Thursday, May 31, 2012

Early-bird rates, opportunity ends June 1 - Registration for 2012 AABA/TJN Research Workshop on Tax Avoidance, Corruption and Crisis

The 2012 research workshop co-organised by the Association for Accountancy & Business Affairs and the Tax Justice Network, will explore connections between tax avoidance, corruption and crisis. The workshop is to be held at Essex University in the UK, 5th-6th July 2012. See the provisional programme here. To register, please click here.

There will be no on-site registration. Therefore, delegates without prior registration will not be able to attend.


Daily Telegraph - The Cost of Tax Havens

Britain's influential Daily Telegraph newspaper is carrying the following letter in today's edition:

Cost of tax havens

SIR – A recent Organisation for Economic Cooperation and Development report on implementation of its anti-bribery convention was critical of the British Government, which has ultimate and final responsibility for crown dependencies and overseas territories, including a number of tax havens.

Havens can facilitate tax evasion, money laundering and other financial crimes. We estimate that each year they allow some companies to dodge $160 billion in taxes in the developing world – far more than such countries receive in aid.

We call on our Government to support the multilateral and automatic exchange of tax information between tax jurisdictions. In addition, Britain should support public registries of the beneficial owners of companies.

Britain and other G20 governments should also commit themselves to more transparent accounting standards for multinational companies, requiring them to report their profits and the taxes they pay for each country in which they operate.

Alison Kelly
Head of Advocacy, Christian Aid
Dr Gavin Hayman
Director of Campaigns, Global Witness
Max Lawson
Head of Advocacy, Oxfam GB
John Christensen
Director, Tax Justice Network
London SE1


Links May 31

Help Matt Taibbi Stand Up for Wall Street Reform Rolling Stone Taibblog
May 30 - Recently in Rolling Stone, Matt Taibbi detailed how Wall Street lobbyists, with a big assist from congress and the White House, are rolling back the Dodd-Frank financial reform law. Join Matt Taibbi's "Thunderclap" tweet here by June 6 to help Matt stand up to the Wall Street lobbyists.

Swiss Council Of States Votes Through Tax Deals Tax-News

May 31 - "The majority of lawmakers in the Council of States provided their backing for the agreements, albeit with a distinct lack of enthusiasm, arguing that the withholding tax model agreed with the three states in question serves as a pragmatic solution to the longstanding dispute, without the need to relinquish traditional banking secrecy." See TJN on Rubik here and here.

See also:
Switzerland Sees No Barriers To Austrian Tax Deal Tax-News

May 31 - More on Rubik, and attempts by Switzerland and Austria to safeguard bank secrecy and undermine the European Savings Tax Directive - see here for background.

Russia Will Fight Tax Dodgers at Offshore Havens Bloomberg

May 30 - "Russia is seeking to curtail corporate use of tax havens as the government considers changes to taxes on foreign profits by offshore-registered units, Finance Minister Anton Siluanov said."

Former UBS Client Pleads Guilty To Not Reporting More Than $11 Million To IRS Wealth Briefing
May 31 - "The US, along with a number of other countries, has attempted to hunt down alleged tax evaders in a bid to plug massive shortfalls in national budgets. The pressure on Switzerland is significant as the Alpine state generates about 12 per cent of its gross domestic product from banking and financial services."

Regulatory push continues Cayman Financial Review

Apr 11 - "There seems to be no let up from the tidal wave of international legislation in the pipeline this year from both sides of the Atlantic, targeting the financial services industry..."

New York Lawyers Issue FATCA Recommendations Tax-News
May 31 - "The New York State Bar Association (NYSBA) has written to the United States Treasury and the Internal Revenue Service (IRS), submitting a report on the proposed regulations implementing the Foreign Account Tax Compliance Act (FATCA) and outlining an alternative approach to implementing some of its information collection and reporting requirements." See here for explanation of FATCA by TJN Senior Adviser David Spencer.

U.S.: Lavoie: Patriotism and Taxation -- The Tax Compliance Implications of the Tea Party Movement TaxProf
May 31 - "In order to strengthen the impact of patriotism on tax compliance and lessen any adverse impact of the tea party movement on the country’s taxpaying ethos, the government should take steps to disentangle American patriotism from its anti-tax roots. Important first steps in this regard are outlined in this Article."

Robin Hood, nurses, Woody Guthrie and Friends of the Earth: Let's tax Wall Street! Friends of the Earth blog
May 30 - Inspired reporting from the National Nurses United’s rally demanding a Robin Hood Tax.


Wednesday, May 30, 2012

Links May 30

Tax reform needed in Argentina Voces en el Fénix (In Spanish)
Jorge Gaggero writes the editorial in the latest edition of Voices in the Phoenix.

Tax evasion, money laundering and tax havens
Voces en el Fénix (In Spanish)
Insightful piece on connections between tax evasion and money laundering. Notes that Anglo-Saxon financial centers New York and London are those that benefit the most - at the expense of the rest of the world - by the opacity of the system of "tax havens"

Kenya: KRA sets its sights on landlords to grow tax streams Nation

May 29 - The Kenya Revenue Authority (KRA) brings in "the Geospatial Revenue Collection Information System (GEOCRIS)" that will "map out new developments coming up across the country as potential tax targets."

Exposing the Hocus Pocus of Trusts Social Science Research Network

The paper examines how parties to a trust arrangement can escape many scenarios of obligations. See also In trusts we trust.

Bangladesh: Expand tax net, not VAT: Rights groups The Independent

May 29 - Calls for the government to reconsider regressive expansion of VAT and curb "black money".

Lengthy Taylor sentence represents justice for Sierra Leoneans: Justice still needed for the people of Liberia Global Witness
May 30 - Press statement calls to attention how companies and individuals helped Taylor exploit the region’s resources to fund war.

The Greek offshore web of contagion – a reminder Treasure Islands
May 30 - Nick Shaxson notes the vast web of offshore connections, and Richard Murphy's commentary on how - "Greece is largely indebted via tax havens to a global financial system that behind the anonymity of the financial architecture."

Christine Lagarde, scourge of tax evaders, pays no tax Guardian
May 29 - "IMF boss who caused international outrage when she suggested that Greeks should pay their taxes earns a tax-free salary."

Private profit for public good? Can investing in private companies deliver for the poor? Eurodad
May 29 - New report "assesses whether external (non-domestic) public finance for private investments in the South lives up to promises to provide finance to credit-constrained companies in developing countries and to deliver positive development outcomes. More precisely, it looks into how much development finance goes to the private sector, as opposed to the public sector; which institutions deliver this type of finance and how; which types of companies are benefiting the most from public support; and how development institutions ensure they support responsible investments that contribute to equitable and sustainable development."

