Financial Secrecy Index updates and the importance of open data

The Tax Justice Network’s Financial Secrecy Index (FSI) latest edition was published on January 30th, 2018. As always, the FSI offers a ranking of the world’s largest contributors to global financial secrecy as well as narrative reports for most of the most famous secrecy jurisdictions, describing their “tax haven” history and summarizing the FSI findings.

Furthermore, the FSI offers detailed database reports for each of the 112 covered jurisdictions, describing their legal framework on financial transparency and available loopholes. These detailed reports (which contain the corresponding description, source and date for each answer) provide the explanation for the secrecy score of each country as well as additional details on a jurisdiction’s transparency. The secrecy score is one of the two components driving the FSI ranking of each jurisdiction.

The latest edition of the FSI offers the detailed reports not only online and for free (as always), but now also in open data format (downloadable as Excel documents). The FSI also offers two interactive maps to play with the data.

The availability of FSI data in open data format underlines TJN’s commitment to full transparency. We are already beginning to reap the benefits. Committed experts have started to look in-depth at our data and advised us of glitches and other issues that require fixing.

The glitches we have acted upon and ‘fixed’ do not affect the secrecy score of a jurisdiction and the FSI ranking remains the same. However, we cannot rule out that more changes will be required in the future. The FSI team spends considerable amount of time assessing each question (especially those affecting the secrecy score of a country). Contested issues are discussed in the team, and final audits and cross-checks of information take place before publication. Still, the detailed database reports include up to 186 questions and answers for each of the 112 jurisdictions. That’s a lot of questions and, of course, we are human and not immune from error! One strategy to minimise the risk for errors is to release all of our data and sources to the public, for others to use it, to check it and also to question it, and thereby improve it if necessary.

The FSI database is a living document and we have now published a new layout version with some additional fixes (e.g. rephrasing some questions for greater clarity, removing some superfluous items from display, etc.). Once again, we would emphasise that the changes do not affect the secrecy score or the ranking of a jurisdiction.

We welcome others to look in detail at the FSI data and report any question or comment they may have. Those interested in doing this should consider:

-Focus on questions with an asterisk *, because this indicates that the question feeds into the country’s secrecy score and thus affects the jurisdiction ranking.

-The FSI applies the lowest common transparency denominator. This means for example that if a country has many types of companies that are very transparent (e.g. they all must register their beneficial owners), but one type of company  is very secretive, then the secrecy score of the country will be based on the most secretive type, because we understand that anyone engaged in illicit activities would likely use the secretive type. Some may argue that this is misleading, because the secretive type may be the exception, but not the rule. However, this is precisely what the FSI looks for: exceptions, loopholes, ring-fences, gaps or anything that could be exploited to abuse secrecy or tax rules, despite general rules. These exceptions prove that countries – and not the FSI – can be misleading: the apparent high statutory tax rates, or comprehensive transparency measures are usually undermined by fine print loopholes.

All comments received will be analysed and responses given to the commentator, but changes would only apply if a source is provided and the change is consistent with the FSI criteria (e.g. notifying us about the “general rule” or a “best case” will not suffice to change an answer if the loophole or exception still applies). While we cannot guarantee to constantly change the published data, all relevant changes that have not been (publicly) addressed will be implemented in 2019/2020 when we undertake the biannual reassessment of the FSI.

You can access the updated FSI database reports here, and the updated Excel extracts, here. Anybody interested to compare against the previous versions, a zipped archive of the database reports published on 30 January 2018 can be accessed here (to open the xml files, please extract the entire zip in a folder and open with internet browswers. For technical reasons this might only work with PCs, not with MACs – sorry!), and of the old Excel extracts, here.

The EU’s latest agreement on amending the anti-money laundering directive: at the vanguard of trust transparency, but still further to go

Our view on the EU’s latest agreement on amending the anti-money laundering directive is that it’s at the vanguard of trust transparency, but there’s still further to go…

The EU Parliament and Council recently reached an agreement on an amendment to the 4th Anti-Money Laundering (AML) Directive of 2015 that required central beneficial ownership registries for companies and some trusts. Given this agreement, it is likely that the proposed amendment will become the text of the 5th AML Directive (if finally approved by all EU relevant legislative actors). Not only did the 4th Directive (to be amended) suffer from loopholes in relation to companies and trusts, but as the Financial Secrecy Index 2018 edition showed, not all EU countries even managed to transpose it to domestic law on time, or were not compliant with the Directive’s requirements. Continue reading “The EU’s latest agreement on amending the anti-money laundering directive: at the vanguard of trust transparency, but still further to go” →

Empowering rural women through tax justice policies: 62nd session of the UN Commission on the Status of Women

How do we empower rural women through tax justice policies? That’s what we at the Tax Justice Network were at the 62nd session of the UN Commission on the Status of Women to discuss recently at the UN Headquarters in New York City. This annual session is an opportunity for State delegations and other relevant governmental and non-governmental actors to comment on, discuss, and work on issues relating to the advancement of women’s rights globally. This year’s priority theme was  ‘Challenges and opportunities in achieving gender equality and the empowerment of rural women and girls’. It’s the largest global gathering focused on gender equality. The 62nd session involved roughly 11,000 participants, over a hundred official side events hosted by governments, and over four hundred parallel events hosted by non-governmental organisations.

