/rls/nrcrpt/2013/vol2/204066.htm"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">2013 report</span></a></span></b><span style="mso-ansi-language: EN-GB;"> by the U.S. State Department’s International
Narcotics Control Strategy (INCSR):</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt;">
<span lang="EN-US">“Lebanon faces
significant money laundering and terrorist financing challenges. Reports
suggest that a number of Lebanese abroad are involved in underground finance
and trade-based money laundering (TBML) activities. In 2011, Lebanese Canadian
Bank (LCB) was designated as a financial institution of primary money
laundering concern under Section 311 of the USA PATRIOT Act. Laundered proceeds
come primarily from foreign criminal activity and organized crime, and Hizballah,
which the United States has designated as a terrorist organization, though the
Government of Lebanon (GOL) does not recognize this designation.<br />
. . . <br />
Lebanese expatriates in Africa and South America have established financial
systems outside the formal financial sector, and some are reportedly involved
in TBML [trade-based money laundering] schemes. Lebanese diamond brokers and
purchasing agents are reportedly part of an international network of traders
who participate in underground activities including the trafficking of conflict
diamonds, diamond trade fraud (circumventing the Kimberly process) and TBML.”</span></div>
<div class="MsoNormal">
<br />
<span style="mso-ansi-language: EN-GB;">Lebanon has taken some
very limited steps to come into line with international standards on
transparency: it created a new money-laundering law in 2001, the year of the
major terrorist attacks on the United States; and in 2011 it imposed certain
new restrictions on banks related </span><span lang="EN-US">to terrorist
financing and money laundering, <b><a href="http://www.iflr1000.com/ViewLegislationGuide.aspx?LegislationGuideId=794&IsPrint=true">reportedly</a></b>
with a view to mitigating “</span><span style="mso-ansi-language: EN-GB; mso-bidi-language: AR-SA;">reputational risk to which banks and financial institutions
might be exposed and to protecting the utmost national interest</span><span lang="EN-US">.”</span><span style="font-family: "Times","serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<br />
<span style="mso-ansi-language: EN-GB;">However, a 2012 </span><b><span lang="EN-US"><a href="http://www.scribd.com/doc/112604694/Global-Forum-on-Transparency-and-Exchange-of-Information-for-Tax-Purposes-Peer-Reviews-Lebanon-2012-Phase-1-Legal-and-Regulatory-Framework"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">report on Lebanon</span></a></span></b><span style="mso-ansi-language: EN-GB;"> by the OECD Global Forum points to a litany of
serious shortcomings. It noted:</span></div>
<div class="MsoNormal" style="margin-left: 36.0pt;">
<br />
<span lang="EN-US">“Lebanese
authorities do not have access to information held by banks, fiduciary
institutions and other institutions within the financial industry, for tax
purposes. Although the Lebanese competent authority can exchange any
information already in its possession, it is unclear whether it has powers to
access information for exchange purposes when the information is not required
for it has own tax purposes. <br />
. . .<br />
Due to strict bank secrecy obligations, the Ministry [of Finance] cannot access
information regarding transactions and the identity of customers of banks and
other entities within the financial sector, including fiduciaries under a
Lebanese fiduciary contract. Moreover, the scope of the professional secrecy
safeguards appears to be broader than the professional secrecy protected under
the international standard." <br />
. . . <br />
Bearer shares and to-order shares may be issued by joint stock companies and
partnerships limited by shares, and adequate mechanisms to ensure that the
owners of such shares can be identified are not in place. Lebanese law does not
ensure that information identifying the settlors, trustees and beneficiaries of
foreign trusts with a Lebanese trustee is available, in particular when the
trustees is acting outside the financial industry and thus not subject to AML
obligations."</span></div>
<div class="MsoNormal">
<span style="mso-ansi-language: EN-GB;">Combined with the
secrecy, in common with many other secrecy jurisdictions, Lebanon offers
significant tax exemptions for non-residents, </span><b><span lang="EN-US"><a href="http://www.uhy.com/wp-content/uploads/Doing-Business-in-Lebanon.pdf"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">including</span></a></span></b><span style="mso-ansi-language: EN-GB;"> on profits, on </span><span style="mso-ansi-language: EN-GB; mso-bidi-language: AR-SA;">stamp duties on contracts, inheritance taxes,
corporate income taxes, dividend distributions, capital gains, Interest, and
more</span><span style="mso-ansi-language: EN-GB;">.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto;">
<span style="mso-ansi-language: EN-GB;">Lebanon’s ranking rose sharply from 22<sup>nd</sup> position (of 73) in
our 2011 Financial Secrecy Index to 7<sup>th</sup> (of 82) in 2013. This change
was largely due to a sharp spike in the scale weighting of Lebanon, based on
IMF data. The IMF told us that the sharp spike was itself the result of
improved data collection methods in Lebanon. Similar spikes can be seen in
certain other measures, such as </span><b><span lang="EN-US"><a href="http://www.tradingeconomics.com/lebanon/insurance-and-financial-services-percent-of-commercial-service-exports-wb-data.html"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">this one</span></a></span></b><span style="mso-ansi-language: EN-GB;"> – which may also be due to data collection
issues.</span></div>
<div style="mso-element: endnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="edn1" style="mso-element: endnote;">
<div class="MsoEndnoteText" style="margin-bottom: .0001pt; margin-bottom: 0cm;">
<a href="https://www.blogger.com/blogger.g?blogID=24487626#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[i]</span></span></span></span></span></a><span lang="EN-US"> <a href="http://almashriq.hiof.no/lebanon/000/070/aramco/paradise-lost.html">Paradise
Lost: Memories of a Golden Age,</a> From the Saudi Aramco World Magazine,
Sept-oct 1982, vol. 33 No. 5.</span></div>
</div>
<div id="edn2" style="mso-element: endnote;">
<div class="MsoEndnoteText" style="margin-bottom: .0001pt; margin-bottom: 0cm;">
<a href="https://www.blogger.com/blogger.g?blogID=24487626#_ednref2" name="_edn2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">[ii]</span></span></span></span></span></a><span lang="EN-US"> As the IMF notes, The classification of resident and non-resident
deposits is essentially based on whether the holder of the deposit lists a
Lebanese address, which is generally not a useful metric for establishing
residence, particularly given the size of the Lebanese diaspora.</span></div>
</div>
</div>
TJNhttp://www.blogger.com/profile/16660915220314656665noreply@blogger.com0