See also:
International development aid going to private companies The Bureau of Investigative Journalism

May 30 - "Eurodad’s research found many of the biggest investments in international aid are in fact going to firms based in tax havens."


Krugman: Laffer curve is 'junk economics'

From Paul Krugman on the Laffer Curve:
it’s junk economics (pdf). See the data in the linked piece.
His link connects to a study, which we've blogged before, called “High Rate” Income Tax States Are Outperforming No-Tax States: Don’t Be Fooled by Junk Economics, by the Institute on Taxation and Economic Policy (ITEP,) a sister organisation to our friends at Citizens for Tax Justice. Krugman is full of praise for ITEP:
if you want to discount ITEP as a liberal source — which you shouldn’t, because they do very good, careful work
and he refers to a comprehensive study by Jim Alim which says, in the abstract:
"there is moderately strong evidence that a states political orientation has consistent and measurable effects on economic growth; perhaps surprisingly, a more “conservative” political orientation is associated with lower rates of economic growth."
Cue, of course, hysterical comments beneath his article.

We get tired of banging on about old Arthur Laffer, to be honest, but it's a zombie that won't die, so we keep having to come out every now and then, to bash it on the head. Krugman has saved us a bit of time here.


UK: why information exchange beats withholding taxes every time

Courtesy of the fascinating paper by Itai Grinberg which we blogged recently, and a careful reading by Markus Meinzer, we have found a stunning endorsement for information exchange from a rather surprising source: the UK Treasury. This paper was written in February 2000, while the EU Savings Tax Directive was still being thrashed out, and it is unequivocal.

This is important, because Swiss bankers and others are telling everyone they can that it is far better to apply withholding taxes on dirty money sitting in or routed through Swiss and other banks, than to shine daylight onto them, because . . . well, we find it hard to follow their line of argumentation. And the current UK government appears to have swallowed the Swiss line, wholesale.

Although it is theoretically possible to have both effective information exchange and withholding taxes, in practice the UK has placed itself in a position of either one or the other. This is because it has chosen to sign a deal with Switzerland which endorses withholding taxes - but whose main purpose, sotto voce, has been a political one: to sabotage wider European efforts to produce transparency through the European-wide transparency project, the Savings Tax Directive. (Read more about some of the subtleties involved in that particular political chess game here and here.)

So here is what the UK Treasury had to say, back in 2000.
The UK believes there are seven key advantages to exchange of information.

First, exchange of information allows for the right amount of tax due on the income from savings to be collected. For those countries which tax the savings income of their residents at the marginal rates which apply to income in general, a withholding tax is unlikely to be the marginal rate at which the investor should be paying tax in his state of residence.

Second, exchange of information allows savings income to be taxed in the right country - that is, the investor's state of residence rather than solely in the state of source for the investor's savings income. The "co-existence approach" [TJN: permitting E.U. states to choose to apply either withholding tax or information exchange] does not allow for this and this is why several Member States have argued for revenue sharing.

Third, exchange of information encourages compliance with the tax system. It provides a deterrent to the non-declaration or under-declaration of income. In contrast a withholding system, without exchange of information, might appear to give the impression of legitimising tax evasion since it fails to deter non-declaration. Acceptance by the EU of the "co-existence" model in Community legislation might be interpreted by taxpayers as a signal that non-declaration to the taxpayer's state of residence will be tolerated.

Fourth, exchange of information helps wider compliance with the tax systems of Member States, including tackling the serious problem of cross-border "laundering" of the proceeds of tax evasion. Exchange of information will often draw the attention of the country of residence to the existence of an asset which may have been funded from income, profits or gains which have themselves been hidden from the tax authorities. In turn, these activities could now be taxed. Withholding conveys none of these advantages.

Fifth, exchange of information is easy and efficient. It would be sufficient to draw the attention of the country of residence to the existence of the income-producing asset - the tax authorities could then seek sufficient information from the investor to work out the tax liability. In contrast, applying withholding might in some circumstances require a financial institution to perform complex calculations not needed for its own purposes. In addition, a withholding system would require additional administrative costs in order to manage tax deductions or investor certification.

Sixth, exchange of information is good for the honest investor, since it does not lead to the cash flow disadvantages associated with a cross-border withholding tax system.

Seventh, exchange of information produces equity between Member States. It precludes the likelihood of capital flight from countries providing information to countries opting for withholding under "co-existence" arrangements. Dishonest investors determined to evade tax will generally prefer to suffer a (minimum) withholding tax rather than have information passed to their country of residence, and will choose where to invest their savings accordingly. This would lead to undesirable distortion of competition, by putting financial institutions in withholding countries at a tax-driven competitive advantage.

Exchange of information for tax purposes is consistent with the trend to greater international co-operation and transparency in international financial systems, encouraged by international initiatives in both tax and non-tax fields. Even if withholding arrangements were adopted by all countries globally, this would not provide an effective solution to evasion of tax on savings income. They would not allow Member States to collect the full amount of tax due on their residents' savings income, nor to deter and detect the "laundering" of the proceeds of tax evasion through investment abroad.

Exchange of information arrangements on a wide international basis is the only way in which an effective solution to the evasion of tax on savings income can ultimately be achieved. And it is the only way that the Helsinki European Council Conclusions can be delivered. Such an approach requires EU countries (as well as important third countries) to set aside those bank secrecy laws which are standing in the way of a solution to tax evasion based on exchange of information. This has already been recognised in a number of important initiatives on the international front aimed at tackling tax evasion, harmful tax competition and international financial crime.
That is a good start. Disappointingly, the list does not contain the word 'automatic.' We have noted on numerous occasions how the OECD has sought to impose its woefully inadequate "on request" system of information exchange on recalcitrant secrecy jurisdictions, calling it the internationally agreed standard - when we have demonstrated beyond doubt, on several occasions, that the far more comprehensive system of automatic information exchange is superior. Grinberg adds:
"Anonymous withholding arguably represents the tax administration forswearing any independent effort to collect tax that is due. Thus, it may well legitimize tax evasion not only through offshore accounts but also more broadly.

A cross-border anonymous withholding system also undermines the expressive role that taxation plays within a liberal democracy. A cross-border anonymous withholding system also undermines the expressive role that taxation plays within a liberal democracy.
(and he develops this important point further, particularly on pp 41-42l we also noted further additional points he made in our recent blog on his paper.)

It would seem odd, on the face of it, to see the UK endorsing information exchange, given its recent displays of abhorrence for financial transparency. However, the history of all this isn't a simple one.

We know from discussions with participants that the UK - led by its gigantic financial sector in the City of London - has for years played a long game in eviscerating the European Savings Tax Directive, inserting loophole after loophole to ensure that it will collect only a fraction of its potential. (The latest Swiss deal is just a continuation of that longer game: we have demonstrated beyond doubt that it will collect only a tiny fraction of what has been promised: perhaps one tenth, but no more.)

