The offshore world and the enablers of capital flight

We’re pleased to share an article from Argentinian Economist Jorge Gaggero which was recently published by Opinion Sur which we’ve adapted in places from the original version. It’s time, he says, for countries in the Global South to act together to address capital flight and the slowness of the world’s biggest economies to reform it. Read on here:

The offshore world and the enablers of capital flight

Jorge Gaggero 17 July, 2017

As main protagonists of the offshore world, global banks, multinational corporations, fiscal havens, large global tax and auditing consulting firms and specialised law firms are the enablers of the capital flight from multinational corporations and the “global rich.” Jorge_Gaggero

Among Southern countries, Argentina is showing signs of early development of the capital flight phenomenon. After four decades of a persistent outflow of resources, the most recent calculations of the stock of offshore wealth of Argentinian-origin in relation to the magnitude of Argentina’s GDP (the gross domestic product representing the annual value of wealth created in the country), show a record high among Latin American countries—shared only with Venezuela. Estimations place Argentina within the top places of the global ranking, the equivalent of almost one GDP accumulated in the offshore world. Around 400-500 billion dollars lie outside the economic system (more than 90% of which is in illegal ways). The annual flight flow represents almost 5 points of GDP, a quarter of the total investment made every year in the country. Continue reading “The offshore world and the enablers of capital flight” →

New research on key role major economies play in global tax avoidance

An important new study on Offshore Financial Centres (OFCs) from the University of Amsterdam has made some fascinating discoveries, challenging, as the Financial Secrecy Index has, the popular misconception that tax havens are only palm fringed little islands and exposing that in fact major economies play a key role in global tax avoidance. Specifically they’ve mined data that highlights the central role of ‘conduit’ and ‘sink’ havens. Enter stage right the United Kingdom and the Netherlands…

In ‘Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network’ economists and computer scientists in the CORPNET research group have used:

“a data-driven method based on network analysis to identify OFCs. Our data covers over 77 million ownership relations, which together form a large network in which value flows from subsidiaries to shareholders. From it we extract millions of global corporate ownership chains (see Figure 2). The resulting fine-grained insight allows us to not only see where value originates and ends up, but also exactly where it originated. This allows us to identify two types of OFCs: 

  • Sink-OFC: a jurisdiction in which a disproportional amount of value disappears from the economic system.
  • Conduit-OFC: a jurisdiction through which a disproportional amount of value moves toward sink-OFCs.”

Continue reading “New research on key role major economies play in global tax avoidance” →

We explore Land Value Tax in the Tax Justice Network July 2017 podcast

In this month’s July 2017 Taxcast: we explore Land Value Tax and the billions in revenue we’re missing out on. Plus:

Continue reading “We explore Land Value Tax in the Tax Justice Network July 2017 podcast” →

Launch of international research collaboration, #AltAusterity

Today is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner.  The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity.

The project comes together following a December, 2016 workshop which brought together national findings on the damage being done under the rubric of austerity – not least, the UK’s persistence with dramatic corporate tax cuts, despite the clear and unrefuted evidence of the lack of benefits the policy brings. (See our Alex Cobham’s presentation slides.)

Over the coming years we will explore austerity in terms of cuts to spending (‘fiscal consolidation’) and revenue (e.g. tax cuts), but also public sector restructuring and labour market reforms. Although there is substantial evidence that austerity harms rather than aids economic growth and that it disproportionately hurts the most vulnerable of society, it remains salient and prominent in everyday political and policy conversations in many countries.  Despite the growing public dissatisfaction with the policy, as expressed through the ballot box and protests.

Continue reading “Launch of international research collaboration, #AltAusterity” →

RB tax avoidance – company calls for public country by country reporting after Oxfam report reveals profit shifting

Oxfam has today released a report on tax dodging by RB, the company formerly known as Reckitt Benckiser and the maker of thousands of well known household products.

The report looks at the 2012 restructuring of the company which saw it set up ‘hubs’ in the Netherlands, Dubai and Singapore, all well known corporate tax havens, and demonstrates the continuing power of the corporate expose as a mechanism for encouraging companies to change their ways. As a result of Oxfam’s work, RB itself is now calling on governments around the world to legislate to compel all multinationals to be transparent about the tax they pay though country by country reporting of key financial data.

