This month we ask – what’s going on with our pre-school childcare and elderly care home services? We take a long hard look at the financialisation of our services and what we can do about it.
Plus: the Conservative party in the UK has won a major victory in the general elections. With major challenges for tax justice, what are the next steps for trade deal negotiations? Will Britain now become a fully fledged Singapore-on-Thames?
It’s not good for essentially public infrastructure…to have public infrastructure at the whims of companies that we can’t even contact is extremely precarious and unsustainable… that’s why there’s a strong case to be made for politicians and people of all political persuasions to be interested in the sustainability of this industry. Because it needs to be fair and it needs to be sustainable because of the people involved, the people who will be affected.”
The European Union is a colossal export for the City of London and one which the large banks and the major law firms do not want to be locked out from… all sorts of pundits have been flagging up growth opportunities in far East Asia, but with Hong Kong and Singapore already well established as offshore financial centres and the Chinese are now talking about expanding offshore financial services through Macau, the growth opportunities in Southeast Asia are unlikely to compensate in any way for the market share losses which arise from a hard Brexit from Europe.”
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Last week, the Tax Justice Network held its first virtual conference, bringing together over 150 people from around the world, from Portland to Sydney. Offices, living rooms and libraries on different continents were connected into one virtual space where speakers from the OECD, G24, IMF, World Bank and ICRICT discussed leading proposals to reform the international tax system.
Immediately after the conference, we published a blog on why the virtual conference came at a critical point for the OECD’s reform process and how it helped highlight an unexpectedly strong, international consensus. The discussions generated media coverage and the enthusiasm from the speakers and participants made the conference a success. But there’s a second success story that emerged behind the curtains of the conference and it has to do with the Tax Justice Network’s own reform process for how we run conferences.
Three challenges to
hosting an internationally-focused conference
The Tax Justice Network held its first annual conference in London over a decade ago, which has since grown into a multi-day event bringing in hundreds of people from around the world every year. Aiming to strike a balance between making our internationally-focused conference globally accessible and keeping the conference feasible to organise and run for our small team, we alternate the location of our conference from year to year, holding the conference in London every other year and in another country, usually in the global south, in the years in between.
There are three challenges that come up when hosting an
international conference. First, inviting speakers and delegates from around
the world produces a large carbon footprint, especially when traveling by road
or train as an alternative to flying is not an option. Second, while alternating
the location of the conference helps make the conference much more accessible,
the conference can remain inaccessible for many people due to the cost of
travel, visa restrictions and other factors. Lastly, as conference organisers,
we have a responsibility to provide an inclusive format for participating in
talks and sessions at the conference. Hosting a virtual conference gave us an
opportunity to address these challenges in a new way.
Reduced carbon
footprint
Addressing the first challenge – reducing our conference’s
carbon footprint – is the most obvious benefit of hosting a virtual conference.
Nobody had to take a flight to participate in our conference. But just how much
carbon did we save by meeting online instead of in person? Assuming the conference
would have been held in London and all participants outside of the UK travelled
by plane, our participants would have taken an estimated 114 flights to London,
producing a carbon-footprint of 154 tonnes. According
to the Environmental Protection Agency in the US, that’s the equivalent to
the carbon footprint produced over a full year by the energy consumption
(electric and fuel) of over 60 US homes. Then factor in local transportation
emissions, the electricity consumption and air conditioning needed to host at a
large venue for two days, food waste and all the hotel towels and bedsheets
that will get washed after a single use. The numbers begin to add up. Not only
did nobody have to fly to participate in our conference, but most participants
most likely did not have to spend any significant extra electricity or fuel on
heating or air conditioning at home or the office to attend, they likely did
not make themselves three different meals for lunch to accommodate various
dietary requirements and, as exciting as the conference was, they probably did
not have to change their bedsheets just because our conference came to town.
Increased global
access
Of course, the carbon footprint saved in our thought experiment above is overstated because had participants had to fly, the conference would have likely had fewer participants from more distant locations. And that exactly is the point. Ultimately, lack of access to in-person, internationally-focused conferences tends to disproportionately be experienced by would-be speakers and would-be delegates from the global south. The Tax Justice Network does aim to assist speakers and delegates from the global south with accessing our annual conference through reduced ticket prices, support with travel costs and visa advice where possible, but this is not a perfect solution. Hosting a conference virtually eliminates many travel-related obstacles to participating in a conference.
Participants to our virtual conference last week joined from 38 different countries. The wide reach of the conference meant that some participants on the east coast of Australia stayed up late to 2:30am local time to join in, while those on the west coast of the US got up early to join in at 7:30am local time. Here’s a map of where conference participants were based.
Virtual conferences do, however, raise different obstacles
to access, which may still be disproportionally experienced by participants
from the global south, such as availability of affordable, fast and reliable
internet access. Going forward, we’ll be exploring solutions to the unique
challenges raised by hosting virtual conferences. We may find that assisting
with broadband costs may be more feasible than assisting with travel costs,
which in turn means we can support more people to participate.
More inclusive
participation
Aside from the challenges of helping people get to our conference and reducing the impact on the planet in the process, there remains the challenge of making sure everybody has the opportunity to participate constructively, be heard and respected in talks and sessions. At our 2019 annual conference, we introduced the use of Slido at the conference which delegates could use to ask and upvote questions to speakers. The tool had a number of benefits such as eliminating the fear and pressure of public speaking, especially in a room full of experts, that can keep delegates from raising questions. Raising questions through the app helps, to some extent, reduce unconscious biases towards gender and race. It helps organise questions and democratise the process of selecting questions to raise to speakers. Plus, it has the added benefit of making sure the questions raised are actually questions, and not so much more-of-a-comment type questions.
While we did not use Slido during our virtual conference,
the Crowdcast platform we used to host the conference online provided similar
question-asking and voting features to participants. Not only did this mean we
can enjoy the benefits of a question raising tool, but the online nature and
format of the virtual conference made the practice of using the online tool
feel like a more natural way of communicating, helping reduce the friction that
delegates may have experienced in getting set up on the Slido app at our annual
conference.
All in all, we were very happy with the performance and outcome of our first virtual conference. This was very much a learning process for our team and we’ll continue to experiment with different ways of improving both our virtual and in-person conferences. As one participant put it, physical conferences like our annual conference still have a place and an important role to play. Building our offering of virtual conferences in the future can help take the debate even further.
Depending on how the OECD reform process develops, we might likely host a follow-up conference on the issue. In the meantime, you can view all the slides, shared papers and replay videos from last week’s conference here.
Just two weeks ago, a resolution on country-by-country reporting at the EU Competitiveness Council missed the qualified majority needed by just one vote. Among those who voted against the resolution was Austria’s Minister of Economic Affairs, Elisabeth Udolf-Strobl. But only a few days later the Austrian Parliament committed to ending its long-standing opposition and promised “to prevent further delay” in moving proposals forward in the EU.
The move was made possible by the fact that Austria’s interim government does not have a stable majority in Parliament. After the so-called Ibiza affair scandal hit the right-wing Freedom Party, and instability subsequently engulfed the conservative government, there is now a free play of competing forces in parliament with the Peoples Party and Greens scrambling to form a new government. The Social Democrats have taken advantage of this to advance public country-by-country reporting by using the votes of the Greens and the Freedom Party to push through a motion obliging the current and future governments to vote for tax transparency at the European level. This should clear the way for final negotiations between governments, the European Commission and the EU Parliament.
The
resolution comes after a vigorous and sustained advocacy campaign by Attac, the
Vienna Institute for International Dialogue and Cooperation, KOO and others. It
marks a sea change from the pattern of recent years, which saw civil society demands
consistently rejected by finance ministers from the People’s Party in favour of
corporate interests.
Meaningful European leadership on the issue of public country-by-country reporting has the potential to deliver a dramatic blow to the current environment of secrecy and abuse in the tax practices of multinational corporations. Effective and transparent country-by-country reporting would oblige companies to publish how much profit they declare in each country and how much tax they pay on it. It is well-documented that such public reporting is essential to curbing tax avoidance by multinational corporations, which is in turn critical to stem the hemorrhage of revenue from developing countries.
The triumph in Austria is just the latest development in the battle for full and meaningful public country-by-country reporting, which has been running for some time. The EU Commission presented a proposal on the issue back in 2016, but this is limited to corporations’ subsidiaries in EU states and to blacklisted ‘tax havens’. It also excludes a number of important accounting elements from country-by-country reporting reports, such as sales and purchases, asset values, stated capital, public subsidies, and the full listing of subsidiaries.
Following
scrutiny of the Commission proposal, the European Council delivered a legal
opinion calling for a change in its legal basis that would make it a tax file
rather than an accounting file. This would in turn diminish the participation
of the European Parliament, which is in favour of more rigorous standards, to a
consulting role only. While the Legal Affairs Committee of the European
Parliament has argued for keeping the current legal basis, the Parliament has since
weakened its position by introducing a loophole which would allow corporations
to keep information secret if they believe it to be ‘commercially sensitive’. It
has stuck to its guns in demanding that multinationals report on their
activities in all countries, however.
While the legal wrangling between the European Commission and the more democratic Parliament is sure to continue, this victory in the Austrian Parliament should translate into an important shift in the balance of powers at those negotiations in the months ahead. Public country-by-country reporting, at the EU level at least, is now within our grasp.
The OECD process to reform the international tax rules for multinationals is at a critical point. The secretariat’s proposals have drawn widespread criticism, not least for sidelining the perspectives of non-OECD countries; and the US has blown up the agreement with France that underpinned the secretariat’s approach, threatening instead to impose trade sanctions. But the dramatic policy shift to taxing multinationals on their global profits, rather than treating each subsidiary separately, now seems to be entrenched. The question is, where will things go from here?
Yesterday the Tax Justice Network held a virtual conference, ‘Where next for global taxing rights? Technical and political analyses of the OECD tax reform’. The keynote speeches, presentations and discussions focused on assessments of the revenue redistribution between countries that various proposals could generate, and on the political prospects for the process as a whole. We were delighted to have high-level contributions from key international organisations, including the OECD secretariat. And while the debate was sharp, the degree of consensus was unexpectedly strong.