But we note in this 2003 paper by the International Tax and Investment Organisation (ITIO,) no friend of TJN's, that despite having done all this, the UK has, at times in the past, been more comfortable with automatic information exchange than with withholding taxes.
"Following a concerted lobby effort by the United Kingdom (directed at preserving the London-based Eurobond market), member states agreed that automatic exchange of information, rather than withholding tax, was the ultimate objective of the E.U. approach to policing the taxation of savings."
This on the face of it might make sense, since that lobbying effort would have been happening at a time when the final scope of the Savings Tax Directive was unclear, and they might have worried that a withholding tax might have been applied to the super-massive Eurobond market, from which City bankers and lawyers earn vast rents. Note here that the Eurobond market is a tax-free, largely regulation-free offshore market, one of the keys to understanding the size and power of the global financial services sector and to the rebirth of the City of London from the 1950s (read all about about that in this book.) But -- surprise, surprise -- in pushing for information exchange, the UK was being more devious than it would appear! From the New York Times, in February 2000:
"Britain proposed Friday that governments exchange information to crack down on investors who evade taxes by stashing their money abroad, as an alternative to a proposed European Union withholding tax on savings income that is favored by most EU governments.

But EU officials said the British offer appeared to be a ploy aimed at undermining the withholding plan, which Britain vehemently opposes as a threat to the dollars 3 trillion Eurobond market in London. Britain says the 20 percent withholding tax would drive holders of Eurobonds into other markets.

A senior official at the British Exchequer, Dawn Primorolo, proposed the information exchange at a high-level EU working group that is seeking to solve the tax conundrum before a summit meeting in Lisbon in June.

"It is difficult to regard the latest U.K. contribution as being very constructive," Jonathan Todd, a spokesman for the European Commission, said.

Officials said Britain had produced the new approach without warning or preparation at the group meeting.
. . .
In London, a spokesman for the Treasury said Britain had not altered its position on a withholding tax, adding, "We won't agree to anything that damages the City's interests.""
For international tax wonks, the twists and turns of international tax are fascinating, and the existential crisis now facing the European Union itself adds a whole new dimension of uncertainty into all this.

Still, we will stick with that official and strong UK endorsement of information exchange. Whatever happens, the basic principles are timeless.

One more for our permanent information exchange page.


Tuesday, May 29, 2012

Tackling tax havens: a marathon task

Our heartfelt congratulations and thanks to Gavin Smith, pictured here, who ran the Edinburgh Marathon last week, in a sweltering 25 degrees, raising awareness about the damage caused by tax havens and also raising funds for Tax Justice Network. 


Monday, May 28, 2012

Links May 28

Piercing the Veil of Secrecy: Securing Effective Exchange of Information to Remedy the Harmful Effects of Tax Havens
This new academic paper reviews the regulatory approach to tax havens, including the severe limits to current bilateral agreements between countries. Hat tip: Phineas Baxandall, U.S. PIRG.

OECD is “skeptical” about Rubik accords swissinfo
May 28 - "The head of tax issues at the Organisation for Economic Co-operation and Development has expressed concern over accords drawn up by Switzerland and some European nations to deal with the anonymity of assets." See recent TJN commentary on Rubik here, and read TJN's analysis.

Note to the IMF: it is a universal truth that parents unable to feed their children will steal Tax Research UK
May 28 - Richard Murphy points out: "You can’t feed bankers but not feed the children of Greece. Not if you want anything like social stability – for bankers, let alone the Greeks."

A message to Bob Geldof: I hope your African funds pay their tax Tax Research UK
May 26 - Bob Geldof, rock musician famed for raising aid money for Africa, is launching a new African private equity fund - he’s partnering the UK’s notorious CDC, a major tax haven user.

How Italian assets still evade the tax authorities swissinfo

May 28 - Italy has increased its controls at the Swiss border to prevent undeclared funds from leaving the country. Italian customs officers include trained mechanics specialised in finding hidden money in cars. The report includes an interview with a professional "black money courier".

Fears for Sky Blues grow Political Economy of Football

May 24 - Illustrating the pervasive use of offshore in the world of soccer. "Fears that Coventry City may have to go into administration have grown after an investigation by the Coventry Evening Telegraph revealed that the first call on the club's assets are now held by a company registered in the Cayman Islands ..." Hat tip: The Cynical Tendency.

The Facebook IPO: Shareholders Weren't Invited to the Real Party Taibblog

May 23 - "We see stories like this that hint at a kind of two-tiered market system – in which most of the real action takes place inside an unregulated black-box network of connected insiders who don’t disclose their relationships or their interests."


More on New Zealand as a rogue financial state

We have written periodically about New Zealand and its poisonously lax company incorporation regime, serving as a cover for all kinds of crimes. We've had the Indians complaining about it recently, and of course the Australians:
"ATO commissioner Michael D'Ascenzo last week warned Australian taxpayers against avoidance schemes that use New Zealand administered trusts as a way to gain tax-free income. The warning is another blow to New Zealand's financial standing, coming as news broke that the country had, along with Russia, been turfed off a European Union anti-moneylaundering "white list" because of weak regulation."
Now we have Naked Capitalism, following an exploration of the Mexican Drugs Lords connection, continuing its excellent New Zealand series, with a new headline: New Zealand, Fresh From Its Service to Mexican Drug Lords, Helps Out the Russian Mafia. It takes a cue from the NZ newspaper Stuff:
"Another New Zealand shell company has been linked to an alleged fraud worth more than US$150m - this time involving Ukrainian state-owned companies.

The company, Falcona Systems Ltd of Albany, Auckland, was struck off the New Zealand Company Register last October but only after it was used to gain $150m in kickbacks for Ukrainian and Latvian officials, according to East European media reports."
And behind all this, it seems, lurks the Russian Mafia. And it has gems such as this:
Two years ago another New Zealand shell company, SP Trading Ltd of the same Queen Street address, was found to have chartered a Georgian registered plane to fly embargo-busting arms from North Korea to an unknown Middle Eastern state. They were intercepted in Bangkok.
Classy stuff. And then the sign of the capture of policy making by criminal financial interests:
"New Zealand companies can be created online for just $153.33 and while Commerce Minister Craig Foss has said action is being taken to tighten registrations, nothing has happened. Foss is in Japan and could not be reached for comment."
We have seen this kind of behaviour from secrecy jurisdictions again and again. For pitifully small sums, jurisdictions can prostitute themselves out to the world's criminals, for a handful of dollars. It's not even very much money! An earlier Naked Capitalism headline captured the spirit: New Zealand Opportunity! Earn $$$ Working from Home, Creating Bogus Companies for Crooks!

