George Turner ■ The Offshore Wrapper – Friday 8 September


Welcome to the Offshore Wrapper, a weekly roundup of news from the world of tax and tax havens. If you want to receive the wrapper in your inbox every week, you can subscribe here.

Tax the rich?

President Trump’s plans to reform the US tax system have led to a growing debate around the world on the taxation of the rich and economic justice. We’ve seen the usual tried, tested and failed arguments about how removing all taxes on the rich and on corporations will unleash a huge tide of economic growth that will ‘lift all the boats’.

Countering this isn’t difficult due to the volume of evidence collected over decades that shows that giving the wealthy more money doesn’t mean they suddenly start spending it on the poor. Instead, we know that tax cuts lead to more economic inequality and poorer governments who will struggle to provide vital public services.

Indeed, the evidence of the failure of so-called “neo-liberal” economic ideology is now so powerful that even conservative thinkers are starting to get increasingly nervous about the ‘cut at all costs’ agenda. Writing in the Washington Post, conservative blogger Jennifer Rubin describes how several right-leaning US think tanks are starting to look at how to reform the tax system without cuts, presumably having now accepted that cuts don’t necessarily lead to economic growth. In the Atlantic Magazine, Derek Thompson writes about moves towards a ‘millionaire tax’, an extra tax rate on incomes over $1m, which even appears to have support from Alt-Right leader Steve Bannon amongst others.

And across the Atlantic in the UK this week there were two interventions in the tax and economic inequality debate. The Institute for Public Policy Research published an interim report from their Commission on Economic Justice. The Commission, which includes business leaders (and the Archbishop of Canterbury), argues that the UK economic system is broken, with economic gains being taken by the rich and corporations instead of being distributed fairly. The report recommends reform of the tax system among other things since the current tax system cannot fund the amount of public spending that’s really required. The Commission has not yet made specific reform proposals – but watch this space.

The leader of British political party the Liberal Democrats Sir Vince Cable also gave a speech this week where he said that the UK risked being torn apart by rising levels of inequality. He’s called for new taxes on wealth, including inherited wealth to redress the balance.

The TJN also entered the debate, participating in a round-table discussion on TRT World, which can be seen here:


The Azerbaijani Laundromat

Journalists working with the Organised Crime and Corruption Reporting Project have uncovered a major money laundering scheme coming out of Azerbaijan. The scheme was exposed after a leak of information from the Estonian branch of Danske Bank was passed to the Danish newspaper Berlingske, which then worked with the Organised Crime and Corruption Reporting Project on the story. The scheme involved moving money though a series of shell companies in order to hide the identities of the people behind the cash. They believe that the beneficiaries are members of Azerbaijan’s ruling elite.

Of course, one of the key jurisdictions used in the scheme was Tax Haven UK. The people behind the scheme used the notorious Scottish Limited Partnerships to hide the sources of the money. These very same types of Scottish Limited Partnerships are used in a similar money laundering scheme coming out of Russia and previously exposed by the Organised Crime and Corruption Reporting Project.

The money itself ended up in a variety of organisations, including in the pockets of European politicians and football clubs as Azerbajan sought to improve its image overseas. The full story can be found here:

African tax officials take on key roles in international policy debate

In an encouraging sign of the increasing presence of tax officials from Africa in international forums on taxation, the UN Tax Committee has announced that it has appointed 6 officials from Africa to serve on the UN Committee of Experts on International Cooperation in Tax Matters.

In total the committee has 25 members; there will be 3 from Europe and none from the US.

The UN Committee of Experts has always been hamstrung by poor resourcing. Experts attend in their individual capacity and are not granted funds to attend meetings or paid for their work by the UN. The increased participation of African officials demonstrates an increased commitment from tax authorities across the continent to get involved in shaping policy on corporate tax matters.

Sharif faces criminal investigation after Panama Papers scandal

The scandal surrounding former Pakistani Prime Minister Nawaz Sharif continues to rumble on. Mr Sharif was removed from office by the Supreme Court after he was unable to provide evidence for the source of funds used by his family to purchase several large assets. These assets included offshore companies and high value apartments in London. At least one of these apartments was concealed via a Liberian shell company. The Sharif family ownership of the assets was uncovered as part of the Panama Papers leak.

Now Pakistan’s National Accountability Bureau is proposing the seizure of all (known) assets and bank accounts controlled by Sharif and his children and it has opened a criminal investigation. Whether this will be successful remains to be seen, as Reuters points out, the National Accountability Bureau has several cases open on Mr Sharif, one dating back to 1999.

Photo by Matthew Straubmuller used under the Creative Commons License. Find Matthew’s work on flickr –

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