Four points of broad consensus
First, there was clear consensus that the global distribution of taxing rights is unjust, and deeply so. Far too much profit ends up in low- or no-tax jurisdictions rather than where the real economic activity takes place, and the revenue implications of this are very substantial.
Second, it was also clear that we do not yet have a combination of data and methodology to generate comprehensive results on the redistribution of taxing rights that different proposals would lead to. The quality and confidentiality of OECD country-by-country reporting data are major obstacles.
The 2020 review of the OECD country-by-country reporting standard provides a very well-timed opportunity to sort out the technical basis – and the just-published GRI standard provides a technically robust alternative, to which the OECD standard should converge. The potential EU decision to make their OECD standard data public would overcome the issue of secrecy of this data. While the conference was in session, we heard the news that the Austrian parliament has now backed publication, which could shift the decisive vote among member states (many congratulations to Attac Austria, VIDC and KOO!).
The third point of consensus was that the Inclusive Framework has definitely been a real step forward; but that the distribution of political rights over international tax reform is perhaps even more unjust than the distribution of taxing rights. It remains an open question whether the OECD process can evolve to give non-members a genuinely ‘equal say’. If not, an explosion of unilateral measures seems likely; unless a consensus were to emerge on a UN forum…
Finally, the last panel came to a very clear conclusion, starting with the World Bank and IMF speakers, and confirmed by the OECD’s Ben Dickinson: there is ‘no turning back’ on either the shift to a unitary approach, or on the political imperative of addressing global taxing rights. ‘The genie is’, well and truly, ‘out of the bottle.’
International tax rules: ‘a colonial pattern, refined for the 21st century’
Prof Jayati Ghosh of Jawaharlal Nehru University, and the Independent Commission for the Reform of International Corporate Taxation (ICRICT), gave the opening keynote speech. In it, she laid out the key injustices of the current tax rules as they form part of our current, imbalanced globalisation – ‘a colonial pattern, refined for the 21st century’; and then detailed the technical and political flaws in the current proposals and process. In particular, Prof Ghosh highlighted the arbitrary and illogical nature of imposing a distinction between residual and routine profit; the value of treating all global profits equally, apportioning them between countries according to the location of multinationals’ real economic activity; and the importance of including employment and not (only) sales as a measure of that activity.
The second keynote was delivered by Dr Marilou Uy, director of the secretariat of the Intergovernmental Group of Twenty-Four. Dr Uy presented the G24’s view of the OECD process. On the one hand, she highlighted the value of the opportunity to contribute more fully than had previously been allowed. But on the other hand, Dr Uy identified a series of obstacles in the process. These include the short timeline of the process, making it difficult to bring together the resources to provide a full response reflecting member countries’ concerns and wishes; and the damaging lack of information available to assess the options. Dr Uy closed with a quote from the IMF in respect of the process for setting international tax rules – namely, that ‘ an approach more universal in its full inclusion of countries and its coverage of fundamental policy issues is needed’ (p.46).
Data, methods and transparency
The first panel featured six speakers, offering a combination of technical insights on the reform proposals, and perspectives on the technical aspects of the process. David Bradbury, who leads the OECD team charged with carrying out the economic assessment of the proposals, laid out the broad strokes of their findings so far – namely, small but positive revenue redistribution from the secretariat’s pillar one proposals, with larger but uncertain wins possible from the less well-defined pillar two proposals. Mr Bradbury also highlighted the difficulties of data, and the weaknesses of the reporting provided by multinationals under the OECD’s country-by-country reporting standard. The secretariat has provided each Inclusive Framework country separately, and confidentially, with the basis for estimates of the revenue impact of the secretariat proposal.
Ruud de Mooij of the IMF’s Fiscal Affairs Department presented a summary of key findings, highlighting as Jayati Ghosh had done, two key points: the much larger redistribution associated with a full unitary approach (compared to the residual profit approach); and the importance, for lower-income countries above all, of including employment in any formula.
Prof Valpy FitzGerald of Oxford University and ICRICT presented the findings of a paper co-authored by Tommaso Faccio and me. Using aggregate OECD country-by-country reporting for US multinationals (the only such data currently public), the paper confirms the much greater revenue redistribution away from corporate tax havens that would be delivered by a full unitary approach (e.g. the G24 proposal, as compared to the OECD secretariat’s proposal). The paper also confirms the importance of employment as a factor, for all country groups except the US (although that pattern might well be different for non-US multinationals).
Prof Kim Clausing of Reed College provided an overview of critiques of the available data, and from forthcoming work a rigorous assessment of the value of profits shifted by US multinationals, drawing on different data sources and subject to varying assumptions.
Abdul Muheet Chowdhary of the South Centre drew on the South Centre’s own conference from earlier in the week. He was particularly critical of the lack of detail, either of methodology or actual findings, of the OECD’s economic assessment. Questions from the floor also raised the question of why governments had been told they could not share the OECD’s assessment for their country alone, with media or civil society.
Finally, Lauri Finer, a special adviser in the Finnish ministry of finance, provided a view from an individual high-income country. Finland has not yet developed its own estimates of overall revenue impacts, but from some estimates for individual countries they are expecting very small changes indeed: perhaps 0.1% of tax revenue, or 1% of corporate tax revenues, and uncertainty over even whether this would ultimately be a gain or a loss.
Politics and process: ‘We don’t want to lose the opportunity’
The second panel focused on more political aspects. Stephanie Soong Johnston of Tax Notes facilitated a discussion featuring Marilou Uy and also Ben Dickinson, the OECD’s Head of Global Relations and Development; Marijn Verhoeven, head of the World Bank’s global tax team; Vicki Perry, Assistant Director of the IMF’s Fiscal Affairs Department; and Prof Sol Picciotto, coordinator of the BEPS Monitoring Group, emeritus professor at Lancaster University, and one of the Tax Justice Network’s senior advisers.
Ben Dickinson identified three ‘quite radical departures from the past’. First, that multinationals will be treated as single entities, and so global profits will be assessed. Secondly, a formula will be applied to divide up that profit globally; and third, the idea of a fixed return for routine distribution functions. He closed with the view that ‘we are on track, heading for what we hope is the beginning of a political agreement in early 2020.’
Marijn Verhoeven argued that the level of detail available early next year may be key in determining the extent to which individual countries are able to apply what is agreed. Expecting that little detail would in fact be available, he speculated on a possible role for the Platform for Collaboration on Tax. Particular issues need to be addressed for lower-income countries to benefit, such as their right to require direct access to country-by-country reporting from multinationals. An important, open question is whether any agreement will be sufficient to see countries pull back from unilateral measures such as digital services taxes.
Vicki Perry noted the extent of agreement on (some) formulary apportionment under pillar one, and (some) minimum tax arrangements under pillar two; but highlighted just how much distance there is from those generalities to meaningful agreement on the hard specifics. The absence of solid, quantitative analysis on the revenue impacts, including for lower-income countries, is a major issue. At the same time, minimum tax arrangements – especially for inbound foreign direct investment – are key, but may be under pressure in the potential agreement. At a broad level, there are clear political risks to the process; but the potential gains are great, and it is heartening that there is a forum now for lower-income countries to engage in. Impact on the latter must remain the focus.
Sol Picciotto began his remarks by noting that ‘finally, we are now having the right conversation’. With country-by-country reporting data, we are able to begin a proper discussion of unitary taxation and formulary apportionment. The issues under discussion would potentially require coordinated revision of all tax treaties around the world, which may simply not be realistic; but in fact those treaties have been misapplied, in respect of transfer pricing approaches, and so the applicability of formulaic approaches without treaty revision can be reconsidered.
In the subsequent discussion, Ben Dickinson revealed that the Inclusive Framework Steering Group was at that moment in discussions, trying to understand the US position, which breaks sharply with both the overall work programme and the secretariat’s own unified proposal – and that the US had been clear that it is not withdrawing from negotiations.
Marilou Uy highlighted the need to make sure that the opportunity for change is not lost, and Vicki Perry confirmed this: ‘We don’t want to lose the opportunity to make some important changes that would bring the tax system more into line with reality than the one that was developed a hundred years ago.’ Sol Picciotto saw the US position as not unreasonable, however, because the secretariat’s proposal is not workable – and so a broader, principle-based approach is needed.
Overall consensus broke out again, with agreement that the major shifts in play are not now irreversible. The policy debate is now on formulaic approaches to multinationals’ global profits; and to be analysed in terms of the distribution of taxing rights between countries. Panellists agreed effusively that ‘there is no going back’, now that ‘the genie is out of the bottle’.
Thanks…
We’re enormously grateful to all the speakers and participants who made the conference such a success, and to the team here who ensured the entire thing ran smoothly. We’ll be blogging next week with a review of the exercise, including a round-up of media coverage and a rough calculation of the climate benefits of the virtual approach, and how we may use it in future.
In the meantime, you can find all the slides and video on the conference home page, which we’ll continue to update with links to relevant new research on the economic assessment of the reforms. And perhaps news of a follow-up conference…
Welcome to this month’s latest podcast and radio programme in Spanish with Marcelo Justo and Marta Nuñez, free to download and broadcast on radio networks across Latin America and Spain. ¡Bienvenidos y bienvenidas a nuestro podcast y programa radiofónica!
En este programa:
La historia detrás de las protestas en Colombia.
¿Pagan mucho en impuestos las corporaciones en América Latina?
La inversión extranjera directa en América Latina.
Y en nuestra miniserie sobre municipios, el caso de San Antonio de Areco y la crisis económica Argentina
INVITADOS:
María Fernanda Valdes de la Friedrich Ebert Stiftung de Bogota, autora de Reducir la desigualdad “El Papel de la política tributaria”
Juan Valerdi, ex asesor del Banco Central de Argentina
Giovanni Stumpo, director de la Unidad de Inversión y estrategias corporativas de la CEPAL
Francisco Paco Durañona, intendente de San Antonio de Areco de 2011 a 2019 y hoy senador de la provincia de Buenos Aires.