The Tax Justice Network co-sponsored two parallel events. The first, “Tax and Gender Justice: Empowering rural women in mining-affected communities”, was also sponsored by the Global Alliance for Tax Justice (GATJ), Public Services International (PSI), Christian Aid, Center for Economic and Social Rights (CESR), and the Association for Women’s Rights in Development (AWID). The panel highlighted the experiences of activists and campaigners from Africa and South America in challenging both global macroeconomic structures and national policies that allow extractive companies to erode women’s rights through environmental degradation (rights to land, water), displacement (right to housing), profit shifting (less funding for provision of public services), and corporate capture of the state.

The second session, “Taxing Rural Women in Developing Countries: Worst and Best Practices sponsored by the Feminist Legal Studies Department at Queen’s University (Canada) Faculty of Law and the Tax Justice Network, focused on how tax regimes such as property tax, value added tax, income tax, and corporate tax disproportionately affect and disadvantage women, and especially rural women. It also explored the issue of ‘control’ and ‘influence’ in the creation of these tax regimes (hint: it’s big corporates) and and noting how few of its influencers are women. In the words of one of the panelists, Professor Kathleen Lahey, “women are still trying to escape the last economy. Women are still trying to escape feudalism in some places.”

So, how will women fare in this ‘corporate’ economy where corporate interests have captured states and their most effective economic re-distributive tools of taxation and tax policy making at the highest levels? This is the question tax justice and gender justice communities need to address. How will we tackle those forces which we consider to be so undermining for women?

This is an emerging issue only just beginning to be understood by policy makers and influencers and linking macroeconomic policies to women’s rights seemed like a marginal concern within the broader gender rights discussion at UNCSW. Instead, policy advocacy efforts in the realm of economic policy focused mostly on microeconomic issues like financial inclusion, access to [micro]credit, and access to financial literacy education. At the macroeconomic level, the discussion centred on issues of [increased] female labour force participation and [freedom from] unpaid care work, often used as a kind of shorthand suggesting women’s economic empowerment.

Substantively missing from this critical global gathering was discussion on the opportunities to extend literacy and analysis on the impacts of tax regimes (i.e. low corporate tax rates, joint filing of income taxes, VAT), international financial structures (i.e. trusts, secrecy jurisdictions, profit shifting) and tax evasion on the full realisation of women’s rights including economic empowerment.  Wrongly, these concepts are seen as ‘far away’ from the grassroots reality of women. This is perhaps because the mechanisms and pathways of these impacts are deemed too complex by a broad swathe of women’s rights advocates as these concepts require a level of theoretical literacy that can be hard to communicate in orthodox models and language. Moreover, the ability to demystify these concepts is another way to dismantle the vested interests that want to keep this understanding out of the hands of women through exclusive language and use of jargon.

The inclusion of illicit financial flows is a foot in the door for tax justice and gender justice advocates; it challenges state parties and requires them to question what is being lost (from the funding pot) and how. This can help bring tax justice in from the margins of the debate, but not without the tax justice movement doing more to build alliances at the grassroots levels in order to mainstream the idea and create better and simpler understandings of the complex and myriad ways that macroeconomics impacts women’s rights. These issues are key to how we discuss funding the realisation of rights.

The document summarising the outcomes of the 62nd session of the UN Commission on the Status of Women makes reference to domestic resource mobilisation, official development assistance and very importantly, the need to combat illicit financial flows (s43). In the context of UNCSW, the inclusion of illicit financial flows is a big win and is a result of concerted hard work by a small group of macro-economic policy warriors.

Responsibility for funding the realisation of rights is often couched in what can be positively realised in terms of domestic resource mobilisation and official development assistance. In other words, instead of looking at what’s being lost and could be utilised, the focus is often on how much money is coming in and can be made available to fund the realisation of rights. So, all eyes are on the 10 tax dollars coming in that can be used for development assistance, not on the 8 dollars being lost to tax evasion, illicit financial flows etc.

Last but not least, multinational corporations have shown us that they’re not going to behave well when it comes to paying fair taxes, or police themselves in this area. Section 46 (o) of the outcome document says the Commission “emphasize[s] the need for business enterprises, including transnational corporations and others, to identify, prevent, mitigate and account for human rights abuses by their operations, products or services on the wellbeing of women and girls in rural areas and provide for or cooperate in their remediation”

We agree, and it’s what we, and many others have been advocating for many years. However, it is critical that we continue to build the capacity to hold these transnational corporations to account through more targeted advocacy and campaigning and leveraging international instruments such as the reporting structure of Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) to bring public pressure on them.

Your emails and us: an important notice

New European Union regulations for personal data protection are coming into force on the 25th May 2018. At the Tax Justice Network we’re committed to sharing our ideas and research with a broad global audience, in pursuit of tax justice across the world. We do some of this through our email list of subscribers to whom we send details of the latest tax justice news, research and events, our own commentaries, blog posts, and monthly podcasts. It’s a great way to catch up for those who want to keep track of things quickly in a kind of ‘one-stop shop’. Continue reading “Your emails and us: an important notice” →

A lower effective corporate tax rate is associated with a lower rate of job creation: new research

We’re often told that cutting corporate tax rates will lead to the creation of more jobs. We all want to see more jobs created but what does the evidence say about that? Australian economist and Member of Parliament Andrew Leigh has recently published new research on the subject which makes for interesting reading. His research looks at data for 1,000 profitable Australian firms, comparing their tax rates with the pace of job creation. The data shows that companies that pay less tax actually tend to create fewer jobs. Continue reading “A lower effective corporate tax rate is associated with a lower rate of job creation: new research” →

Edition 3 of the Tax Justice Network Arabic monthly podcast/radio show الجباية ببساطة

Here’s the third edition of our new 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 It’s available for listeners to download and it’s also available for free to any radio stations who would like to broadcast it. You can also join the programme on Facebook and on Twitter.