These stories are packed with extra information.

In the past, there were relatively few people with bad things to say about New Zealand. That is changing, very fast indeed.


Friday, May 25, 2012

Links May 25

Capital inflows: Tax accord with Switzerland may bring in billions Financial Times (subscription required)
May 15 - On Rubik - Friedrich Rödler, head of PwC in Austria "concedes that the deal – and Switzerland’s success at negotiating such arrangements – is indirectly helpful to Austria, as the country, like Switzerland, has a tradition of bank secrecy it wants to preserve."

What happened to the list of 3000 tax evaders? Le novel observateur (In French)
May 23 - On the decryption of files from an HSBC whistleblower, reporting on suggestions that the list of names was manipulated by the French police and other authorities to keep hidden the names of certain holders of secret accounts.

Bank Wegelin shirks second court hearing swissinfo
May 24 - "Wegelin is accused of helping its clients hide more than $1.2 billion (SFr1.15 billion) in offshore bank accounts ... The indictment of Wegelin, which was founded in 1741, marks the first time that the US has accused a foreign bank – rather than individuals – of helping Americans commit tax fraud."

Eurovision puts Azerbaijan under the spotlight The Bureau of Investigative Journalism

May 22 - On corruption and human rights abuses in Azerbaijan, with the ruling class amassing "fabulous wealth and a string of companies in Panama."

U.S.: To Know the Gas Tax Is To Love the Gas Tax Citizens for Tax Justice
May 25 - "It’s also important that motorists realize gas taxes are not to blame for those high prices, and that gas taxes are absolutely essential to the safety and efficiency of the infrastructure we use everyday."

See also;
The Pigou Club Manifesto Greg Mankiw's blog

May 25 - Interesting to note support for the gas tax on both sides of the political spectrum - see this commentary by Greg Mankiw, formerly chairman of the Council of Economic Advisers under President George W. Bush, and economic adviser to Mitt Romney.

MEPs back financial transaction tax Irish Times
May 23 - "Parliament has been calling for this tax for almost two years with the latest Eurobarometer survey showing that 66 per cent of Europeans are in favour of it. The author of the proposal, Greek Socialist Anni Podimata, said the tax should go ahead even if some member states object to it. “'We cannot be held hostage by a few countries.'”


ITR: Why LVCR abuse may be unpoliceable

We have previously reported, ad nauseam, on the scammy loophole exploited by large retailers using the British Channel Islands to dodge paying VAT.  In the following article, just published in the International Tax Review, Salman Shaheen explores the possibility that the EU has still not got to grips with the problem, which means that anti-market distortions remain in place.  

With permission from International Tax Review, we have repeated their entire article below.

24 May 2012
Salman Shaheen - ITR
Despite the UK government’s decision to remove low value consignment relief (LVCR) on mail order products from the Channel Islands to prevent big offshore retailers exploiting a VAT loophole, the EU’s final importation rules may be making LVCR unpoliceable.

When LVCR was first introduced to free up intra-community trade in 1983, EU member states still had cumbersome customs borders and it made little sense to slap VAT on low-value samples being sent between jurisdictions. When the customs borders came down in 1992, LVCR was quickly forgotten, but with the advent of the internet and the mass expansion of mail order, the close proximity of the extra-EU Channel Islands provided the perfect loophole for large retailers selling to UK customers to avoid paying VAT.

Under pressure from the EU and domestic taxpayers struggling to compete with their offshore rivals, the loophole has now been closed, but as International Tax Review reported last month, Channel Island retailers are looking to ship goods into Germany and Belgium to claim LVCR there on products addressed to customers in the UK.

New evidence uncovered by International Tax Review suggests that the EU’s final importation rules make it very difficult to prevent companies from circular shipping to abuse LVCR, even though member states retain the right to set their own LVCR thresholds and exclude mail order goods.

LVCR is granted on final importation, which traditionally was the country in which the customer resides. Since the customs borders were removed, however, LVCR is granted in the member state in which the goods enter the EU under the presently accepted definition of final importation. After which goods can move freely through customs.

“Generally speaking, the place of final importation is the EU country where the goods are cleared for free movement in the EU - the place where the goods have been formally imported,” said Mark Agnew, senior VAT consultant at Baker & McKenzie. “Usually this is the country of point of entry, though it is possible to bring goods into country A under one of a number of customs regimes that means that goods are not cleared for free import, and then move them on to country B where the import is declared and the goods are cleared.”

Agnew believes this means that if goods are import cleared in Germany then shipped onto the UK then in theory there is little the UK can do to police this because they cannot deny a supplier claiming LVCR in Germany.

If this is true, then despite the UK removing LVCR from Channel Islands mail orders, a right guaranteed by the EU, it has little ability to police companies attempting to circumvent this.

Peter Mendham, VAT consultant at Allen & Overy, confirms the view that if the goods are put into free circulation in Germany then the German LVCR threshold will apply and once the goods have been released into free circulation packages addressed to individuals are not subject to any further control.

“What makes the LVCR such an effective way of importing low value items in bulk is that a container or rail wagon can be filled with packages addressed to the intended recipients and it is treated as multiple consignments rather than a single consignment, thereby enabling each package to fall within the conditions for LVCR,” said Mendham.

Mendham points out that though EU law does allow some discretion as to the value threshold, member states have to find a balance between protecting themselves from what they see as abuse of the relief and putting themselves in a position whereby they have to calculate and collect duty and VAT on a multitude of low value importations.

Les Allen, senior VAT consultant at DLA Piper, expects that if the UK authorities become aware of further LVCR abuse, they will raise the issue with the Commission to seek to close any loophole.

Richard Allen, of Retailers Against VAT Avoidance Schemes (RAVAS), points out that member states do not have any discretion with regards to allowing abusive avoidance or evasion, despite the letter of EU law. He is concerned at the debate over the final importation rules in relation to LVCR.

“Since 1988 member states have had the option to exclude mail order goods completely and collect VAT on mail order,” said Allen. “According to the lawyers that power is unenforceable.”

“What appears to have happened is that when the customs borders came down LVCR was not transposed correctly into the single market,” Allen added.

Based upon the intent of the relief up to that point, Allen believes it cannot be right that LVCR was ever intended to be granted by one member state for delivery in another.

This would suggest that LVCR rules are anachronistic and in need of reform, particularly where companies are using circular shipping to get around closing loopholes.

“In the short term I think EU law should be immediately altered so that it cannot apply to goods that are re-imported and can only apply to the packet when it arrives at its destination,” said Allen. “Order splitting should also be classified as an abuse. It should in the longer term be scrapped as it was introduced to help the pre-single market in a pre-digital age.”