También tenemos ‘extra’ este mes: queremos compartir este video sobre las guaridas fiscales, una colaboración entre Justicia ImPositiva y Pagina 12 basado en nuestro mini-serie ‘la breve historia de los paraísos fiscales:’
As we enter the final week of Britain’s 2019 general election, tax justice has become a top election battleground subject. Tax justice is, as we’ve always said, a vote winner, and it’s continuing to climb up the political agenda. We’ve made a video with Reel News looking at the economically and socially damaging race to the bottom between nations on tax and regulations, something which will be highly significant in a post-Brexit scenario, if it happens. We’re sharing that video with you here with some ideas on how governments everywhere should be governing in the public interest.
The OECD’s process for reform of international tax rules has just been torpedoed by the United States. As the US announced 100% tariffs on a range of goods, in response to the French digital services tax, finance minister Bruno Le Maire said on Monday that, “having demanded an international solution from the OECD, it [Washington] now isn’t sure it wants one”. Here we explore three scenarios that could emerge.
Where do things stand?
What’s the current position of the ‘BEPS 2.0’ process, after this extraordinary development? In brief, it’s pretty bad.
The OECD secretariat appeared to have gambled the success of the process, and much of its own credibility, on pushing through a deal based on a US-French agreement. The idea was that an international solution would obviate the need for the French digital services tax (DST), and therefore also avoid any US countermeasures. Now the US has announced those countermeasures anyway, and apparently signalled its intent to quit the international process.
As the Tax Justice Network and a good many others wrote in our submission to the OECD consultation on pillar one of the reforms, the ‘unified’ proposal being pushed by the OECD secretariat involved riding roughshod over the work programme agreed by the Inclusive Framework group of 134 countries, despite the claims that G24 and other countries would be given an ‘equal say’, in order to deliver a very limited reform with revenue benefits concentrated in the hands of a few OECD member countries.
Three scenarios
Two weeks ago, we reviewed the submissions to the OECD consultation and laid out three scenarios:
Limited reform. In this scenario, intended to meet US demands, the secretariat would deliver a reform that would redistribute little profit from tax havens, with some revenue benefit for major OECD countries and little for anyone else.
Process collapses due to lack of trust. In this scenario, the refusal to allow G24 countries or others the ‘equal say’ promised to the Inclusive Framework would be met by a rejection of the secretariat, and ultimately a collapse of the process.
Reset. Here, the threat of collapse would see the secretariat forced to make concessions to the Inclusive Framework. This would necessarily include a longer timeline, recognising that 2020 is simply too short for such a major overhaul of the rules, and an agreement to evaluate fully the three proposals that the Inclusive Framework had agreed to consider, including that of the G24.
These remain relevant today – but the likelihood of each has changed.
Attaching probabilities…
With the US moving to sanction France, and Bruno Le Maire indicating that US withdrawal is likely, option 1 seems increasingly improbable. Even if it is a Trump negotiating ploy, to get a ‘better’ (even more limited?) reform for US multinationals, the chances of success are poor. Nonetheless, the imbalance of power means that it remains possible that some, very weak deal will be signed off in 2020.
With the OECD secretariat’s ‘unified’ proposal having proved so divisive, option 2 (the collapse of the process) seems more likely now. Placating the US will likely lead to an even less appealing outcome for Inclusive Framework members, whose faith in the process is already stretched. But the threat of confrontation with, ultimately, the US under its current volatile leadership, may prevent outright rejection of the process.
Option 3 may provide the secretariat with a path forward: to reset the process, and seek to bring the Inclusive Framework members back into the fold. While the US seems likely to take a hostile position, even assuming that it remains within the process, the advantage for the OECD secretariat is that a longer timeline extends the process beyond the next US presidential election.
In addition, a reset of the process could allow the OECD secretariat a chance to restore trust of Inclusive Framework members, and a genuinely more realistic schedule to do the homework on analysing probable revenue redistributions for the major reforms in prospect.
But it also faces real issues: the US may simply not accept the goalposts moving, and might impose harsh sanctions on individual countries, and/or withdraw financial support for the OECD. Other OECD members, too, may be unwilling to give a genuine voice to Inclusive Framework members.
Even if the secretariat has the space to try, it may not prove possible to regain the trust of G24 countries and others in the Inclusive Framework. It will take bravery for the secretariat even to try. But the other options look unlikely, or unpalatable.
Overall, the prospects of an eventual shift to a UN forum, and away from the OECD, have become more likely this week. This could happen more quickly, following a collapse of the BEPS 2.0 process, or more slowly as an attempt to deliver limited reforms drags on into 2020. Or perhaps there is another twist in the tail, from this unpredictable and often illogical US administration…
To explore the technical and political questions at this pivotal moment for the reform of international tax rules, we are bringing together speakers from the OECD secretariat, the G24, IMF, World Bank, South Centre, BEPS Monitoring Group and other leading experts at our virtual conference on 11 December.
You can sign up by clicking the button below, and join the pre-discussions immediately on our private Slack channel.
Welcome to the twenty-third edition of our monthly Arabic podcast/radio show Taxes Simply الجباية ببساطة contributing to tax justice public debate around the world. (In Arabic below) Taxes Simply الجباية ببساطة is produced and presented by Walid Ben Rhouma and Osama Diab of the Egyptian Initiative for Personal Rights, also an investigative journalist. The programme is available for listeners to download and it’s also available for free to any radio stations who’d like to broadcast it or websites who’d like to post it. You can also join the programme on Facebook and on Twitter.
In Taxes Simply #23 – Understanding the Iraqi crisis:
We interview business consultant Hassanein Mohieddin about the underlying economic causes of the ongoing uprising in Iraq.
Plus: the most important tax news from the region and around the world:
Egypt starts a process for taxing social media sales
Tax fight between FedEx and the New York Times
Economist Thomas Piketty says billionaires are hurting economic growth.
الجباية ببساطة ٢٣ -كيف يمكن للعراق الخروج من المأزق؟
أهلا وسهلا بكم في العدد الثالث والعشرين من الجباية ببساطة حيث نبدأ الحلقة بحوار مع الاستشاري في قطاع الأعمال حسنين محي الدين حول الدوافع الاقتصادية للانتفاضة المستمرة في العراق، وننهي الحلقة في الجزء الثاني بملخص لأهم أخبار الضرائب في المنطقة وحول العالم وتشمل أخبارنا المتفرقة: ١) مصر تبدأ إجراءات فرض ضريبة على مبيعات منصات التواصل الاجتماعي؛ ٢) معركة ضريبية بين فيديكس ونيويورك تايمز؛ ٣) الباحث الاقتصادي طوما بيكيتي يقول أن المليارديرات يضرون بالنمو الاقتصادي.
We’re pleased to share the tenth edition of the Tax Justice Network’s monthly podcast/radio show for francophone Africa by finance journalist Idriss Linge in Cameroon. The podcast is called Impôts et Justice Sociale, ‘tax and social justice.’
Nous sommes heureux de
partager avec vous cette dixième
émission radio/podcast du Réseau Tax Justice, Tax Justice Network produite
en Afrique francophone par le journaliste financier Idriss Linge basé
au Cameroun. Le podcast s’appelle Impôts
et Justice Sociale.
Dans cette neuvième
édition nous revenons sur le premier pilier des propositions de l’OCDE en vue
d’une taxation unitaire des multinationales au niveau mondial
Nous avons l’occasion
de partager des avis de deux économistes de renom, qui sont aussi des membres
de l’ICRICT,
une Commission indépendante qui mène des travaux pour la formulation d’une
taxation unitaire et équitable des entreprises multinationales dans le monde
Il s’agit notamment de:
Ricardo
Martner, un économiste indépendant avec 30 ans d’expérience dans
le secteur des Nations Unies
Thomas Piketty, Economiste lui aussi et Professeur à l’Ecole des Hautes Etudes en Sciences Sociales de Paris en France. Il est surtout reconnu pour la qualité de ses travaux sur les inégalités économiques dans le Monde
Pour écouter directement en ligne, cliquer sur notre lien Youtube, ou l’application Stitcher.
Vous pouvez aussi suivre nos activités et interagir avec nous sur nos pages Twitter, et Facebook.
As urgent reshaping of the international tax system has risen up the geopolitical agenda, the OECD’s tax reforms announced in January 2019 are proceeding at a rapid pace. The proposals set out to go “beyond the arm’s length principle”, introducing elements of unitary taxation and formulary apportionment, with the aim of redistributing taxing rights to the countries where real economic activity takes place.
To date, however, there has been little public analysis of the likely effects of these reforms and questions have been raised as to whether the current proposals are comprehensive enough to provide the drastic changes the international tax system needs to keep up with the changing landscape of multinational companies.
This one-day virtual conference hosted by the Tax Justice Network brought together international experts including speakers from the International Monetary Fund (IMF), the Intergovernmental Group of Twenty-Four (G24), the Organisation for Economic Cooperation and Development (OECD), the World Bank (WB) and the Independent Commission for the Reform of International Corporate Taxation (ICRICT) to provide technical analyses of the current proposals and consider the following questions:
How do the current reforms compare to alternative proposals tabled by other international institutions and civil society organisations?
What are the implications of the reforms for lower-income countries, particularly on tax bases, as well as those of OECD members?
How far do the suggested reforms achieve their intended goals of redistribution of taxing rights and tightening up on tax avoidance?
What are the political challenges within the OECD reform? And, looking to the future, what potential is there for involvement in the decision making process from other international bodies such as the United Nations?
Welcome and Keynote I: ‘The maldistribution of global taxing rights, and how to fix it’ and Q&A
Panel I: ‘The revenue impacts of redistributing taxing rights’ and Q&A
Keynote II: ‘The G24 proposal, and the challenges of the Inclusive Framework’ and Panel II: ‘Which way now for the reform and redistribution of global taxing rights?’ and Q&A
Shared papers and resources
Independent Commission for the Reform of International Corporate Taxation and Tax Justice Network
Welcome to our seventh monthly tax justice podcast/radio show in Portuguese. Bem vindas e bem vindos ao É da sua conta, nosso podcast em português, o podcast mensal da Tax Justice Network, Rede de Justiça Fiscal.