Edition 3:

Why has the democratic transition failed to achieve social justice in the Arab region? We discuss this topic with Mr.Abdessatar Mabkhout, an international consultant and a financial analyst from Tunisia, and El Mehdi Fakir, an economist and a strategy and risk management consultant.

لماذا فشل الإنتقال الديمقراطي في إرساء عدالة إجتماعية في المنطقة العربية؟

هذا  هو التساؤل في العدد الثالث لبرنامج “الجباية ببساطة” الذي إستضاف المستشار المالي عبد الستار مبخوت من تونس والمستشار والخبر الجبائي المهدي فقير من المغرب للنقاش فالموضوع.

“الجباية ببساطة” برنامج إذاعي باللغة العربية يهدف لنشر ثقافة العادلة الجبائية في المنطقة العربية. يقدمه وليد بن رحومة وتنتجه شبكة العادلة الضريبية

OECD rules vs CRS avoidance strategies: not bad, but short of teeth and too dependent on good faith

The OECD’s Model Mandatory Disclosure rules for CRS avoidance strategies are not bad in our opinion, but short of teeth and far too dependent on good faith by rogue intermediaries and taxpayers…

On March 9th, 2018 the OECD published the Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures and an FAQ. They are a set of rules to be adopted by interested countries, requiring intermediaries and taxpayers to report on schemes that could be used to avoid reporting under the Common Reporting Standard (CRS) for automatic exchange of banking information. This is a step in the right direction, including the intention to consult widely. (Yet as we’ve pointed out before, and continue to do so: the fact that the standard has been drawn up without wide consultation, and by excluding developing countries, is still casting its shadow over it all, as issues of relevance continue to be ignored – see more details here, here and here). We sent our proposals on the Mandatory Disclosure Rules through the Financial Transparency Coalition. Unfortunately, none of our proposals were taken into account. Continue reading “OECD rules vs CRS avoidance strategies: not bad, but short of teeth and too dependent on good faith” →

How come Mauritius is the biggest foreign investor in India?

We’re pleased to share a new study by Suraj Jaiswal for the Centre for Budget and Governance Accountability on Foreign Direct Investment in India and the role of tax havens. As their summary of this study says:

Governments across the world are trying to attract Foreign Direct Investment (FDI) as a policy tool to promote growth, employment, etc. India has also adopted policies for promoting FDI and has seen significant increase in FDI in the decade of 2000 and onwards. In this context, the paper looks at the FDI flows to India between 2004-14. It analyses where the FDI is coming from, especially countries who are regarded as tax havens such as Mauritius and Singapore, and tries to explain the reasons behind it.

The paper makes use of a unique dataset which identifies the ultimate parent/controlling entity of the individual FDI inflows, and thus able to identify which FDI inflow is coming directly from the home country of investor and which are routed through the other country. To find the reasons behind the routing of FDI through a third country, it analyses the secrecy aspect as well as the tax agreement of that country with India to find the linkages between secrecy, tax agreements and routing of FDI to India.”

Continue reading “How come Mauritius is the biggest foreign investor in India?” →

Regulation of Beneficial Ownership in Latin America and the Caribbean

My paper – Andres Knobel – on “Regulation of Beneficial Ownership in Latin America and the Caribbean” which I wrote for the Inter-American Development Bank is now available in Spanish and English here. The paper, published in November 2017, provides an explanation on the concept, obstacles and nuances of the definition of beneficial ownership. It also mentions typical loopholes, the differences in regulation when it comes to legal entities or trusts, and what to do when the ownership chain contains a mix of different types of legal structures.

For newcomers, the paper also explains the importance of beneficial ownership for tackling many of the worst type of abuses and crimes. The annex, for instance, shows how beneficial ownership could be key to resolving a scheme involving tax evasion, corruption, money laundering, round-tripping and market abuse:

The second part of the paper assesses beneficial ownership regulation in 26 countries, quoting each country’s definitions of beneficial owners of companies and trusts, and assessing whether those definitions are compliant with international standards (e.g. what threshold they use, do they cover all the parties to a trust, etc).

Most of the Tax Justice Network’s work (e.g. the Financial Secrecy Index) considers beneficial ownership registration with a government authority to be the only acceptable standard. This paper checks availability of beneficial ownership regulation in different countries, and whether they are compliant with the OECD’s Global Forum’s and the Financial Action Task Force (FATF)’s much less demanding standards. According to these organisations, as long as beneficial ownership is available and authorities may ask for it, that’s considered good enough.

Hopefully in the near future, both the OECD and the FATF will join us, and other civil society organisations in considering that the only acceptable standard should be beneficial ownership registration in public registries available in open data format.