Allen believes LVCR is no longer required and that to suggest processing lots of packages is expensive is farcical.
“If a trader can create a complex multi-stage logistical route for millions of individual packages and still make a profit, customs authorities can certainly collect the tax on millions of single packages and make a profit,” said Allen.

He wants the new VAT rules coming in 2015 to be applied to mail order in the same way as digital downloads. This would force retailers to register for VAT in the EU.
“Also EU legislation should be brought in that makes marketplace platforms liable for VAT if they do not compel traders operating on their platforms to comply with EU legislation and payment of VAT,” said Allen.


TJN's May Taxcast

In May’s Taxcast: Tax haven insiders speak out, the co-founder of Facebook ‘unfriends’ the US, and Europe considers a Financial Transaction Tax.

Update: For latest and previous Taxcasts, see here.


Reminder - Registration for 2012 AABA/TJN Research Workshop on Tax Avoidance, Corruption and Crisis

Register by 1 June for "early-bird" rates. Prices for both residential and non-residential bookings are an extra GBP 15.00 for registration after 1 June. To register, please click here.

The 2012 research workshop co-organised by the Association for Accountancy & Business Affairs and the Tax Justice Network, will explore connections between tax avoidance, corruption and crisis. The workshop is to be held at Essex University in the UK, 5th-6th July 2012. See the provisional programme here.

There will be no on-site registration. Therefore, delegates without prior registration will not be able to attend.


TED: Don't mention inequality (and tax) please, we're entrepreneurs

TJN is sceptical about the over-blown claims of self-styled "wealth-creators", who all too often should be more accurately described as rent-seekers or "wealth-appropriators", the latter being the preferred term suggested by Professor Sol Picciotto.  We were therefore more than a little intrigued by this article in Salon magazine, which goes some way to puncturing the high-minded claims made for the TED debates, described here as "a massive, money-soaked orgy of self-congratulatory futurism."

What triggered such scorn?  Well, recently Nick Hanauer, a venture capitalist, had the temerity to use his TED lecture to comment - in the context of appalling levels of inequality - that most venture capitalists like himself were not in fact job-creators  and should be taxed at a high rate.  Good stuff, but not apparently the sort of thing that TED audiences feel comfortable with.  As Pareene notes:

"Because TED is for, and by, unbelievably rich people, they tiptoe around questions of the justness of a society that rewards TED attendees so much for what usually amounts to a series of lucky breaks."

So what happened next is that TED 'curator' Chris Anderson declined to promote Hanauer's talk, ostensibly because it was “mediocre”, though he subsequently gave the game away by stating that “a lot of business managers and entrepreneurs would feel insulted” by the argument that multimillionaire executives hire more employees only as a “last resort.” As Pareene acidly observes: "The entire recent history of the fixation on short-term returns, obsession with “efficiency,”  and “streamlining” of most American corporations escaped the notice of Mr. Anderson, apparently."

Censorship takes many forms, and is not the sole prerogative of authoritarian states. When high-profile organisations like TED impose this type of censorship to avoid scaring the elites who fund their activities, they take corruption to a different plane.  The taint of money hangs over TED, not least because, as Pareene points out: "To even attend a TED conference requires not just a donation of between $7,500 and $125,000, but also a complicated admissions process in which the TED people determine whether you're TED material."

Read the full article here

Hat tip: Khadija Sharife


The Role of Tax Havens in Illegal Logging

Guest blogger Koos de Bruijn of TJN Netherlands and a member of TJN's Global Board explores the links between tax havens and illegal logging.

An interesting new episode has been added to the series by the Financieele Dagblad (Financial Daily) about the Netherlands' role as a Treaty Haven. We’ve blogged about this issue before
This current episode deals with the Dutch link in the illegal logging activities of Asia Pulp & Paper (APP), a leading paper producer in Indonesia. APP is the joint brand name of a number of pulp and paper companies in Indonesia and China, all belonging to the Sinar Mas Group of the Indonesian Widjaja family. The company has been accused by several organisations, including Greenpeace, of large scale illegal logging in the Indonesian rainforest. 
During the last five years APP has been expanding its activities to Europe, Northern America, Asia and Australia.The Dutch link uncovered by research institute Profundo reveals that APP  avoids taxes by using Dutch holding and financing companies. The report documents the tax dodging structure and highlights a number of irregularities, which might involve legal offences.
Based on the report Greenpeace has put pressure on ANT, the trust-office that hosts the activities for APP. According to Greenpeace the financing of APP-factories is organised through the financial holding company based in Amsterdam. Greenpeace wrote two letters to the Dutch National Bank (DNB), the supervisor of the trust-sector, in which it stated that several irregularities have been noted. Double Taxation Treaties (DTT’s) between the Netherlands and Canada, Malaysia and Indonesia might have been abused. Also the ‘friendly’ loans from the Chinese International Ningbo Bank to Paper Excellence would not be in line with the financial supervision rules in China and the Netherlands, since only an interest rate of 0.01% is being charged. 
DNB has replied that they will take account of these irregularities in their supervisory activities. Meanwhile ANT denies the acquisitions.  However, an Indonesian delegation of ANT has addressed the issue of illegal logging to the management of APP. APP announced they will cease logging trees in the rain forest.
Greenpeace is not impressed by this promise: in 2006 APP made exactly the same promise in an advert in the New York Times.
The interesting lesson of this case from a tax justice perspective is that there are potential cases everywhere. Profundo and Greenpeace have hopefully created an interesting trend.
Endnote:  The authors of the FD-serie, Siem Eikelenboom and Gaby de Groot, have been awarded the Dutch Citi Journalistic Excellence Award for their series on Tax Route the Netherlands (Belastingroute Nederland).


Thursday, May 24, 2012

Helsinki seminar and major new article on transfer pricing

The Tax Justice Network will be holding a Seminar on Transfer Pricing in Helsinki, on June 13-15th, 2012. The Seminar is being co-hosted by TJN, the Government of Finland and KEPA, the umbrella civil society organization in Finland.

The seminar's purpose is to analyse the OECD’s dominant Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, and to suggest modifications and alternatives to those Guidelines. The Seminar will focus especially on the needs of developing countries.

It will be attended by academics, researchers, government officials and representatives of civil society organizations, and it has been organised by David Spencer, Senior Adviser to TJN and director of TJN’s Transfer Pricing Project.

In connection with the Seminar David has written an article, “Transfer Pricing: Will the OECD Adjust to Reality?”

It is a long, detailed and important article which refers to a broad range of research and analysis, and it will be posted as a permanent item on our Transfer Pricing webpage.