Continue reading “RB tax avoidance – company calls for public country by country reporting after Oxfam report reveals profit shifting” →

Post-Panama Papers sunlight on New Zealand Trusts

Wellington,_New_Zealand,_2_March_2007_-_Flickr_-_PhillipC

UPDATE BELOW, 24/07/2017

If you ever wondered what kind of response to a financial transparency law might indicate a corrupted financial secrecy industry, look no further. We reported recently on what’s been happening to trusts in New Zealand in our Offshore Wrapper (our weekly take on tax justice news – for which you can sign up here, don’t miss out). First, here’s what our very own George Turner reported on about a month ago, followed by interesting updates: Continue reading “Post-Panama Papers sunlight on New Zealand Trusts” →

Half measures mean Mauritius will continue to be a tax haven for the developing world

There was news this week that Mauritius has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This is an initiative from the OECD to allow countries to take measures designed to stop tax avoidance by multinational companies and put them into their existing network of tax treaties without renegotiating those treaties.

This is a particularly important measure for a countries like Mauritius. Mauritius has a wide network of tax treaties with African and South Asian countries allowing it to act as a conduit for capital to slip tax freely between the West and the developing world. This is commonly called treaty shopping.

So, the signing of the MLI by Mauritius should be seen as good news. Well, not quite. The MLI does not change the relationship between the signatory and all other countries that have a tax treaty with the signatory. Jurisdictions which are not part of the MLI are not included, and even within the MLI jurisdictions can chose not to modify tax treaties with others in the system. This happens through the publication of each country’s ‘preferences’.

A closer look at Mauritius’s ‘preferences’ shows that a number of vitally important treaty relationships are not covered by the jurisdiction joining the MLI, leaving a number of developing countries vulnerable to companies using Mauritius to shift profits in an attempt to avoid tax.

We have been through the list of Mauritius’s ‘preferences’ in the MLI and Mauritius’s existing treaty network. The jurisdictions which currently have a treaty relationship with Mauritius but are not covered by the MLI are as follows:

AustraliaBotswanaEgypt
IndiaMalaysiaMozambique
NamibiaNepalPakistan
BangladeshChinaRwanda
SenegalSingaporeSri Lanka
ThailandTunisiaUganda
ZambiaZimbabwe

Countries which are not covered by the MLI or do not match in terms of these preferences have to renegotiate their treaties on a bilateral basis to include clauses which prevent the tax abuse. Here things can get complicated too, as there are a range of anti-avoidance measures available to countries, some better than others. In one key area – the anti-treaty abuse rule – an effective option is to apply a “principle purpose test”. (PPT) This test denies the benefits of a tax treaty if one of the principle purposes of a transaction was to gain that treaty benefit. Mauritius has accepted this test as an interim measure in the countries it will implement the MLI with.

However, in bi-lateral negotiations it has said it prefers the limitation of benefit rule, which applies a large number of more technical criteria to the parties completing a transaction and denies treaty benefits to parties which do not meet those tests. Those tests can be a local ownership requirement, for example.

A limitation of benefits rule is much more complicated to administer than than a PPT test, which causes difficulties for developing countries.

Finally, through the MLI system a country does not need to implement all of the anti-avoidance provisions which form part of the MLI. As well as choosing which countries the MLI applies to, a contracting party can also express reservations on specific policy areas which it does not want to implement. Mauritius has a great deal of reservations about MLI provisions, including on measures such as strengthening capital gains tax from the sale of participations in domestic companies (article 9), the transfer of dividends (article 8), and provisions to prevent tax abuse of income from permanent establishments in third countries (article 10), and the artificial avoidance of permanent establishment status (articles 12 and 13).

So whilst Mauritius (and others) may celebrate the signing of the MLI as a great work of spin for this tax haven island, the weakness of the system still allows this jurisdiction to create significant problems for its neighbours in Africa and South Asia.

Our July 2017 Spanish language Podcast: Justicia ImPositiva, nuestro podcast de julio 2017

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 the July 2017 programme:

Guests:

Continue reading “Our July 2017 Spanish language Podcast: Justicia ImPositiva, nuestro podcast de julio 2017” →

G20: Pressure rising on tax haven USA

Whilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice.