Welcome oligarchs, erode democracy: our March 2018 podcast

In this month’s Taxcast: They say history is written by the victors. So how can we rethink the way we use words about tax havens that reflect the reality of what’s really happening? We talk to Alain Deneault about his new book in which he writes about ‘laundering with language’ – Legalising Theft: a short guide to tax havens.

Plus:

Produced and presented by Naomi Fowler, featuring John Christensen of the Tax Justice Network and author, philosopher and sociologist Alain Deneault. Continue reading “Welcome oligarchs, erode democracy: our March 2018 podcast” →

PRESS RELEASE: European Commission digital tax plan is a nail in the coffin for OECD tax rules

The Tax Justice Network welcomes the European Commission’s new measures to combat tax abuses in the digital economy – in particular, the intention to ensure taxes are paid in the places where business is done, and where profits are really made.

For the last decade, some of the worst offenders in the world of corporate tax dodging have been the digital giants, companies like Google, Facebook, Amazon and Apple. These companies present a particular problem for governments, in that so much of their business takes place online, making it easier for them to locate their profits offshore.

Today’s main announcement is the introduction of a ‘Digital Services Tax’. This short-term measure will apply a 3% tax on the revenues of companies related to specific online services, introducing the concept of a virtual ‘permanent establishment’ so that companies become taxable in jurisdictions where they have users – even if there is no employment or tangible assets.

An analysis of several major digital services companies operating in Europe for the Tax Justice Network reveals that such a tax would be roughly equivalent to an effective corporation tax rate of around 10%.

The European Commission estimates that digital services companies currently pay an effective tax rate of just 9%, whilst companies operating in the rest of the economy pay an effective rate of 23%.

However, there have been many well publicised cases demonstrating how some companies have used accounting tricks to get their tax rate down to close to zero. As such, the new measures will set a limit, preventing the most extreme abuse.

In addition, the Commission has announced a longer-term aim to align profits of digital companies much more fully with the location of their real economic activity. In keeping with the ongoing work to introduce a Common Consolidated Corporate Tax Base in the EU, such a measure would ensure that taxable profits were allocated in proportion to EU members’ share of activity.

This confirms the intention of the EU to break, comprehensively, with the OECD’s international tax rules – which require adherence to economically illogical transfer pricing rules, with profit divided between multinational groups’ subsidiaries on the basis of contrived, theoretical ‘arm’s length prices’.

Alex Cobham, chief executive of the Tax Justice Network, said:

“The European Commission’s digital tax directives are a welcome step. Not only do they put an immediate limit on the scale of these companies’ tax abuses, but they also set the course for the radical shift in international tax rules that we have campaigned for since our formal inception in 2003 – namely, the abandonment of the arm’s length principle and the switch towards unitary taxation of multinationals.”

Liz Nelson, a director of the Tax Justice Network, said:

“The EU is flexing its muscles, acting against OECD norms to protect its tax base, because it has the power to do so. But the whole world needs to make that shift, so that lower-income countries too can protect their tax base and support the progressive realisation of human rights to which the UN Sustainable Development Goals framework commits us all. Ultimately, this requires that tax policy be set in an international forum, breaking the rich countries’ hegemony, in order to allow all countries to act against multinationals’ tax abuse.”

New report: German-African research linking illicit and criminal financial flows with global poverty

The Tax Justice & Poverty research project is a co-operative effort between three institutions run by the Jesuit Order of the Catholic Church: the Jesuitenmission based in Nuremberg (Germany), the Jesuit Centre for Theological Reflection in Lusaka (Zambia) and the Jesuit Hakimani Centre in Nairobi (Kenya). Work started in 2012 and Dr. Jörg Alt of Jesuitenmission summarises some of the conclusions in this short version of the main report on their attempt to bring together aspects of joint interest arising from work in three very different countries. Continue reading “New report: German-African research linking illicit and criminal financial flows with global poverty” →

Our March 2018 Spanish language podcast: Justicia ImPositiva, nuestro podcast, marzo 2018

Welcome to this month’s latest podcast and radio programme in Spanish with Marcelo Justo and Marta Nuñez, downloaded and broadcast on radio networks across Latin America and Spain. ¡Bienvenidos y bienvenidas a nuestro podcast y programa radiofónica! (abajo en castellano).

In this month’s programme:

Continue reading “Our March 2018 Spanish language podcast: Justicia ImPositiva, nuestro podcast, marzo 2018” →

Questions raised over offshore dealings of Serbian PM’s former company.

The Croatian political magazine, Nacional, is running a story which implicates the International Finance Corporation in a deal involving offshore companies and more than a hint of a conflict of interest in Serbia. One of the main protagonists in the deal is the Serbian Prime Minister, Ana Brnabic.

As with most offshore stories, the long and complicated twists and turns of the strings of offshore companies involve can be hard to follow but some facts emerge that at the very least highlight the severe deficiencies in the management of the international development finance sector in managing risk in their investments.

The basic story is as follows:

Prior to entering the Serbian Government, Ana Brnabic worked for an energy company that was investing in wind farms in Serbia, Continental Wind Serbia. Continental Wind had an exceptionally poor relationship with the Serbian Government. In 2015 the company was involved in a major scandal when the wife of its founder, Mark Crandall (one of the founders of Trafigura), was recorded in a phone conversation telling an opposition politician in Serbia that Continental had been asked to pay a bribe to the director of Serbia’s national energy distribution company in order to connect their wind farm to the grid. The man who was alleged to have requested the bribe was a close friend of the then Prime Minister of Serbia, Alexander Vucic.