Wednesday, May 23, 2012

Links May 23

Is the shadow banking system the beginning of the end for capitalism? Tax Research UK
May 22 - Richard Murphy remarks on how the shadow banking system is "a giant Ponzi scheme which is not only not zero sum but is actually destructive." See also Nick Shaxson's comments - Shadow banking as Ponzi finance: new research.

An unhealthy business: major healthcare companies use tax havens to avoid millions in UK tax Corporate Watch
March 17 - "While in public they have been presenting themselves as the future of the National Health Service (NHS), a Corporate Watch investigation into the accounts and finances of five of the major private healthcare companies has found widespread use of tax havens, including the British Virgin Islands, Luxembourg, Jersey, Guernsey and the Cayman Islands, and tax avoidance schemes Barclays or Vodafone accountants would be proud of."

Spain Shelves Tax Case Against Banking Magnate  Latin American Herald Tribune
May 23 - "Emilio Botin, Spain’s leading banker, will not face charges for tax evasion, the National Court decided after an 11-month-long investigation. The chairman of Banco Santander, his brother, Jaime, and 10 of their offspring were under scrutiny in connection with income from accounts at HSBC Holdings’ private bank in Switzerland."

Tackling 'disturbing' tax evasion and avoidance Public Service Europe
May 23 - "Above all, systems must be flexible enough to allow prevention and detection strategies and business rules to change regularly, so that agencies are not outmanoeuvred by the constantly evolving tactics of tax evaders."

Too posh for your pocket: Famed Ferraris draw tax fire in Italy RT
May 23 - "Owners of Ferraris and Lamborghinis are facing a county-wide crackdown in Italy ... A Ferrari owner interviewed by ABC News said the car’s value plunged at least 20 percent recently"

Church of God pastor indicted for tax evasion, predicts coming of Christ Fox 19
May 23 - "A Union, KY minister is predicting Jesus Christ will return to Earth on May 27, 2012, more than a week before his federal trial on June 4 for tax evasion."

Miami teachers union calls for tax amnesty Ventura County Star
May 23 - President of the teachers union in Miami-Dade County said "Teachers hate cheaters ... If people pay their taxes we can pay our teachers."

How Financial Criminalization Crashed the Economy, and the Culprits Got Off Scot-Free Huffington Post
May 23 - By Charles Ferguson, Director of the Wall Street movie The Inside Job. "It is important to understand that this behavior really is seriously criminal. We are not talking about neglecting some bureaucratic formality."


Raising the global profile of tax justice issues

From our guest blogger Simon Bond

The Tax and Transparency Forum organised earlier this month in London by International Tax Review magazine was unique. For the first time it brought together tax justice advocates and the corporate world of multinationals to discuss the burning international issues of tax and transparency. The high profile speakers included Clare Short, chair of the Extractive Industries Transparency Initiative, Pascal Saint Amans who as head of tax at the OECD (Organisation of Economic Co operation & Development) is probably the most important figure in global tax affairs, Richard Murphy and John Christenson of Tax Justice Network and David McNair formerly of Christian Aid and now with Save the Children. The corporate side was represented by the heads of tax policy of a number of well known multinationals. Nearly 200 people attended.
That this event took place at all is a result of increasing understanding of the crucial role of tax in development and poverty alleviation, and growing public appreciation of the issue. Developing countries need tax revenues to develop, reduce poverty and ultimately end aid dependency. It is currently estimated by Christian Aid, Action Aid and others that developing countries lose more through international tax avoidance and evasion than they receive in aid.
The Extractive Industries Transparency Initiative (EITI), a British initiative, is also helping counter corruption in countries rich in natural resources. It aims to end the ‘resource curse’ where a country’s natural wealth impoverishes the population and can lead to its becoming a fragile state. 
The most relevant topics of the day were on ‘country by country’ reporting, the relationship between transparency and corporate social responsibility and ‘automatic information exchange’.

A new standard: country by country reporting
The proposal for country by country reporting by multinationals is a response to the fact that 60% of international trade is conducted by multinationals trading with themself (‘intra-group’ trading). This can effectively enable profits and costs to be allocated to different jurisdictions such as the tax havens and the countries in which real economic activity takes place in such a way as to reduce tax liabilities. The relevant concept is ‘transfer pricing’ (prices agreed within a multinational for its intra group trade). Transfer mis-pricing is where imports can be given an exaggerated price to inflate costs and exports a low price to shift profits into a tax haven. The current standard set by the OECD is ‘arms length transfer pricing’ whereby multinational operations are supposed to act as if they are not related by using market prices. Under current accounting standards, ‘intra group’ trading within multinationals is hidden.
It is argued that adopting country by country reporting would:
•    enable developing country tax authorities to ‘risk assess’ where they are losing potential tax revenues
•    help defeat corruption by supplementing EITI (putting EITI disclosures into context)
•    make globalisation accountable locally (multinationals do not float above the global economy)
•    benefit everyone using multinational’s accounts (including shareholders)
•    enable arms length transfer pricing in developing countries to work effectively (as information on market prices is often not available)
•    expose the abuse of tax havens, a cost which is borne by us all. 
•    Economists would further argue that disclosing this information and making risks explicit is an essential component of free markets which would make them more efficient in allocating resources. This would reduce the cost of capital, encourage more economic growth and reduce poverty. This belies any suggestion that tax justice has an anti markets and business agenda.

Transparency and Corporate Social Responsibility
The changes discussed at the conference need international agreement and legislation which, even if there were political will behind it, takes time. Meanwhile, corporate social responsibility has a part to play. Indeed, there is a moral and a practical case for extending corporate social responsibility to transparency and tax. The prominence now given to tax issues and recent press coverage of tax at Vodafone, Goldman Sachs and Barclays means that companies may need to consider a number of risks: that their reputation with the public may be damaged, that they may face the uncertainty of litigation over tax avoidance arrangements with the closure of such arrangements disrupting their cash flow / profitability and the effects on recruiting and retaining the brightest and best (many people do not want to work for the ‘bad guys’).

How Automatic Information Exchange will help
If tax evasion is to be deterred and detected, jurisdictions need to exchange relevant information with other countries’ tax authorities on those who have shifted money abroad. The OECD’s current standard is called ‘information exchange on request’ which is widely considered inadequate as tax authorities seldom have sufficient details on who is hiding money abroad. That is why information should be exchanged automatically subject to protections such as excluding countries that do not respect human rights or the rule of law.
Tax havens are often called secrecy jurisdictions as they all, in some way, offer secrecy to those from outside. It was noticeable at the conference that none of the multinational representatives used the terms tax havens or secrecy jurisdictions, yet these jurisdictions have become central to the workings of the international finance system and the scale of tax avoidance and evasion which is particularly detrimental to developing countries. It was also noticeable that John Christenson of the Tax Justice Network gave a separate presentation to the conference on automatic information exchange before the panel discussion, implying that the multinational representatives would have felt uncomfortable participating in a panel discussion with him (except for the introduction to the conference, the other sessions consisted of panel discussions which included multinationals’ representatives).
The Tax Justice Network views the recent tax ‘deals’ between some EU members (including the UK) and Switzerland that preserve the famous Swiss tax secrecy as ‘toxic spoilers’ because they enable assets to remain hidden, are corrosive to markets, democracy and social stability, and will not generate the amount of revenue claimed (for a number of reasons, including assets moving to more distant secrecy jurisdictions).