It’s so good we quote it in full below. But the key point is in our added italics: the EU (and presumably others) have managed to get the US to sign up to the new international standard for automatic, multilateral exchange of tax information, the Common Reporting Standard (CRS).

The US is currently the only financial centre of any size not to sign up to the CRS.

Further on in the text the communiqué threatens sanctions against countries which do not meet the agreed international standards on tax transparency which include adoption of the CRS. So has the US given up on the opaque road marked ‘Tax Haven USA’?

The logic of the communiqué is clear. If the OECD is serious about enforcing international standards of tax transparency, it must blacklist the US if it fails to adopt the CRS before 2018. This will pave the way for other countries to put in place sanctions against US banks, forcing compliance. Whether the OECD will have the political space, or the guts to do that to its biggest member, is another question altogether. But it’s now clear that the EU is promoting the CRS as the standard it expects the US to reach. The EU blacklisting process will also be watched with interest.

International Tax Cooperation and Financial Transparency: We will continue our work for a globally fair and modern international tax system and welcome international cooperation on pro-growth tax policies. We remain committed to the implementation of the Base Erosion and Profit Shifting (BEPS) package and encourage all relevant jurisdictions to join the Inclusive Framework. We look forward to the first automatic exchange of financial account information under the Common Reporting Standard (CRS) in September 2017. We call on all relevant jurisdictions to begin exchanges by September 2018 at the latest. We commend the recent progress made by jurisdictions to meet a satisfactory level of implementation of the agreed international standards on tax transparency and look forward to an updated list by the OECD by our next Summit reflecting further progress made towards implementation. Defensive measures will be considered against listed jurisdictions. We continue to support assistance to developing countries in building their tax capacity. We are also working on enhancing tax certainty and with the OECD on the tax challenges raised by digitalisation of the economy. As an important tool in our fight against corruption, tax evasion, terrorist financing and money laundering, we will advance the effective implementation of the international standards on transparency and beneficial ownership of legal persons and legal arrangements, including the availability of information in the domestic and crossborder context.

EU-US tax war comes to the G20

The Juncker/Tusk letter of 4 July setting out common positions for the EU at the G20 throws down a direct challenge to the Trump administration, on Tax Justice Network priorities in particular – dealing with tax avoidance, tax evasion and anonymous ownership of companies, trusts and foundations.

Continue reading “EU-US tax war comes to the G20” →

Recovering Africa’s Stolen Assets: from Jersey to Kenya

An interesting event has come to our attention that we’d like to share, taking place at Chatham House in London. Full event details here.

Recovering Africa’s Stolen Assets: Lessons from the Windward Trading Case

A report by the World Bank’s Stolen Asset Recovery programme found that, while nearly $1.4 billion in suspected corrupt assets were frozen in OECD countries between 2010 and 2012, less than $150 million was returned. Recovering stolen assets is of particular importance for sub-Saharan African countries, given the extent of the looting of public funds carried out by corrupt leaders and officials.

Prosecuting international corruption and recovering stolen assets has proved difficult and time-consuming. Both states from which assets have been stolen, and those where these assets are laundered or stored, have struggled to produce results. Continue reading “Recovering Africa’s Stolen Assets: from Jersey to Kenya” →

Will the G20 ever end the global problem of tax avoidance and tax evasion?

Ahead of the G20 Summit in Hamburg this week our own George Turner has published this op-ed in the German newspaper Die Tageszeitung today. The article discusses why, despite sustained political engagement from world leaders, we are still some way from solving the problem of tax avoidance and tax evasion. Here’s an English translation of the article:

Continue reading “Will the G20 ever end the global problem of tax avoidance and tax evasion?” →

Redistributive hypocrisy: The growing dominance of tax haven USA

coffersWe’re delighted to bring you a guest blog by Lukas Hakelberg, a researcher from the University of Bamberg – one of our partners in the EC-funded COFFERS project. The blog outlines the motivation and key findings of a study by Lukas and a colleague, Max Schaub.