Penalidade máxima: a sonegação no futebol:Ouça no podcast #7:
No futebol nem tudo é jogada bonita e bola na rede. Para muitos, o aspecto financeiro e o peso do dinheiro podem manchar a beleza do esporte mais popular do mundo.
A sétima edição do É da sua contafala sobre a falta de transparência em transações milionárias, negócios suspeitos, paraísos fiscais e como funciona a indústria de sonegação de impostos no mundo do futebol.
Um intermediário da Confederação Brasileira de Futebol conta como são as transações dos jogadores de futebol entre clubes; quem ganha quanto e como se paga impostos sobre esses valores.
Veronica Grondona, da Tax Justice Network, explica o negócio do futebol nos paraísos fiscais.
O advogado do português Rui Pinto explica os motivos de sua prisão em Portugal. Também conhecido como John do Football Leaks, Rui Pinto denunciou esquema de corrupção e sonegação fiscal envolvendo clubes internacionais. A ativista e diplomata Ana Gomes questiona a vontade política das autoridades portuguesas em combater a corrupção e a sonegação fiscal.
As dívidas tributárias de mais de US$ 600 milhões dos maiores times brasileiros.
Como a sonegação fiscal virou um negócio às avessas e o que fazer para corrigir, com Marcelo Lettieri da Instituto de Justiça Fiscal
O que pensam os amantes do futebol sobre o poder do dinheiro no esporte?
Onde pagam impostos os jogadores de futebol africanos que vão pra Europa? Comentário de Nick Shaxson, da Tax Justice Network
Call to action: O mundo do futebol precisa de mais transparência fiscal. Caso queira manifestar solidariedade ao denunciante do Football Leaks, siga-o no twitter Rui Pinto
We blogged recently that the UK’s main opposition party has committed to introducing unitary taxation by the end of the next parliamentary term. As we’ve said, it represents an important further normalisation of unitary taxation, and a potentially important step to ending the great damage done by corporate tax abuse internationally. In addition to our infographic here explaining unitary taxation, we think it’s useful to share an article for Open Democracy by one of our senior advisors, emeritus professor of law at Lancaster University, Professor Sol Picciotto. He was co-author of an important report whose recommendations have been adopted by the UK Labour Party.
In this article Professor Sol Picciotto addresses two important questions: could a UK government implement unitary taxation, and what would be the benefits? As he writes in his article:
adoption by a country such as the UK of a policy of moving towards unitary taxation with formula apportionment could accelerate the growing momentum for a more effective and comprehensive international solution. Indeed, earlier this year the Indian government put forward proposals to adopt fractional apportionment unilaterally, explaining how it could be compatible with its tax treaties. Even if not all countries follow, governments bold enough to lead the way could create a new consensus for reform of the rules to make them fit for the 21st century.”
In his view, unitary taxation is
a bold, visionary plan for taxing multinationals from the Labour Party – but it is also workable and necessary.”
You can read his full article here on the Open Democracy website.
Coauthors: Andres Knobel, Markus Meinzer and Moran Harari
The
Financial Action Task Force (FATF) which evaluates countries on their
compliance with its anti-money laundering recommendations recently published a
report on best practices of beneficial
ownership for legal persons, leaving trusts aside. The report contains interesting examples of
countries doing exactly what our paper on beneficial ownership verification proposed, but misses the point on
the issue of beneficial ownership registries, let alone public ones. While the
paper proposes many measures that we agree are useful and necessary, it fails
to endorse the most critical of measures: public beneficial ownership
registries.
Recommendation 24 (not 10)
While many
FATF recommendations refer to beneficial ownership information such as
Recommendation 10 on customer due diligence by financial institutions, this new
FATF paper on best practices (as well as most of our papers on beneficial
ownership) focuses on FATF Recommendation 24. This recommendation is about making
sure authorities’ have access to accurate beneficial ownership information. If
you want to see how the measures proposed here relate to Recommendation 10,
scroll down to the bottom of the blog post.*
The multi-pronged approach
The FATF Recommendation
24 and the OECD’s Global Forum allow countries to choose at least one of the three
following approaches to ensure timely access to accurate beneficial ownership
information: the registry approach (eg a beneficial ownership register), the
company approach (the legal person collects beneficial ownership and makes it
available to authorities on request), and the existing information approach
(use any beneficial ownership information available with banks, corporate
service providers, tax authorities, land registries, etc).
The FATF
paper on best practices describes the challenges faced when implementing each
of the approaches without endorsing any specific one as the best one. To us,
this is like if a teacher gave two students the same grade on a test because they
both answered the same number of questions, regardless of whether they answered
the questions correctly.
In reality,
the three approaches were never on equal footing because the company approach
is a pre-requisite for the other two.
The company
should always be required to identify its own beneficial owners and only then it
can report this data to a registry (registry approach) or to a bank or
corporate service provider (existing information approach) – or keep it to
itself (just company approach).
To
illustrate, let’s play out a scenario where a company would not be required to
identify its own beneficial owners:
Company A
walks into a bank to open an account.
Bank teller: “Hello Company A, please tell me
who your beneficial owners are.”
Company A: “I don’t know (and I don’t need to know).”
Bank teller: “Oh, sorry to bother you.” Then, asking in every direction: “People of the world, are any of you the beneficial owners of Company A? In such case, please identify yourself.”
While this
imaginary dialogue would never take place, Germany implicitly requires this by waiving the
company’s obligation to identify its beneficial owners, when a German company
is owned by at least two layers of foreign entities.
The new FATF paper now proposes the “multi-pronged approach” to ensure beneficial ownership transparency. In other words, it suggests implementing more than one approach out of the three possible ones because this has proven to be more effective compared to choosing just one of the three. We discuss the pros and cons of each approach below. However, from our perspective choosing a combination of any two out of three approaches is not good enough. We believe the company approach and registry approach must always be implemented together as a first step. This would constitute the bare minimum requirement. The existing information approach should only ever be implemented as a second step to cross-check, complement and verify the information retrieved by the first step.
The company approach
We consider the company approach to be a pre-requisite for any of the other approaches because the company is in the best position to identify its own beneficial owners, and maybe the only actor capable of doing so. However, relying on the company itself as the only source for authorities to access accurate and timely beneficial ownership information is risky, to say the least. A company investigated for money laundering may never reveal the beneficial ownership data when requested by authorities (especially if they have no presence in the country nor local natural persons who are liable for not complying with the law). In addition, even if we assumed all companies to be honest, ensuring access to beneficial ownership information on any company would mean supervising every local company at their office and checking that they do have beneficial ownership data. This could include millions of companies. The alternatives, sample audits or harsh sanctions for non-compliance, can only get so far. While these alternatives may encourage companies to comply, authorities wouldn’t be able to know for sure that they are complying, unless they checked each and every one of them.
The existing information approach
The
existing information approach seems comprehensive, because it may cover
anything: banks, lawyers, tax authorities, real estate registries, commercial
databases – anyone who may have beneficial ownership information on a company. But,
and this is a big but, it relies on information actually existing.
Local banks
may be required to obtain beneficial ownership information from companies, but
first a company must have engaged with a bank, eg opened a bank account.
Otherwise, the bank will have no beneficial ownership information on that
company.
Tax
authorities may be required to obtain beneficial ownership information from
companies, but first a company must be considered tax resident in the country (depending
on local tax laws) and actually filing the necessary returns with tax
authorities Otherwise, tax authorities will have no beneficial ownership information.
In other
words, the existing information approach is like a country trying to identify
its citizens solely on circumstantial identities: a credit card, a driver’s
license, a library card, a student id, etc. The country would be able to
confidently identify a person who has all those documents, but what if the
person does not have a credit card or driver’s license, and is not a student at
any school? There would be no data on the person at all for the country to
identify them by.
Even if every
company did engage with either a local bank, notary, tax authority, land
registry or any entity required to collect beneficial ownership information, a
second problem remains: enforcement would still require checking hundreds to thousands
of banks, lawyers, notaries or registries that may or may not have beneficial
ownership information. Sample audits or sanctions would again create
incentives, but they would not rule out the possibility of non-compliance.
Lastly, private
actors that hold beneficial ownership information could tip off their clients
about authorities asking for their information, which could affect
investigations.
The registry approach
The
registry approach is the only way to ensure that beneficial ownership
information has been collected (and registered). The registry would hold information
on all companies that were incorporated in the country, and could simply check
whether they filed beneficial ownership information or not. For a
well-functioning beneficial ownership registry, sample tests may not be
necessary: the registry, especially if it has digital records, would be able to
look at every local company (even if there are millions of them) and check if
they have filed beneficial ownership information or not. There would be only
one place to go instead of hundreds to millions and if information is
digitalised it would take a few seconds to bulk check if any company is missing
their beneficial ownership form.
From our
perspective, the registry approach doesn’t necessarily require the commercial
registry to be the body that holds beneficial ownership information. Any
authority would do: tax authorities, central bank, etc, as long as each and
every company has to file beneficial ownership information with that registering
authority. In other words, the registry approach assumes that an authority
holds information on all companies. Instead, if filing beneficial ownership with
an authority were optional, conditional or circumstantial, we wouldn’t consider
a country to be implementing the registry approach. At best, it would be
implementing the existing information approach. What differentiates both
approaches is not only whether an authority or a private party holds the
information, but also making sure that information on all entities is available
with the authority – not just on those companies that circumstantially had to
file information. You could think of the registry approach as the ‘leave no one
behind’ approach.
Nevertheless,
if beneficial ownership information is held by the commercial registry, it is
much more likely that the information could be made publicly accessible than if
it were held by tax authorities or the central bank.
On a
separate note, verification of information is of course not ensured by just having
a registry, although once verification procedures are implemented by the
registry, it is much easier to check if they actually took place. In contrast,
if banks, companies or other data holders are required to not only collect but
also verify beneficial ownership information, authorities would still have to do
checks to ensure that both the collection and verification took place.