Very shortly afterwards, Vucic visited Washington DC and a group of Congressmen organised a letter to Vice-President Joe Biden outlining allegations of corrupt practices in the country under his leadership. Vucic suggested that Continental was behind the letter, and wanted to use it as leverage to help win projects, saying: “Some want to build wind farms in Serbia where there was no proper regulation, with the idea of selling electricity at three times the market price…. They wished to win this deal at any cost”.

Brnabic, as the head of Continental in Serbia held a press conference denying that the company had been involved in any wrongdoing, stating that the bribery allegations were false. The scandal ended there.

Ten months later, in August, 2016 Brnabic was appointed by Vucic to be the Minister of Public Administration (taking over from the sister of Crandall’s wife). The following year she was surprisingly elected by the Serbian Parliament to become Prime Minister, when Vucic became President. During that time the relationship between Continental and the Government of Serbia had suddenly thawed. One affiliate of Continental won a 12 year contract to sell energy into the Serbian grid at a fixed price. Before the contract was signed the government amended its legislation to introduce greater price incentives for wind power.

This culminated in the launch of a major wind power project in 2017, funded by 190m Euro in loans from the International Finance Corporation and the European Bank for Reconstruction and Development. The project launch was attended by Alexander Vucic himself.

Questions to answer

This kind of potential conflict of interest – political decisions being key to private returns, and individuals associated with private companies holding high political positions – should raise eyebrows. Add to this the fact that all of these investments were structured though highly murky offshore structures – involving shell companies and trusts in Malta, Luxembourg, Cyprus, Guernsey and Delaware. Structures that Ms Brnabic appears to have been, at the very least, aware of.

One might think, what on earth is the IFC doing getting involved in such a deal? As we have reported before, the IFC is all too comfortable with the use of tax havens to structure its investments. In this case a spokesperson for the IFC told Nacional:

“As with all projects funded by IFC, IFC undertook a thorough due diligence of the project, including the legitimate use of intermediary jurisdictions, to ensure that it meets all IFC investment criteria.”

The EBRD said:

“As with all projects funded by the EBRD, we undertook a thorough due diligence of the project, including the legitimate use of intermediary jurisdictions, to ensure that it meets all our investment criteria.”

Now there is no evidence that Ana Brnabic personally benefited from the deals between her former employer and the government, and she has said that she was not involved in any decisions made by the government of Serbia that concerned these investments by Continental.

Her statement to Nacional was as follows:

“I was not involved in creating the ownership structure outside of Serbia and I have no idea what it is… I have reported to the Anti-Corruption Agency that I was the CWS Director and that I do not want to have any influence on any decisions that generally concern the policy of renewable sources in Serbia. As the Minister of Public Administration and Local Self-Government, I absolutely was not involved or had no contact points with the legislation concerning renewable energy sources…. I was not personally involved in drafting and accepting regulation on state incentives as I was not in the Government at the time….

All taxes were paid to the Republic of Serbia and we always tried to be a socially responsible company, as best confirmed by numerous donations and contracts with local government that part of the company’s profit is paid directly to the budget of the municipalities.”

But isn’t the real issue this: Large scale infrastructure projects rely on key government decisions in order to be viable, at which point the owner is granted stable, often taxpayer-funded, long term profits. In this particular case the benefits appear to have been particularly generous. In a world where people move between the public and private sector frequently, and particularly in smaller economies where the pool of people working at the top of government and in business is small, there exists the potential for huge conflicts of interest.

Policy responses

In this context there needs to be a much greater obligation placed on these companies to be transparent. It is not good enough for the IFC and EBRD to simply say ‘we looked at it, and trust us, it’s all fine’.

Large international financial institutions should use the market power they have to drive out financial secrecy, not to acquiesce with it – otherwise the kinds of scandals being reported in Serbia today will only continue.

At the national level, there is a full policy agenda. Alex Cobham, chief executive of Tax Justice Network, told Nacional that this deeply worrying story of financial secrecy and the mingling of public and private interests confirms the importance of key transparency policies, in order to protect the public from the risks of corruption and tax abuse.

“First, it is crucial that we have public registers of the ultimate beneficial ownership of companies and of trusts and foundations. Such a measure, now required in the EU through the revised Anti Money Laundering Directive, is the new international standard. Relatedly, governments should only allow companies to do business in their countries if they publish their true ownership and their accounts. At the same time, politicians and senior civil servants must be required to declare publicly their assets to guard against conflicts of interest.

“Secondly, this case makes clear that all public contracts must be in the public domain. There can be no good reason to prevent the public seeing how their own money is being spent by their elected representatives – and that logic extends equally to subsidies and tax incentives. The importance of incentives for the global switch to renewable energy makes this an industry of particular concern, likely to attract unscrupulous operators with no interest in sustainable development,” Cobham said.