We’ve been raising the alarm about the global impact of ‘Tax Haven USA’ as the world’s biggest financial centre, increasingly an outlier, resisting broader trends towards tax transparency. The study by Hakelberg and Schaub uses the Tax Justice Network’s Financial Secrecy Index in addressing the question of whether this behaviour has effectively redistributed financial activity in favour of the US, and at the expense of other secrecy jurisdictions.

Continue reading “Redistributive hypocrisy: The growing dominance of tax haven USA” →

Tax Justice Annual Conference 2017, 5-6 July: Final Programme

#tjn17

GLOBAL TAX JUSTICE AT A CROSSROADS

SOUTHERN LEADERSHIP AND THE

CHALLENGES OF TRUMP AND BREXIT

City, University of London, 5-6 July 2017

The Association for Accountancy & Business Affairs (AABA), City, University of London (CityPERC), and the Tax Justice Network (TJN), are delighted to confirm the programme for next week’s annual conference – the latest in an annual event series dating back to 2003. The events bring 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.

Registration (last few places)

https://www.eventbrite.co.uk/e/global-tax-justice-at-a-crossroads-tjn-aaba-annual-conference-2017-tickets-31976056245

There is a small charge for attendance and refreshments during the two days. For more information contact: [email protected]  Continue reading “Tax Justice Annual Conference 2017, 5-6 July: Final Programme” →

Empty OECD ‘tax haven’ blacklist undermines progress

The OECD has today published a list of “non-cooperative jurisdictions” on tax ahead of the leaders G20 leaders summit in Hamburg, and hailed the “great progress” being made on international efforts to tackle tax evasion. The list only contains one country, Trinidad and Tobago.

The Tax Justice Network condemns the empty ‘tax haven’ blacklist. Far from the success which is being trumpeted, this meaningless gesture instead threatens the genuine progress that the OECD has in fact been making.

The report hails ‘massive progress towards the exchange of information on request standard’, despite the fact that this standard has been superseded by the superior alternative of automatic information exchange. Automatic exchange has been a key part of the Tax Justice Network’s policy platform since our establishment in 2003, and although long dismissed as utopian, is now the basis for OECD’s Common Reporting Standard which will come into action this year.

The key finding of the report is that: “As a result of the significant progress made since April 2016, only one jurisdiction (Trinidad and Tobago) still meets the current criteria to be considered not to have made sufficient progress towards satisfactory implementation of the agreed tax transparency standards.”

The global standard, which is preferred by the OECD is now cooperation through automatic, multilateral exchange of tax information between tax authorities. Many jurisdictions taking part in this system have failed to commit to information sharing outside a small group of rich economies, so there are grave challenges to ensure lower-income countries benefit.

But most worryingly, the biggest financial centre in the world – and the biggest OECD member – has flatly refused to participate in automatic exchange. The USA demands automatic provision of information from all others, and provides only a few countries with anything in exchange under the skewed, bilateral arrangements agreed in support of the Foreign Account Tax Compliance Act (FATCA). The OECD report does note, in the FAQ, the USA’s rejection of the CRS – but erroneously claims that ” the US is automatically exchanging certain information under its many bilateral agreements implementing FATCA and that each of those agreements also includes a commitment to full reciprocity (which would deliver information similar to that exchanged under the CRS).”

Alex Cobham, chief executive of TJN, said:

Over the last few years, the OECD has indeed made great progress in some areas of tax transparency – but today’s announcement is not a part of that, it actively undermines it. Since the financial crisis, the OECD and its members have finally embraced the Tax Justice Network’s longstanding position that only multilateral, automatic exchange of information can support an effective antidote to financial secrecy, and all of the tax abuse, corruption and other crime that goes with it. It’s disheartening then to see the OECD fall back into the old pattern of creating ‘tax haven’ blacklists on the basis of criteria that are so weak as to be near enough meaningless, and then declaring success when the list is empty.

It’s a simple matter to look at the multilateral arrangements for automatic exchange of information that will kick in from this year, and to assess each jurisdiction in terms of the share of the world with which they intend to provide information. This reveals immediately that many of the usual suspects such as Switzerland, including many OECD members, are simply not going to extend transparency further than they absolutely have to. Inevitably, lower-income countries are systematically being excluded. And the elephant in the room? The OECD’s biggest member, the United States, has positioned itself to demand information from everyone else, while refusing to reciprocate. If you were going to produce a tax haven blacklist with only one member, it wouldn’t be a small Caribbean island – it would be tax haven USA.