The ideal approach
While the
FATF paper identifies the structural problems of each approach (eg companies’
lack of incentives to identify their beneficial owners), it still allows
countries to choose any approach. In our view, the ideal solution is the
FATF establishing the three approaches as successive building blocks to ensuring
authorities’ access to beneficial ownership information.
In essence,
the most fundamental component (in bold in the figure above) is the registry
approach, with the company approach (the company identifying its beneficial
owners) as a pre-requisite. If all beneficial ownership information is
contained in one central registry, it’s possible to easily access it whenever
needed, and to verify compliance and the accuracy of registered information,
even before the information is needed (before it’s too late). This also helps
foreign authorities access and verify information, who would otherwise have to
spend time in justifying a request for information and wait until it is
received, if ever at all.
The
existing information approach definitely adds value, but it should only be the
cherry on top. Banks, corporate service providers, notaries and even other
authorities dealing directly with the company should be able to obtain
information from the beneficial ownership registry while having the
obligation to report any discrepancy (eg “John doesn’t appear as the
beneficial owner in the Registry but he is the one who manages the bank account
and withdraws money, so he should be included”).
The law
could also require engaging with a bank, notary or a corporate service provider
in order to incorporate a company (the dotted arrow in the figure above) to add
an extra layer of verification and control of beneficial ownership information.
However, a country choosing only the “company + existing information approach” as
a way to ensure authorities’ access to beneficial ownership information (without
the registry approach) would be missing out. First, it would depend on the
company actually engaging with a local bank, notary or service provider for
these to hold beneficial ownership information. Otherwise, no one in the
country would know who the beneficial owners are. Second, it makes enforcement
much more difficult and costlier: supervisors would have to check every single
notary, bank or corporate service provider to make sure that they are doing
their job right.
The
registry approach should thus be promoted as the best approach (considering the
company approach as a pre-requisite). The FATF already requires countries to
have registries providing basic company information (company name, address,
etc). Upgrading the registries to also collect beneficial ownership information
is much more cost-efficient in the long-run than having to supervise the
hundreds to thousands of banks, notaries, lawyers and corporate service
providers.
Public registries
The FATF –
in our view – fails to endorse public beneficial ownership registries as the
best strategy to ensure beneficial ownership transparency, and it even seems to
undermine them:
For example, an openly
and publicly accessible central registry does not necessarily mean that the
information is accurate and up-to-date. (page 22)
This
statement is true, but also misleading. Establishing an under-resourced
registry that is unable to run any checks or verification and rather acts as a
repository of information could end up being of little value. But the same
applies to any measure that a government could implement. If you do something
wrong, or only half-way, of course it will not be effective. The point is which
approach (or combination of approaches) is better, if done properly. For
example, we published a checklist for any country willing to
implement a beneficial ownership registry. More fundamentally perhaps, the FATF
fails to take into account the pressures arising from public scrutiny of the
data. The use (or abuse) of low level staff (natural persons) as “premium” nominee
shareholders and directors whose identities are effectively stolen or hijacked
by superiors in hierarchical law firms (as happened in case of the Panama Papers), could be detected more easily if
public scrutiny allowed questioning the veracity of a person – not least from
within the firms, but also from any business partner and journalist.
On the
bright side, the FATF acknowledge a positive trend towards public beneficial
ownership registries, which also helps foreign investigations:
The trend of openly
accessible information on beneficial ownership is on the rise among countries. (page 74),
…it is also understood
that countries have encountered difficulties in getting information on
beneficial ownership that is not publicly available. (page 70)
Highlights
The FATF
paper does have some interesting pieces of information as described below.
Switzerland applying the “every shareholder is
a beneficial owner” (no threshold approach) to domiciliary entities
The FATF
paper describes that financial intermediaries in Switzerland are required to
obtain information from all individuals without applying the 25% threshold of
capital or voting rights when dealing with domiciliary entities (companies
as entities such as legal entities, trusts or foundations, that do not have any
operational activity):
A written declaration will be required from the domiciliary concerning
its beneficial owners. (Art. 4 para. 2 of the Federal Act on Combating Money
Laundering Act and Terrorist Financing). The threshold of 25% of the capital or
voting rights in the legal entity does not apply to such type of entities. This
means that all beneficial owners must be identified, regardless of the amount
of their participation in the company (page 55)
Countries implementing automated verification,
red-flagging and appropriate sanctions
The FATF
paper mentions many strategies to verify beneficial ownership information based
on some countries’ experiences. These include automated cross-checks against
other government databases to determine the accuracy of information, and using
data mining to establish patterns and red-flag suspicious cases. These
suggestions and examples are exactly what our paper on beneficial ownership verification proposed back in early 2019 (as
well as our paper’s previous version from 2017).
In
addition, whenever inaccurate or incomplete information was detected, our paper
proposed not allowing an entity to be incorporated, or winding it up if already
existed, or at least marking it with a warning for anyone to be aware of the
risk. The FATF paper describes that some countries are doing precisely this. Below
are some extracts from countries.
Austria
Austria requires
different measures to verify beneficial ownership information, including
automated real time cross-checks against government databases, automated
sanctions in case information is missing, adding a public remark to warn users
that a company has potentially incomplete or wrong information and a system of
risk points for non-resident beneficial owners based on their country of
residence’s risk, resulting in further investigation by Austrian authorities:
Legal entities, which report beneficial owners with foreign
citizenship or place of residence, or ultimate legal entities with a registered
address in a foreign country will receive a certain number of risk points based
on the ISO Code of the foreign country. Thus, those legal entities will be more
likely be in the risk category high or very high, resulting in a greater chance
that the BO Registry Authority will request documentation on beneficial
ownership and will carry out an off-site analyses of beneficial ownership.
(…)
Through an automated alignment with other registers, it is ensured
that beneficial owners and legal entities can only be reported if their data is
also contained in other public registers. If, for example, a person with a main
residence address in Austria is entered as a beneficial owner, there is a real
time check with the Central Residence Register in the background if the entered
person has a valid main residence in Austria. (…)
By setting a
remark the legal entity will automatically be notified about the remark
(without identifying the obliged entity that set the remark) and informed that
the reported beneficial owners could not be verified and that the legal entity
therefore has to examine its report. The remark is only removed if the legal
entity then files a new report. However, the remark will still be visible in
the historical data. Consequently, a remark will be visible in all excerpts
from the BO Register. In addition, the BO Registry Authority is monitoring the
list of all remarks set in the register and may request documentation on
beneficial ownership if a remark is not resolved by a correct report.
Implementation of automated coercive penalties. If a report is not
filed within the deadline – either within the initial reporting period or within
28 days of newly established legal entities – then the competent tax office
will automatically send a reminder letter with the threat of a coercive penalty
of € 1 000 to the legal entity. (pages 41, 46, 52, 57)
Denmark
Denmark also has automated cross-checks, including validation
checks (eg to prevent dead people from being registered). If beneficial
ownership information is not checked, a company will not be able to
incorporate:
The CVR
automatically checks information that is filed (which must be done
electronically), and will cross-check this information with various
governmental registers, the CPR number – Civil registration number / CVR number
– Unique identification number for legal entities and other details such as
address (Danish Address Register – DAR) and dates. Furthermore, business rules
are set up in the system to avoid impossible situations ex. registration of a
deceased person, and as the Business Register entails information about legal
entities, certain information about the entity is prefilled in order to ease
the registration and to avoid mistakes. These automated checks are then
followed by more detailed manual checks in suspicious cases. The system is also
designed to use large datasets and with machine learning to better identify
potential risks (….)
If the BO
information is not adequate when checked, the company will not be incorporated.
If the BO information is checked in the following phase, the DBA has the legal
basis to dissolve the company compulsorily (page 48)
The Netherlands
The Netherlands has automated cross-checks against government
databases, a risk system for further investigations and creates a network maps
of relevant relationships that could be used for investigations:
The Scrutiny,
Integrity and Screening Agency performs risks analysis by automatically
scanning several closed and public sources on a daily basis, to look for any
relevant financial or criminal records of directors, and the (legal) persons in
their immediate surroundings. Data includes the Company Registry, Citizens
Registry of the municipalities and the Central Insolvency Registry, as well as
other public sources. In addition, data is obtained from the tax authorities,
the Judicial Information Service, and the National Police Services Agency. If the
computer system reveals a heightened risk, either immediately upon registration
or later on, during the life span of the legal person, this dedicated Agency
will carry out a more in-depth analysis. If the analysis confirms that there is
indeed a heightened risk, a risk alert will be sent to a group of recipients,
including law enforcement and supervisory authorities such as the Public
Prosecution Service, the Police, the Tax Intelligence and Investigation
Service, the Dutch Central Bank, the Netherlands Authority for the Financial
Markets and the Tax and Customs Administration (.…)
The
Scrutiny, Integrity and Screening Agency also provides ‘network maps’ for inter
alia law enforcement and supervisory agencies. A network map plots the relevant
relationships between a (legal) person of interest, and other persons or legal
persons, including bankrupted or disincorporated legal persons. (page 50)
Other relevant cases of beneficial ownership verification include
Belgium (page 47), Italy (page 34), Jersey (page 36), Spain (page 40) and
Sweden (page 52).
Proposals
on how to deal with foreign companies
The FATF paper also includes proposals on how to deal with beneficial
ownership from foreign companies. While the paper doesn’t mention (our paper’s)
proposals on an automated international cross-check of information using
zero-knowledge proof tests (without needing to share the actual data with a
foreign country, but only confirming information), it does present valuable
options that require no international cooperation:
b) Rating jurisdictions’ level of co-operation – Rating
jurisdictions based on the availability and extent of their co-operation. Impose
defensive measures such as restriction of certain business activities
accordingly.
c) Requiring re-registration with a local beneficial ownership.
d) Requiring
re-approval by domestic national authorities based on detailed investigation of
the relevant legal entities. (page 70)
Option b echoes our paper’s proposed quality limits (limiting the
ownership chain of a local company by allowing it to include only foreign
entities as long as they are from countries that have public legal and
beneficial ownership information). Of course, the Financial Secrecy Index could be
a basis and source of evidence to know whether a country’s entities should be
blacklisted based on the country’s level of transparency and exchange of
information.