“Finally, this story highlights the shocking failures of the World Bank’s IFC, and of the EBRD. These are institutions that claim to invest for the public good, but consistently refuse to ensure financial transparency or appropriate tax behaviour of their projects – and so once again find themselves associated with risks of corruption and tax abuse. Their policy choice to accept financial secrecy regardless of the public harm is shameful,” he added.

Now you see me, now you don’t: using citizenship and residency by investment to avoid automatic exchange of banking information

On February 19th, the OECD launched a consultation entitled “Preventing abuse of residence by investment schemes to circumvent the CRS”. It was about time. Since 2014, we have written several papers and blogs (here, here, here, here and here) explaining how residency and citizenship schemes offered by countries can be abused to avoid automatic exchange of bank account information established by the OECD’s Common Reporting Standard (CRS). Continue reading “Now you see me, now you don’t: using citizenship and residency by investment to avoid automatic exchange of banking information” →

Plazo abierto: Conferencia anual #tjn18, Lima

Click here to read this in English

El plazo de inscripción está ahora abierto para nuestra conferencia anual, que este año tendra lugar en Lima del 13 al 14 de junio. ¡Regístrese ahora y lo veremos allí! Los detalles completos, incluido el programa, están a continuación, junto con los contactos para cualquier pregunta o comentario.

La conferencia 2018 de la Tax Justice Network, que forma parte de una serie anual de conferencias que se remonta al 2003 y que es organizada conjuntamente con la Friedrich-Ebert-Stiftung (FES) y Latindadd, mostrará la investigación de vanguardia de la región y otras latitudes, reuniendo a investigadores, académicos, periodistas, personal político de organizaciones de la sociedad civil, consultores y profesionales, políticos electos y sus investigadores, funcionarios gubernamentales y de organizaciones internacionales. El propósito es facilitar la investigación, el debate y la discusión de mentalidad abierta, generar ideas y propuestas para informar y dar forma a las iniciativas políticas y a la movilización. La conferencia se llevará a cabo en español e inglés, con interpretación directa e inversa.

Tema de la Conferencia

Los impuestos son una herramienta crucial para combatir las desigualdades, redistribuir los ingresos y recaudar ingresos para el gasto público. Pero la soberanía de los Estados para llevar a cabo tales políticas se ve ampliamente socavada por la capacidad de las elites y las empresas multinacionales para ocultar o eliminar sus ingresos de la red impositiva; por los patrones más amplios de corrupción; y por su presión en contra de las políticas de impuestos directos sobre la renta, los beneficios y las ganancias de capital. Si bien se reconoce que América Latina ha tenido logros importantes al revertir el crecimiento de la desigualdad de ingresos en los últimos años, esa tendencia puede debilitarse, y muchos países de la región siguen exhibiendo una alta desigualdad y una redistribución débil.

Los Paradise Papers han confirmado una vez más cómo los individuos ricos ocultan sus activos y flujos de ingresos en jurisdicciones de secreto financiero (“paraísos fiscales”), y cómo las compañías multinacionales son capaces de reducir su obligaciones tributarias a través de una serie de formas en gran medida ocultas, aprovechando los vacíos en las normas tributarias internacionales para trasladar sus ingresos al extranjero, y también haciendo que los gobiernos se enfrenten entre sí para obtener exenciones fiscales. Los gobiernos también pueden ser reacios o incapaces de imponer medidas fiscales verdaderamente progresistas frente a la resistencia de las élites.

Pero el mundo está cambiando. El fracaso del proyecto de la OCDE sobre Erosión de Base imponible y traslado de beneficios (BEPS, por sus siglas en inglés) para reducir la evasión y elusión fiscal multinacional ha llevado a una mayor presión para que se produzcan cambios reales en las reglas, con países de la región respondiendo de diversas maneras – con algunas economías importantes buscando su ingreso en la OCDE, y otras como Ecuador centrándose completamente en las opciones de la ONU para que un foro más representativo considere cambios en las reglas. Mientras tanto, los esfuerzos para poner fin a la propiedad secreta han progresado significativamente, aunque la mayoría de los países que no pertenecen a la OCDE siguen excluidos de los acuerdos para el intercambio automático de información financiera, y los registros públicos de propiedad real para empresas, fideicomisos y fundaciones no están todavía muy extendidos. Argentina, que preside el G20 en el 2018, tiene la oportunidad de mostrar un liderazgo dinámico en nombre de la inclusión.

Para avanzar en la lucha contra las poderosas desigualdades que socavan los derechos humanos, entre ellas los de las mujeres y los grupos etno-linguísticos marginados, es preciso abordar estos importantes desafíos políticos a nivel nacional, regional y mundial.