Multinationals’ perspectives, areas of controversy and positive developments
Companies making investment decisions want a predictable and stable tax regime in order to forecast future profitability, and multinationals want a global standard so that the same rules apply to all companies in a market. They would also like to see the building of tax authority capacity in the developing world (it is better to deal with someone who knows what they are doing). The Department for International Development is currently focusing on building tax capacity.
Particular areas of controversy include:
•    whether arms length transfer pricing can be made to work or if it should be replaced by an alternative system known as a ‘common consolidated corporate tax base with unitary apportionment’?
•    how to account for and tax ‘intangibles’ such as intellectual property and brands which have become a more significant part of a multinational’s value and which are easy to hold in a secrecy jurisdiction as they are seldom geographically specific?
•    the right balance between taxpayer confidentiality and deterring / detecting tax evasion and avoidance?
•    the international tax system was largely built to prevent ‘double taxation’ of the same economic transaction by two countries’ tax systems, but how to remove the opportunities for artificial ‘double evasion’?
•    when developing countries offer tax incentives to attract multinationals to set up operations in their country, whether the benefits exceed the costs?
Recent positive developments include:
•    work by the OECD to enhance transparency and reduce the potential for evasion and avoidance
•    calls by the European Parliament and the Council of Europe for country by country reporting (it is also being considered by the UK Parliament’s cross party International Development Committee)
•    legislation covering transparency, such as the Dodd Frank Act in the US.
However, it was also pointed out that consensus to improve global standards is impossible whilst it is opposed by countries such as Switzerland and Singapore.

Views on tax justice have changed dramatically in the last four years, from those in the know regarding it as a harmless, gentleman’s sport to growing appreciation that tax dodging imposes real costs on society and especially on developing countries. This conference marked a milestone in that journey. The journey is a reflection of the impact that the Tax Justice Network and other advocates have achieved.
Progress to date now needs to be transformed into international agreements and real reforms. This needs political will and widespread support. Those who are concerned about global poverty and development should not shy away from the subject in the belief that tax is too technical for them. We can all understand the basics and become tax justice advocates.


Tuesday, May 22, 2012

Links May 22

Tax havens and social economy at the EESC plenary session European Economic and Social Committee
Plenary session 23-24 May 2012 - At the 481st plenary session of the EESC, the Committee will vote on important opinions regarding financial and tax havens, social entrepreneurship and corporate social responsibility. You can follow the plenary session live via this link.

Tax Inspectors Without Borders: A Seriously Good Idea Governance and Development

May 22 - "As some NGO have long argued, there is a need for some kind of international tax helicopter force to come to the aid of outgunned tax agencies at critical moments." See recent TJN blog on this issue. Hat tip Martin Hearson. 

Aussie taxman targets NZ trusts - Business DayMay 21 - "The Australia Taxation Office has New Zealand trusts in its sights as part of its huge Project Wickenby tax avoidance probe." See info on Project Wickenby here and here.

Argentina: Interview with Jorge Gaggero Miradas al Sur (In Spanish)
May 20 - Jorge Gaggero comments on regressive taxation and inequality, and the need for reform of the corporate tax system in tandem with improved control of monopolies.

See also:
The countryside wants to earn more and pay less Miradas al Sur
(In Spanish)
May 20 - On absurdities and inequality in the tax system.

'Vulture funds' circle as Greece fears grow The Independent
May 17 - "An American tax exile living in the Cayman Islands has emerged as a winner from the chaos engulfing Greece ... Kenneth Dart, the Michigan-born heir to a disposable cups fortune, was handed an estimated €400m (£320m) cheque from Greece this week."

Tackle Tax havens Canada Canadians for Tax Fairness
A call to action for Canada to take a lead in tackling tax havens.

Flat taxes – a great way to help the poorest pay for the richest Guardian
May 22 - Richard Murphy analyses the Taxpayer’s Alliance proposal for a flat tax in the UK.

Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling' Rolling Stone Taibblog
May - We've commented before on challenges faced by conscientious bank compliance officers, as were highlighted in the excellent report by Global Witness Undue Diligence: How Banks Do Business with Corrupt Regimes. This piece highlights disdain for compliance.

Shell’s obscure payments kill its case for weak US and EU transparency laws Global Witness
May 20 - "The details of payments agreed by Shell to the Nigerian Government for a controversial oil deal expose the urgent need for the very transparency measures which Shell is currently opposing."

Bank of England commissions new whitewash Treasure Islands
May 22 - Nicholas Shaxson comments on a story as reported in the Financial Times BoE bows to pressure for probes.


Updated: Tax Inspectors Without Borders: A Seriously Good Idea

A seriously useful article from Mick Moore, from the UK's Institute of Development Studies, and the founding Chief Executive Officer of the International Centre for Tax and Development.

Its preamble goes:
In the struggle between developing countries’ tax systems and multinational companies, there are calls for an elite task force of international tax experts to assist the side of national tax agencies. Here is why I believe a new proposal by the OECD to create ‘Tax Collectors Without Borders’ is a good idea.
We have given our cautious endorsement to the idea, too. Now read the rest of his article. It is short, and to the point.

Update, May 23: We received an email from an international tax expert, whose permission we don't (yet) have to publicise, which injects a serious note of caution:
"Perhaps the plan for an oecd SWAT team could be useful, perhaps not.

The country needs to have laws in place that make foreign companies actually liable for tax --- or else nothing works. The SWAT team can do nothing if taxes are not legally due. In one of the fictional cases, we have transfer-price abuses. The OECD is going to solve such abuses? How, when it cannot solve them in Germany or the U.S.? What we might get is an oecd style transfer-price audit, with a negotiated settlement at 25 cents on the dollar. Something, but not a lot.

The country needs to have an anti-interest stripping law in place. If it does, does it really need an outside SWAT team? If not, what can the SWAT team do --- appeal to transfer pricing constraint? It needs an anti-royalty-stripping rule in place. And, of course, it needs to have avoided an oecd-based tax treaty that protects against domestic anti-stripping laws. Is oecd going to be helpful in this regard?"
Given our deep mistrust on the OECD, based on its jealous guarding of its woefully inadequate and even harmful standards on a range of issues in the international arena, which we have commented on interminably (see here, here and here, for example), it is wise to take this note of caution extremely seriously.