Need to
review data protection and privacy laws that affect access to information
Importantly, the FATF paper refers to the need to revisit data
protection and privacy laws. While these are of course relevant, they should
not be abused to prevent relevant authorities and stakeholders from accessing
beneficial ownership information:
It is also
expected that countries will take action to facilitate the timely sharing of
basic and beneficial ownership information at the domestic and international
level to address barriers to information-sharing (e.g. reviewing data
protection and privacy laws). (page 72)
Our 2017 guidance paper on a checklist
for beneficial ownership registries specifies the importance of allowing
information to be searched using different fields (company name, incorporation
date, identity of owners, their residence, etc (page 5). The FATF paper also
proposed this:
Information
in the company register is generally recorded digitally and is preferably
searchable. The search function supports searches by multiple fields. (page 73)
Conclusion
In conclusion, the FATF paper proposes many measures that we agree
are useful and necessary. It also describes best cases available in several
countries that could be followed by others. However, it fails to endorse
registries of beneficial owners, let alone public ones, as the best approach.
* How does
this blog post’s proposals relate to FATF Recommendation 10?
Another
relevant FATF recommendation, which is related but not the focus of this paper,
is Recommendation 10 on customer due diligence: how banks, and other obliged
entities (eg lawyers, notaries, corporate service providers, etc) are supposed
to obtain and verify information, including beneficial ownership information,
provided by their customers. For example, when opening a bank account for a
customer, banks and other obliged entities may use information from the
commercial registry or beneficial ownership registry (green circle in the
figure below), but they cannot rely exclusively on that information for their
customer due diligence obligations. They must use other sources too, and follow
other procedures (eg obtain identity documents, in-person meetings, etc) to
comply with Recommendation 10’s procedures.
However,
this blog post doesn’t apply to Recommendation 10, and none of its observations
or proposals refer to changing Recommendation 10 in any way nor obliged
entities’ customer due diligence obligations. This blog post focuses only on
Recommendation 24 about ensuring access to beneficial ownership information by
authorities (and ideally also by the public).
The research and advocacy seminar is organised in the context of the conference “Financialization in the Global South” (list of panels here, time table here, register here), happening from 26-28 November 2019 also in Buenos Aires. This event is free to attend. Details and location can be found below.
The seminar introduces the methodology and discusses
the research and advocacy potential of Tax Justice Network’s Corporate Tax
Haven Index (CTHI). This index combines two measures to create a ranking of the
world’s most important tax havens for multinational corporations: the Haven
Score based on 20 mostly tax-related indicators of corporate tax haven-ness,
assessing how aggressive a jurisdiction’s corporate tax haven laws, regulations
and practices are; and the Global Scale Weight showing the scale or size of
corporate investment activity as a proxy for the magnitude of the
profit-shifting potential in that jurisdiction. The jurisdictions are ranked by
how much each contributes to tax avoidance risks and the race to the bottom in
corporate income taxation. The Haven Score’s twenty indicators rely on in-depth
policy analysis in five relevant areas of corporate tax policies: the lowest
available corporate income tax rate; loopholes and gaps; transparency;
anti-avoidance measures and double tax treaty aggressiveness. Researchers and
members of social society are invited to feedback on the methodology, and to
contribute suggestions for the future geographical expansion of the index in
the Latin American region.
Another part of the seminar will introduce the present
the Tax Justice Network’s latest paper on the risks emanating from the secrecy
in the investment industry. In 2018, the total value of financial instruments
processed in the US was USD $1.85 quadrillion (USD $1,850 trillion). Still,
there is no transparency on who the beneficial owners of investment entities
and financial assets are, let alone if they are paying the corresponding taxes
or if they are part of money laundering or other financial crimes. Neither
current beneficial ownership registries nor the Common Reporting Standard for
automatic exchange of tax information solve the investment industry’s secrecy.
Seminario de presentación e investigación del
Índice de Guaridas Fiscales Corporativas 2019
El propósito del seminario es introducir la metodología, presentar y
discutir la investigación del Índice de Guaridas Fiscales Corporativas de Tax
Justice Network (CTHI, por sus siglas en ingles). El índice combina dos medidas
para crear un ranking de las más importantes guaridas fiscales para
corporaciones multinacionales del mundo: un ranking de guaridas basado en 20
indicadores de nivel de guaridas principalmente relacionadas con impuestos, que
evalúan que tan agresivas son las leyes, regulaciones y prácticas de una
guarida corporativa; y un ponderador de escala global que muestra la escala o
el tamaño de la inversión extranjera directa como un proxy de la magnitud del
desvío de utilidades potencial en la jurisdicción. Las jurisdicciones son
posicionadas en función de cuánto contribuyen al riesgo de elusión fiscal y a
la carrera a la baja global en el impuesto a las ganancias corporativas. Los
veinte indicadores del índice de guaridas se basan en un análisis detallado de
políticas en cinco áreas relevantes de las políticas de fiscalidad corporativa:
la menor tasa imponible disponible; los huecos para la elusión fiscal; la
transparencia; las medidas anti-elusivas y la agresividad de los tratados de
doble imposición. Académicos, miembros de la sociedad civil, y otras personas
interesadas están invitados a proveer su opinión respecto de la metodología y
contribuir con sugerencias para la futura expansión geográfica del índice en la
región latinoamericana.
This month on the Taxcast we speak to Tax Justice Network CEO Alex Cobham about his new book The Uncounted on the politics of counting. Who’s missing from the stats, from the bottom to the very top? And how can we count better?
Plus: For decades corporate tax cuts have been touted as the way to boost the economy. This month the Tax Justice Network’s John Christensen talks about a paradigm shift on corporate tax in the UK general election: and we look at the results of Trump’s corporate tax cuts in the US – what did they really deliver?
If the rich, if the elites, if the big companies are obviously not meeting their fair share, not meeting their part of the social contract, why should I? And you know, why should I be the only mug who pays tax? And it erodes all the way down. And this is how States and societies crumble.”
~ Alex Cobham
“Neo-liberalism is finished, it’s a busted flush, we’re going to see a change, if not at this election it’s certainly coming and I have the same sense from the US. And the tax justice agenda will feature prominently in whatever comes next”
~ John Christensen
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The Labour party in the UK has today committed to introducing unitary taxation by the end of the next parliamentary term. This is significant internationally because it marks the first such manifesto commitment from a major political party, with a realistic prospect of election success, in a major OECD member country. Coupled with the leadership of the G24 group of developing countries, the Labour commitment represents an important further normalisation of unitary taxation, and a potentially important step to ending the great damage done by corporate tax abuse internationally.
But what is unitary taxation? We’ve put together an infographic below to illustrate how unitary tax works.
Under a unitary tax approach, governments treat a multinational corporation as a group made up of all its local branches, instead of treating each local branch as an individual entity separated from the global chain. The profits that the multinational corporation declares as a group are then apportioned to each country where it operates based on how much of its real economic activity took place in that country.
Simply, put a unitary approach requires multinational corporations to contribute tax based on where they employ workers and do business, not where they rent letter-boxes and hide ledgers. That means making sure corporations pay their fair share locally for the wealth created locally by people’s work.
Today sees
the crystallisation of two potentially pivotal moments in the development of
international tax rules towards the Tax Justice Network’s long-favoured
approach: unitary taxation.
In Paris, the OECD is hosting a public consultation on the biggest reform to the taxation of multinational companies in almost a century – and there is a growing demand for a comprehensive shift to unitary taxation. And in London, the UK Labour party has today become the first major political party in one of the world’s leading economies to make a manifesto commitment to introduce unitary tax.
What is unitary taxation?
Unitary taxation is the approach that treats a multinational group as the taxable unit, rather than the individual subsidiaries in different countries that make up the group. Current international tax rules are based on separate entity accounting, where transfer pricing mechanisms are used to establish the taxable profit that each entity within the multinational group would obtain, if it was operating at arm’s length (independently) from each other entity in the group. This allows gross abuses, with huge volumes of profits being shifted from where they arise, into low- or no-tax jurisdictions. Unitary tax recognises that in reality, profits are maximised at the unit of the group as a whole. ‘Formulary apportionment’ is the name for the process that allocates those global profits as tax base between the different countries where the multinational has real economic activity (employment and final customer sales, say).
The OECD Base Erosion and Profit Shifting (BEPS) process of 2013-2015 had the single, agreed goal of reducing the misalignment between where profits are declared, and where multinationals’ real economic activity takes place. BEPS failed because OECD countries could not agree to move beyond the arm’s length principle. But the new reforms, sometimes dubbed BEPS 2.0, start from an explicit acceptance of the need to move beyond arm’s length pricing. Each of the proposals under consideration include aspects of unitary taxation, of which the proposal from the G24 group of countries is the most comprehensive. The Tax Justice Network has long called for such a reform, estimating the failure to align profits with the location of real economic activity imposes global revenue losses of around $500 billion each year.
What’s at stake at the OECD?
The OECD consultation addresses ‘pillar one’ of the
organisation’s policy reforms. While pillar two focuses on the introduction of
a global minimum tax rate for all countries, pillar one is concerned with the
distribution of the tax base between countries. This is crucial to ending the
corrosive practices of profit shifting, through which multinationals, their
professional advisers and corporate tax havens such as the Netherlands have
conspired to deny taxing rights to the countries where companies’ real economic
activity takes place.
The
consultation addresses the ‘unified proposal’ put forward by the OECD
secretariat, which was put forward following bilateral agreement between the US
and France, and then received support from the G7 group of countries before
being made public. The proposal claims to combine elements of the three
proposals that are in the agreed work programme of the Inclusive Framework
group of 134 countries. All three move beyond the arm’s length principle and
the transfer pricing approaches that have dominated international tax rules
since the key decisions of the League of Nations in the 1920s and 1930s.