 

Agenda Provisional

PRIMER DIA – 13 de Junio de 2018

08h30 – 09h00 Registro y café

09h00 – 09h30 Plenaria: Bienvenida, introducción y marco general: Desigualdad e injusticia fiscal #tjn18

09h30 – 11h00

Primera sesión plenaria: Desigualdades y justicia fiscal

Moderador: Dereje Alemayehu (Global Alliance for Tax Justice, Ethiopia)

11h00 – 11h30 Café

11h30 – 13h00

Segunda sesión paralela A: Justicia Fiscal: Investigaciones teóricas

Moderador: pendiente de determinar

Segunda sesión paralela B: Exenciones fiscales y carrera a la baja

Moderador: pendiente de determinar

13h00 – 14h00 Almuerzo

14h00 – 15h30

Tercera sesión paralela A: Justicia Fiscal desafío de las desigualdades

Moderador: pendiente de determinar

Tercera sesión paralela B: Esconder la riqueza individual: Viejos y nuevos desafíos

Moderador: pendiente de determinar

15h30 – 16h00 Receso

16h00 – 17h30 Cuarta session plenaria: Justicia Fiscal y derechos de las mujeres

Moderador: pendiente de determinar

 

DIA DOS – 14 de Junio de 2018

08h50 – 09h00 Bienvenida Segundo día

09h00 – 10h30 Quinta session plenaria: Fiscalidad y género (Colombia, Ecuador, Uruguay, Bolivia and Venezuela)

Moderador: Maria Valdes Fernandes (FES)

10h30 – 11h00 Café

11h00 – 12h30

Sexta sesión paralela A: El aporte fiscal de la minería y comentarios sobre la erosión de la base gravable y traslado de beneficios en la industria extractiva.

Moderador: Victor Garzon (GIZ, Germany)

Sexta sesión paralela B: Comercio e injusticia tributaria

Moderador: pendiente de determinar

12h30 – 14h00 Almuerzo

14h00 – 15h00

Sétima Sesión paralela: A: Lavado de dinero: Luces sobre Kenia

Moderador: pendiente de determinar

Sétima Sesión paralela B: Flujos financieros ilícitos: Estimaciones y casos de estudio

Moderador: pendiente de determinar

15h00 – 15h30 Café

15h30 – 17h00 Octava session plenaria: Análisis internacional de la justicia fiscal

Moderador: pendiente de determinar

17h00 – 17h30 Sesión de cierre: Reflexiones and una mirada adelante 

 

Inscripción

Español: https://www.eventbrite.co.uk/e/paraiso-perdidodesigualdad-e-injusticia-fiscal-esp-registro-tickets-44017360109

Ingles: https://www.eventbrite.co.uk/e/paradise-lost-inequality-and-tax-injustice-eng-registration-tickets-43888237901

Comuníquese con Claudia Kremer – [email protected] si tiene preguntas, comentarios o inquietudes acerca del evento. Si desea comunicarse en inglés, envié sus preguntas a Fariya Mohiuddin – [email protected]

Registration open for annual conference #tjn18, Lima

Haga click aquí para la versión en Español

Registration is now open for our annual conference, which this year will be held in Lima on 13-14 June. Sign up now, and we’ll see you there! Full details including the programme are below, along with contacts for any questions or comments.

The 2018 conference of the Tax Justice Network, part of an annual series dating back to 2003 and co-organised with the Friedrich-Ebert-Stiftung (FES) and Latindadd, will showcase cutting-edge research from the region and beyond, bringing together researchers, academics, journalists, policy staff of civil society organisations, consultants and professionals, elected politicians and their researchers, government and international organisation officials. The purpose is to facilitate research, open-minded debate and discussion, and to generate ideas and proposals to inform and shape political initiatives and mobilisation. The conference will be held in Spanish, Portuguese and English, with full translation.

Conference Theme

Tax is a crucial tool to challenge inequalities, redistributing incomes and raising revenue for important public spending. But the sovereignty of states to pursue such policies is comprehensively undermined by the ability of elites and multinational companies to hide or otherwise remove their income from the tax net; through broader patterns of corruption; and by their lobbying against policies for direct taxation of income, profits and capital gains. And while Latin America is widely recognised as having had a period of success in reversing the growth of income inequality in recent years, that trend may be weakening – and many countries in the region continue to exhibit both high inequality and only weak redistribution.

The Paradise Papers have confirmed once against how wealthy individuals hide their assets and income streams in financial secrecy jurisdictions (‘tax havens’), and how multinational companies are able to reduce their tax liability in a range of largely hidden ways, exploiting the gaping flaws in international tax rules to shift their income abroad, and also playing governments against each other to obtain tax breaks. Governments may also be unwilling or unable to impose genuinely progressive tax measures in the face of elite resistance.

But the world is changing. The failure of the OECD Base Erosion and Profit Shifting (BEPS) project to curtail multinational tax avoidance has led to greater pressure for real changes in the rules, with countries in the region responding in a range of ways – with some major economies seeking OECD entry, and others such as Ecuador putting their full focus on UN options for a more fully representative forum to consider rule changes. Meanwhile, efforts to end secret ownership have made significant progress – although most non-OECD countries remain excluded from arrangements for the automatic exchange of financial information, and public registers of beneficial ownership for companies, trusts and foundations are not yet widespread. Argentina, chairing the G20 in 2018, has an opportunity to show dynamic leadership in the name of inclusion.

These critical policy challenges must be addressed at national, regional and global levels, if progress is to be made against the powerful inequalities that undermine human rights – including importantly those of women and marginalised ethnolinguistic groups.