Indian government white paper on "black money" is strange

From India's First Post, looking at a new paper on illicit money from the Indian Ministry of Finance:
The IMF study estimated the flight of capital from India during 1971-97 at $ 88 billion, GFI, in its 2010 report, put the total illicit outflows from India at $213.2 billion. This sum, after adjustment for the possible returns earned on these funds (the money is not kept under a mattress), would amount to $462 billion.

The finance ministry’s White Paper pooh-poohs the GFI claim by saying that the estimates are probably too high since they do not take into account “illicit inflows” – the black money that comes back in to earn returns.
The Indian White Paper is here, and the GFI India report is here. But the reasons cited by the First Post for saying that GFI's numbers (which are, as GFI would admit, subject to very large margins of error) are inflated, are bogus. We explained this a while ago following an attack on GFI's numbers by the Oxford Centre for Business taxation (which in our opinion mixes serious academic research with pro-business lobbying, reflecting its funding sources and the way it was founded: see more on that here.) The Oxford study made a similar point to what the Indian finance ministry is saying: that GFI's numbers overstate the figures because they do not take account of illicit inflows back into developing countries, which they suggest should be subtracted from the outflows. But this is totally wrong. Here is the relevant section from our rebuttal of the Oxford study:
What TJN’s colleagues have measured in terms of mispricng is capital flight out of developing countries into secrecy jurisdictions and other locations. What it does not measure is capital flight into developing countries. To illustrate: TJN’s colleagues have measured capital flight out of, say, Congo, and into Switzerland – but have not measured capital flight from Switzerland into Congo. This is not to say that there is not an issue here – there is – but this now brings us to two important points.

First, it is fanciful to think that capital flight into developing countries from tax havens and elsewhere is likely to be anything like as big as capital flight out of developing countries. Even if, say, capital flight into developed countries were, say, 20% of capital flight losses out of developing countries – which seems unlikely (see Richard Murphy’s analysis of this here) - and we were to subtract one from the other, that would be no grounds at all for concluding that there has been a “drastic” overestimation.

In addition to this, how could they possibly come up with “drastically” if they have not measured this themselves – which they haven’t? The use of this -- headline soundbite – word cannot be supported.

Yet the second point is more fundamental. For the researchers have made an elementary yet crucial error. They say we should subtract losses in one direction from tax revenue losses in the other direction – when in fact we should add them.

If a country loses tax revenue from overpriced imports into developing countries and underpriced exports, it does not somehow magically recoup illicit money going in the other direction which suffers losses from, say, flows evading VAT or import duties. No, it loses revenue in that direction too."
Now in fairness to the Indian White Paper, they do make a concession to our argument. But the way they do this is rather odd:
"Illicit inflows have been excluded mainly on the grounds that since illicit flows are unrecorded, they cannot be taxed or utilised directly by the government for economic development. Further, these inflows are themselves driven by illicit activities such as smuggling to evade import duties or value-added tax (VAT) or through over-invoicing of exports. . . By not considering illicit inflows even if the reasons given are valid, it is apparent that the estimate given in GFI’s November 2010 report of a total of US$ 213.2 billion being shifted out of India from 1948 to 2008 appears to be on a higher side. (TJN's emphasis added.)"
One wonders why India's Finance Ministry would stick to its claim that these numbers appear to be on the high side "even if the reasons given [for using that methodology] are valid." Very strange. And in fact, the paper then continues, by saying that GFI's estimates might, after all, be too conservative:
Moreover the GFI (and World Bank) models do not capture significant illicit outflows, such as through:
  • Mispricing occurring through trade in services and intangibles as the same are not addressed in IMF Direction of Trade Statistics
  • Trade mispricing that occurs within the same invoice through related or unrelated parties
  • Smuggling
  • Hawala-type swap transactions

And concludes that further research is therefore needed. We can certainly live with that.

Nevertheless, despite its odd parts, the report contains much that is interesting, and we will put it as a permanent item on our 'magnitudes' page.


Monday, May 21, 2012

Links May 21

Files close on BCCI banking scandal Guardian
May 17 - 
BCCI, story of massive-scale money laundering, bribery, blackmail and organised crime, operating through a global secrecy network - TJN Senior Advisers Prem Sikka and Jack Blum were central players in bringing this case to light, see here.

Luxembourg Defends Savings Tax Opposition Tax-News
May 21 - "Luxembourg’s Finance Minister Luc Frieden defended his decision to block the European Commission’s plans to negotiate new and stronger savings tax agreements with third countries, insisting that given recent developments, the automatic exchange of tax information is not necessarily the only solution to combating tax evasion." Hat tip: Offshore Watch.

U.S. Nonprofits, Businesses Call For End To Corporate Secrecy Wall Street Journal
May 16 - Corruption Currents blog on the letter sent by 41 business and civil society groups to every member of the U.S. House of Representatives and U.S. Senate urging them to co-sponsor the Incorporation Transparency and Law Enforcement Assistance Act - see here.

Travers: Cayman under attack Cayman 27

May 17 - "The chairman of the Cayman Islands Stock Exchange jumps to the country’s defence after a scathing attack in the New York Times. Former Manhattan District Attorney, Robert Morgenthau, slammed Cayman and other off-shore financial jurisdictions like Bermuda in an opinion piece."

Activists rubbish tax rate calls MorningStar

May 20 - " Tax campaigners poured cold water on yet another attempt to revive calls for a single rate of tax which will benefit the rich at the expense of the poor." Read comments from TJN Director John Christensen.

'Compliant confidentiality' not secrecy an advantage for smaller jurisdictions Investment Europe

May 18 - "Regulatory arbitrage is working in reverse in markets such as the Channel Islands, Gibraltar and Malta, as authorities seek to create a more competitive environment away from traditional centres of secrecy such as Switzerland."

Authorities brace for fight against mafia swissinfo
May 18 - "Switzerland is appreciated by the Mafia because of its 'economy and financial centre as well as its infrastructure', according to the Swiss Federal Prosecutor."

Global Regulators Seek Solution to Regulatory, Financial Challenges CRI English
May 17 - On the signing of a Multinational Memorandum of Understanding (MMoU) said to be "the "preemptive standard" for international enforcement cooperation and information sharing ...The MMoU provides a mechanism through which securities regulators share essential investigative material, such as beneficial ownership information and transaction records, including bank and brokerage records. It sets specific requirements for the exchange of information, ensuring that no domestic banking secrecy, blocking laws or regulations prevent the provision of enforcement information among securities regulators."