The
Inclusive Framework group includes many lower-income countries, not only OECD
members, and they have been promised an equal say in the changes to be made.
However, the unified proposal sets aside entirely the one approach in the work
programme that had been proposed by lower-income countries: the proposal for
unitary taxation made by the G24 group. Our analysis indicates that compared to the G24
approach, the unified proposal would be likely to redistribute a much smaller
volume of profits away from corporate tax havens, with much smaller revenue
gains for other countries – especially non-OECD members. Simulations for the French government, just published, confirm “a negligible impact on tax
revenues” is likely.
From our
partial review of the thousands of pages of submissions now made public, a number of key
points stand out. These can be grouped into areas with broad consensus, and
areas where business and other respondents are relatively sharply divided. We
identify three areas of relatively broad consensus:
Scope. There is a near-universal
rejection of the OECD secretariat’s proposed scope. While most independent
submissions criticise aspects of the attempt to reduce the scope to only the
largest, ‘consumer-facing’ businesses, with a range of other industry carve-outs,
most business submissions seek a more limited scope, higher size thresholds,
and where relevant that their own sector be excluded through an additional
carveout.
Complexity
and uncertainty.
An overwhelming share of submissions reviewed, and from all types of
participants including business and civil society, highlight the risk that the
OECD secretariat proposal would increase complexity of the rules and
uncertainty of outcomes for taxpayers and tax authorities.
Impact
assessment. Across
all types of respondents, there is a clear desire for the OECD to release data
and analysis on the projected revenue impact of the proposals. Civil society
has made this a core demand. The US Chamber of International Business said: “USCIB
members believe a completed impact assessment is critically important to enable
progress on the proposed Unified Approach framework.” The intergovernmental
South Centre said: “The South Centre supports the call for the OECD to make
public its country-by-country reporting data on MNEs headquartered in its
member states so that countries can carry out a more thorough assessment of how
the Unified Approach proposal will affect their tax base. At present the OECD
has planned to release this data only after early 2020, potentially after key
elements of the reform proposals have been pushed through.”
In areas
with a divide between business respondents and others, we identify four main
areas:
Curbing
profit-shifting. There
is little engagement from business respondents or their professional services
providers with the question of whether the reforms would reduce the scale of
tax abuse. The major lobby group Business at the OECD (BIAC) goes so far as to
ask that the label ‘BEPS 2.0’ not be used for the process: “that language is
quite unhelpful and, indeed, misleading.
Pillar 1 is – should be – about constructing a new tax system for new
business models and a new economy. That
needs to be a tax system which takes account of the way business is working
(and even more importantly, will come to work); a system that allows
governments to raise money based on new value-creating forms of activity; but
also a system that fosters and enhances cross-border trade and investment and
creates inclusive growth. To impose an anti-avoidance narrative on Pillar 1
could frustrate that.” Non-business respondents, meanwhile, consistently
criticise the proposals for the likely failure to address the scale of profit
shifting.
Fair
distribution of taxing rights.
Here again, there is little engagement from business respondents and their
professional services providers, but a clear consensus among civil society
respondents and those from non-OECD countries that the secretariat proposal will
not redress the stark inequalities in taxing rights that characterise the current
system.
‘Equal
say’. A position
common to many of the civil society responses and those from non-OECD
countries, is to highlight the extent to which the OECD secretariat proposal
has disregarded the key tenets G24 approach, casting doubt on the commitment to
give non-OECD countries an equal say.
Dispute
resolution. Here
is perhaps the sharpest divide. While many business respondents call for rapid,
binding arbitration, often conditioning acceptance of any other changes on
this, it is anathema to respondents from non-OECD countries and to civil
society – often appearing to be a red line, even if other elements of the
proposal were to be accepted.
Where next?
Three main
outcomes can be envisaged. First, and perhaps most likely given the recent
history of the BEPS project (2013-2015), is that the OECD delivers a limited
reform meeting the constraints of major members including the US, which neither
curbs profit shifting to a significant degree nor provides substantial benefits
to Inclusive Framework members.
In this
scenario, trust in the OECD to act as the forum for international tax
rule-setting would be damaged perhaps to the point of being beyond repair. The
power of major OECD members, however, might be enough to prevent any shift of
forum to the UN. That would leave countries with the option of pursuing
unilateral measures, from the digital services taxes that are already
proliferating, to more comprehensive unitary tax approaches. The resulting
pressure from business for an international solution would likely see a quick
return to negotiations – but would they be at the OECD?
A second
scenario sees the current process collapse, due to the lack of trust. Here, a
move to the UN becomes conceivable, if major OECD members were to accept that a
more genuinely inclusive process was necessary since unilateral proliferation
would not represent a stable equilibrium. Again, a return to the OECD process,
or the start of a new one, would seem more immediately likely than a shift to
the UN; but the quid pro quo to achieve this might be a much more serious
commitment to the ‘equal say’ for non-OECD members.
The third
scenario is that the current OECD process is reset. Recognising the depth of
opposition to the secretariat proposal, key actors might decide that the aim of
completing the process during 2020 is incompatible with a full assessment of
the options and obtaining broad agreement. That would in turn open the door to
more serious consideration of the Inclusive Framework’s three approaches,
including the G24 proposal.
The
starting place is the recognition in the current process that the old transfer
pricing rules are not fit for purpose in an age of complex globalisation. In
each of three scenarios, the medium-term prospects are increasingly positive
for a complete shift to a unitary approach – whether led by the OECD or UN, or
simply as the result of cumulative, unilateral actions.
Unitary
taxation has moved from a radical civil society demand in the early 2000s, to
being a core element of the international policy debate today. It offers the
potential to reprogramme international tax, making profit shifting abuses of
multinational companies a marginal problem rather than the major cause of
revenue losses that they are today.
What’s the Labour manifesto commitment?
In the UK, the Labour party has today committed to introducing unitary taxation by the end of the next parliamentary term. This is significant internationally because it marks the first such manifesto commitment from a major political party, with a realistic prospect of election success, in a major OECD member country. Coupled with the leadership of the G24 group of developing countries, the Labour commitment represents an important further normalisation of unitary taxation, and a potentially important step to ending the great damage done by corporate tax abuse internationally.
FAQ
How much revenue would the Labour policy bring in for the UK?
The Labour
party estimates that in the fifth year of the next parliament, the tax would
bring in £6.3bn. This comes from the work of Prof Sol Piccciotto, who is
perhaps the leading international expert on unitary taxation and a Tax
Justice Network senior adviser, and Daniel Bertossa.
Picciotto
and Bertossa lay out a full proposal, and refer to our
analysis (with
Prof Valpy FitzGerald of the University of Oxford, and Tommaso Faccio of the
University of Nottingham) of data on US multinationals for the revenue impact.
We found a revenue impact of nearly $4bn for the UK, from an international
shift to unitary taxation with full formulary apportionment. Scaling up to
include non-US multinationals, and depending on the approach taken, this
implies a total revenue gain of between £6bn and £14bn.
The Labour
party have taken the lower extreme of this range (i.e. the most conservative
estimate). They then reduce it by 30% to allow for possible behavioural changes
(multinationals moving away, or finding other ways to dodge tax). This seems on
the high side for a behavioural response, so this again looks a conservative
assumption. Finally, they roll forward five years, allowing for inflation. That
gives an estimate of revenue at the end of the next parliament of some £6.3bn.
Can the UK do this unilaterally?
Yes. Countries including OECD members have quite different approaches to international tax, whether in terms of defining the tax base or setting the rates, so there is no reason the UK couldn’t go ahead and do this. As above, however, there is an increasing chance that this would be in line with an emerging international consensus to adopt unitary taxation, so the UK could be well positioned to play a leading role in that process.
Wouldn’t the UK have to renegotiate all its double tax treaties?
Many believe that current tax treaties would not pose an obstacle, just as they already allow the application of related ‘profit split’ approaches. However, a renegotiation is not out of the question. The OECD secretariat has confirmed that its current, more complex proposal, for example, would require revisions to the whole global tax treaty network. As George Turner of TaxWatch has written, instead of renegotiating it is also possible for the UK parliament to “legislate to unilaterally disapply the provisions of tax treaties. This last happened in the UK in 2008, when the government legislated to unilaterally override all of their tax treaties to close down a disguised remuneration scheme (FA 2008 ss 58 and 59, which amended ICTA 1988). The action by the UK government was subsequently upheld by the European Court of Human Rights, which noted that double tax treaties should do no more than seek to relieve double taxation, and should not be permitted to become an instrument of avoidance.”
Wouldn’t multinationals leave the UK rather than pay this tax?
Multinationals
operate in the UK because they make money in the UK. A distribution of some
percentage of that profit towards the UK exchequer, just as any domestic
business makes, doesn’t stop it being profitable to operate in the country.
While there would no doubt continue to be a lot of work from professional
service firms including accountants and lawyers trying to game the system,
unitary tax offers a much simpler way to determine taxable profit than the
current rules and so is likely to be much less open to abuse. As noted, the
Labour party’s revenue estimate assumes a 30% reduction due to behaviour
change, which may well be on the high side.
Is the information available to make unitary tax work?
Yes. Following the G20 decision in 2013, the OECD has developed a version of the Tax Justice Network’s proposed standard for country-by-country reporting. This, together with corporate tax returns, provides all the information needed to apply unitary taxation. It would be advisable to ensure that the data to be relied upon is fully audited, and to sharpen the definitions in places to reduce scope for chicanery, but the instruments are in place.
As global capitalism continues to lurch from one crisis to the next, massive levels of tax abuse and avoidance are robbing governments of the resources they need to provide basic social services while also contributing to economic instability, fuelling gender inequalities and undermining human rights.
Nowhere is this systemic malaise more
manifest than in the extractives industry, which pillages the resources of
developing countries while offering them a pittance in return. Last year the 40
largest mining companies raked in US $683 billion, mostly from the Global
South, through the extraction of oil, gas and minerals. But rather than paying
their fair share of taxation to the countries where they operate, most
extractive companies channel their revenue through a complex network of
corporate tax havens and financial secrecy jurisdictions to avoid contributing.