Provisional Programme

DAY ONE – 13 June 2018

08h30 – 09h00 Registration and coffee

09h00 – 09h30 Plenary: Welcome and introductions: Desigualdad y injusticia fiscal #tjn18

09h30 – 11h00 Plenary session One: Inequalities and tax justice

Chair: Dereje Alemayehu (Global Alliance for Tax Justice, Ethiopia)

11h00 – 11h30 Coffee

11h30 – 13h00

Parallel Session 2A: Tax justice: Theoretical inquiries

Chair: TBD

Parallel Session 2B: Tax breaks and the race to the bottom

Chair: TBD

13h00 – 14h00 Lunch

14h00 – 15h30

Parallel session 3A: Tax justice challenges of inequalities

Chair: TBD

Parallel Session 3B: Hiding individual wealth: Old and new challenges

Chair: TBD

15h30 – 16h00 Tea break

16h00 – 17h00 Plenary session Four: Tax justice and women’s rights

Chair: TBD

 

DAY TWO – 14 June 2018

08h50 – 09h00 Welcome to day two

09h00 – 10h30 Plenary session Five: Taxation and gender (Colombia, Ecuador, Uruguay, Bolivia and Venezuela)

Chair: Maria Valdes Fernandes (FES, Colombia)

10h30 – 11h00 Coffee

11h00 – 12h30

Parallel session 6A: El aporte fiscal de la minería y comentarios sobre la erosión de la base gravable y traslado de beneficios en la industria extractiva.

Chair: Victor Garzon (GIZ, Germany)

Parallel Session 6B: Trade and tax injustices

Chair: TBD

12h30 – 14h00 Lunch

14h00 – 15h00

Parallel Session 7A: Money-laundering: Spotlight on Kenya

Chair: TBD

Parallel Session 7B: Illicit financial flows: Estimates and case studies

Chair: TBD

15h00 – 15h30 Coffee break

15h30 – 17h00 Plenary session Eight: International analyses of tax justice

Chair: TBD

17h00 – 17h30 Closing Session: Reflections and looking ahead

 

How can I contact the organiser with any questions?

Please contact Fariya Mohiuddin- [email protected] with any questions, comments, and concerns that you may have. If you would like to communicate in Spanish, please direct your questions to Claudia Kremer – [email protected]. 

Registration details

English: https://www.eventbrite.co.uk/e/paradise-lost-inequality-and-tax-injustice-eng-registration-tickets-43888237901

Spanish: https://www.eventbrite.co.uk/e/paraiso-perdidodesigualdad-e-injusticia-fiscal-esp-registro-tickets-44017360109

 

 

 

Video: discussion on tax revenue losses, Apple’s tax avoidance and ‘state aid’

We’re sharing here the opening panel discussion of the June 2017 European Financial Congress, Eastern Europe’s largest finance congress in Gdansk, Poland.

The theme of the panel was “Tax solidarity in the world and in the EU” and it features visiting Professor at Oxford University Philip Baker QC and the Tax Justice Network’s Markus Meinzer discussing tax revenue losses to Poland due to corporate tax avoidance, Apple’s tax avoidance and the related ‘state aid’ ruling. The discussion considers the following key questions: Continue reading “Video: discussion on tax revenue losses, Apple’s tax avoidance and ‘state aid’” →

Bring in new tax to curb avoidance by multinationals: new report

A new report out today by Grace Blakeley from the progressive policy think tank IPPR argues for a re-balancing of the business taxation system. Titled Fair dues: Rebalancing business taxation in the UK, the report proposes:
a series of reforms aimed at achieving a fairer burden of taxation between different kinds of businesses and taxpayers, while supporting employment, wages and investment. It proposes a fiscally-neutral increase in the rate of corporation tax, alongside a reduction in employers’ National Insurance contributions; and an increase in the base for corporation tax through a simplification and reduction in reliefs and allowances. It also proposes the introduction of an Alternative Minimum Corporation Tax in order to reduce profit shifting by multinational corporations, alongside greater support for international efforts to combat tax avoidance.”
Despite its focus on the UK, there are ideas here for other countries to consider. We’re sharing a summary of the report below, and the full version is available here.

Continue reading “Bring in new tax to curb avoidance by multinationals: new report” →

Tax Justice is a feminist issue: call on governments to act

We celebrate International Women’s Day today by reaffirming tax as a feminist issue. In advocating for greater tax transparency and accountability we, as feminists, are not only demanding multilateral progressive tax policies and a global financial architecture that recognises and disaggregates by gender, but a complete rethink of the orthodoxy; of what fair taxation policies should look like for greater rights and equality for women. Today we wholeheartedly join the Global Alliance for Tax Justice‘s call to governments for tax justice to advance women’s rights and economic equality, which we share here: Continue reading “Tax Justice is a feminist issue: call on governments to act” →

Taxing water and infrastructure in the UK

Michael Gove, the UK’s Environment Secretary had some harsh words for the water industry recently.

“They have shielded themselves from scrutiny, hidden behind complex financial structures, avoided paying taxes, have rewarded the already well-off, kept charges higher than they needed to be.”

The bit he missed from his speech was, “and the government I am a part of has encouraged them to do exactly that.” Continue reading “Taxing water and infrastructure in the UK” →

Video: the high cost of finance and the finance curse

In this film Dr Gerald Epstein discusses his work on how an oversized financial services sector such as the City of London, or Wall Street, can extract wealth from an economy, leading to lower growth, higher indebtedness, and rising inequality. This talk was given as a keynote lecture at a research workshop on the Finance Curse co-organised by the Tax Justice Network and the Sheffield Political Economy Research Institute (SPERI). Continue reading “Video: the high cost of finance and the finance curse” →