Meanwhile, local elites in host countries collude in providing tax incentives
and low corporate tax rates to ensure these companies pay the absolute minimum
to local economies.
On 19 November hundreds of civil society organisations around the world will join forces to demand an end to this plunder. The Global Day of Action will see public protests, educational events and vigorous social media campaigning all over the planet as people who care about justice and equality unite their voices to say enough is enough. Organized by our sister organisation the Global Alliance for Tax Justice, this co-ordinated international effort represents a crucial opportunity for ordinary people everywhere to push back against the injustice of a global economy that has been programmed to rip them off.
This mass mobilisation comes in a context
of multiple enmeshed abuses being perpetrated by the extractives industry. The
sector is notorious for its role in human rights abuses, such as forced
displacement, the destruction of livelihoods and even, in some instances,
murder, not to mention fuelling climate change and widespread environmental
destruction. By confronting the abusive tax practices of the extractives
industry, the Global Day of Action will also aim to build solidarity with and
strengthen these ongoing battles for economic, social and environmental
justice.
The organisers have made an array of resources, including infographics, social media assets and press materials, available on their website to support all those who wish to take part. Here at the Tax Justice Network, we’ll be adding our voice to this important international call to action. While the Tax Justice Network relies on high-level technical analysis and advocacy to shine a light into the opaque structures that rig the global economy, we also recognize that this alone is not enough to transform the unjust international tax system. That’s why the campaigning work of the Global Alliance for Tax Justice, which spun off from Tax Justice Network in 2013, is so fundamentally important. We hope you will join us on 19 November to demand the global Goliaths of the extractives industry pay their fair share.
Welcome to this month’s latest podcast and radio programme in Spanish with Marcelo Justo and Marta Nuñez, free to download and broadcast on radio networks across Latin America and Spain. ¡Bienvenidos y bienvenidas a nuestro podcast y programa radiofónica!
Some troubling news you may not have heard about: recently United Nations staff were informed that the United Nations will run out of money due to a 30% underpayment by member states, most notably the United States: if that nation paid what it owed, that would make up at least 60% of the total unpaid contributions for 2019. Here’s a tweet thread which purports to show the text of an email sent out to staff by the UN Secretary-General, António Guterres:
In news of other diplomatic woes, UN staff were informed by email last night the organisation will run out of money by the end of October. @antonioguterres informed them that as a result of a 30% underpayment by member states (esp Trump administration) they are nearly insolvent.
The Tax Justice Network has long argued that the United Nations is a far more suitable and democratic forum for resolving international tax rules than the OECD, which we often refer to as a ‘rich countries club.’ The Tax Justice Network CEO Alex Cobham puts these failures to pay into an interesting context:
UN currently needs $230 million to keep functioning.
To put that another way, it's less than 0.05% of the $500bn in revenues lost to corporate tax abuse each year. (An issue the UN is not allowed to work seriously on, because OECD members would rather keep it in their power.) https://t.co/ReowhYmNm4
The United Nations Special Rapporteur on extreme poverty and human rights Professor Philip Alston raised the alarm on extreme inequality levels in the United States and in the UK. His evidence-based research was immediately rubbished by both the US administration and the UK government. Since President Trump was elected in the US, there has been a deliberate attempt to weaken an institution which has told some inconvenient truths to power.
We’re not saying that the UN is perfect. But we think it might interest citizens around the world to know whether or not their country has paid its 2019 contribution:
I interviewed Alex Cobham for the Tax Justice Network’s monthly podcast the Taxcast about his new book out this month, The Uncounted. That full interview will be released shortly in the November 2019 Taxcast, but we discussed this threat to the United Nations, and how a more stable future might be achieved. Here’s an audio clip here, followed by a transcript:
I don’t think very many people are actually seized of the urgency of this, I think because the UN seems very far away for most of us, but you know, there are two things at the moment that are really deeply concerning.
So on the one hand, you know, yes because of particularly the role of the US but actually quite a lot of other countries also not doing their bit, the UN is seriously underfunded and looking at having to make quite serious cuts. But actually because it’s only, only I say, missing a couple of hundred million dollars, right? Pretty small in terms of the national budget of lots of high income countries but big in terms of absolute amounts of money and you can see how that will impact very quickly on lots of people’s employment for example, but also on the organisation’s ability to do stuff.
But look, at the same time that the US in particular is effectively imposing deep cuts on the UN, the US is also blocking, in practical terms, all sorts of measures for progress and pushing through some quite regressive positions on things like women’s rights. How this country, or rather this country’s current administration, is being allowed both to starve the organisation of funds and to continue to exert a completely disproportionate amount of power is slightly mind-boggling.
And this doesn’t feel like a position that can continue. Surely it can do one or the other but not both. But ultimately what it points to in some ways is that we need to accelerate something that should have been happening anyway, which is thinking about how the UN becomes self sustaining.
It cannot survive, because good organisations do not survive on voluntary donations, because donations bring with them influence. And that’s as true for an organisation like the Tax Justice Network as it is for a government.
We know that governments that are more dependent on tax respond more to their own populations. Governments that have large natural resource wealth or aid flows become increasingly unresponsive to their people.
For the UN we need to think about countries making payments on a tax-like basis and with a social contract, countries having benefits that stem from their participation and therefore, you know, having some incentives to take part in that.
But, if the UN continues as I’m afraid it is currently, to look at private sector financing solutions for development and indeed, partnerships for itself, rather than seeing the literally hundreds of billions in revenues lost to avoidance and evasion as an obvious place for it to find the relatively small global budget that it needs, it’s kind of condemning itself to going further down this road.
I think that the people working on illicit financial flows need to start making the case very strongly within the UN that there are revenue streams here that would allow the organisation to have a basis of reserves, at least for a kind of independence that would stop it getting back into the situation that it’s got into now through the extreme behaviour of the Trump administration. Maybe there can be a silver lining if this kicks off some structural changes that make this impossible in future.
But right now everyone should be sounding the alert and asking their governments, their own governments, first of all, if they’ve made their contribution, because so many governments haven’t yet done their bit.”
We asked our newsletter subscribers to complete a short survey to help us make sure the Tax Justice Network is delivering the research, stories and opportunities that matter to them, in the ways that help them best engage in tax justice.
We’ve put together an infographic summarising what people said about our work and why tax justice matters to them. You can view the infographic below.
Based on people’s feedback, we’ve created a new supporter scheme for individuals who want to make a one-off or regular donation to the Tax Justice Network. Our supporters will help us to undertake our research and campaigns to expose corruption, fight vested interests and build a fairer global economy by providing us with predictable, unrestricted funding.
Fighting for tax justice
Corporations and wealthy elites have made historic levels of inequality possible by taking over the tax systems of countries around the world, turning tax policy into a tool that prioritises the interests of the wealthy instead of treating the needs of all members of society as equally important. The Tax Justice Network believes a fair world, where everyone has the opportunities to lead a meaningful and fulfilling life, can only be built when we each pitch in our fair share for the society we all want.
Every day, we equip people and governments everywhere with the information and tools they need to reprogramme their tax systems to prioritise the needs of all members of society, over the desires of corporate elites. We need your support, now more than ever, to continue the fight for tax justice. With your help, we need to raise £300,000 to continue our research, advocacy and communications work in 2020, as part of our four-year strategy.
Your donation will make a big impact. We estimate that every $1 invested in the Tax Justice Network may have yielded $1,000 in additional revenues for national governments to spend on reducing inequalities and building strong public services.
Welcome to the twenty-second edition of our monthly Arabic podcast/radio show Taxes Simply الجباية ببساطة contributing to tax justice public debate around the world. (In Arabic below) Taxes Simply الجباية ببساطة is produced and presented by Walid Ben Rhouma and Osama Diab of the Egyptian Initiative for Personal Rights, also an investigative journalist. The programme is available for listeners to download and it’s also available for free to any radio stations who’d like to broadcast it or websites who’d like to post it. You can also join the programme on Facebook and on Twitter.
Taxes Simply #22: how socioeconomic demands are overcoming sectarianism in Lebanon and Iraq
In October 2019, large demonstrations broke out in Lebanon and Iraq, countries that are both governed by sectarian politics. But, this time economic demands have transcended sectarian rhetoric.
In this episode, Lebanese economic researcher Nabil Abdou explains what protestors mean by the “down with the rule of the bank” slogan, and how the tax system in Lebanon encourages rent-seeking at the expense of all other productive sectors. Abdou also explains how demonstrations in Lebanon are organically linked to demonstrations in other Arab and Latin American countries.
In the second part of the programme, we speak with one of the participants of the Iraqi uprising; journalist Karim al-Nur, about the economic motives driving his participation in the demonstrations.
الجباية ببساطة ٢٢ – تجاوز الطائفية بالمطالب الاقتصادية في لبنان والعراق
أهلا بكم في العدد الثاني والعشرين من
الجباية ببساطة. في شهر أكتوبر/تشرين اندلعت تظاهرات واسعة في كلا من لبنان
والعراق، وكلاهما بلاد تحكمهم وتتحكم بهم السياسات الطائفية، لكن هذه المرة جاءت
الكثير من المطالب اقتصادية الطابع متجاوزة الخطاب الطائفي. في هذا العدد نلتقي
بالباحث الاقتصادي اللبناني نبيل عبدو ليشرح لنا تحديدا فحوى شعار “يسقط حكم
المصرف” و كيف أن النظام الضريبي في لبنان قائم على تشجيع الريع على حساب أي
قطاعات منتجة أخرى، فضلا عن ارتباط التظاهرات في لبنان عضويا بتظاهرات في بلدان
أخرى من العالم العربي وأمريكا اللاتينية. في القسم الثاني نلتقي بأحد المشاركين
في الانتفاضة العراقية، الصحفي كريم النور، متحدثا عن الدوافع الاقتصادية لمشاركته
في التظاهرات.
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