Notes to editors

  1. A detailed critique of the OECD blacklist approach can be found here: https://www.taxjustice.net/2016/07/20/oecd-another-go-hopeless-politicised-tax-haven-blacklisting/.
  2. For more detail on the emergence of tax haven USA, see: https://www.taxjustice.net/2015/01/26/loophole-usa-vortex-shaped-hole-global-financial-transparency-2/. This piece also includes links to all subsequent updates, to June 2017.

Worst fears realised? Jersey shares ‘old’ records of trusts and foundations

Life’s full of surprises, some pleasant, some not so much. Imagine you had undeclared offshore assets when the global financial crisis struck, and you’ve nervously watched the world move towards TJN ‘s proposal for multilateral, automatic information exchange. Until now you’ve probably felt ok, and that you had a choice between two moves. Either you could say ‘Ok, the game’s up – I’ll use an amnesty or some kind of disclosure facility, and go straight’; or you could decide to keep hidden, using the new loopholes that are being actively promoted in Switzerland and elsewhere.

You probably weren’t worrying too much about the past though. Information exchange will relate to existing holdings, so you just need to get things lined up before it kicks in (from September 2017 or after). But as India’s Economic Times reports,

“The worst fear of those with secret offshore bank accounts and private trusts is coming true — some tax havens are ready to part with ‘old’ records and even details of trusts and foundations that no longer exist.”

Continue reading “Worst fears realised? Jersey shares ‘old’ records of trusts and foundations” →

The 3rd International Conference on Beneficial Ownership Registries in Buenos Aires

IMG-20170613-WA0021

As we mentioned recently on our blog the 3rd International Conference on Beneficial Ownership Registries took place in Buenos Aires on June 21st-22nd at Argentina’s Central Bank. This was another successful event attended by the Tax Justice Network’s Andres Knobel, who reports back to us here on the dicussions there: Continue reading “The 3rd International Conference on Beneficial Ownership Registries in Buenos Aires” →

What is the City of London’s Finance Curse?

We recently blogged on how the Finance Curse is expected to tighten its grip on the British economy in the coming five years.  In this short video, TJN’s John Christensen, who coined the term with author Nicholas Shaxson and worked in offshore finance for many years, explains what the Finance Curse is and how it harms Britain as a whole. Continue reading “What is the City of London’s Finance Curse?” →

UN must defend target to curtail multinational companies’ tax abuse

The Tax Justice Network, The Independent Commission for the Reform of International Corporate Taxation, and the Global Alliance for Tax Justice call on the UN Secretary General to make sure the commitment to action on tax abuses by multinational companies remains part of the new UN Sustainable Development Goals.

Continue reading “UN must defend target to curtail multinational companies’ tax abuse” →

Britain’s first tax justice election? Our June 2017 Podcast

In our June 2017 Taxcast we ask – has the UK just had its first tax justice general election? Why was economic debate around the election so ill-informed? Are we seeing a popular shift towards tax justice in the UK and in the USA? Is this the beginning of the end of our long austerity winter? How much do people REALLY care about taxes, who pays them and who doesn’t?

Featuring: Vanessa Williamson, Governance Studies Fellow at the Brookings Institution and author of Read My Lips: Why Americans Are Proud to Pay Taxes, John Christensen of the Tax Justice Network, Will Snell of Tax Justice UK and with brief appearances by President Donald Trump and Hillary Clinton. Produced and presented by the the Tax Justice Network’s Naomi Fowler.

Continue reading “Britain’s first tax justice election? Our June 2017 Podcast” →

Questions mount for the SFA

As the mess that is the financial collapse of Rangers Football Club continues to play out in the courts, more evidence emerges of financial foul play by the club in the years leading up to the crash. And that evidence confirms the accuracy of what has been reported here, and the critical questions that the Scottish FA continues to refuse to answer.

But that begs a further question: does anyone in the game, be they fan groups or clubs, care enough to do anything about it?

SMALL TAX LIABILITIES: SOME BACKGROUND

In our report, Doing SFA for Fair Play, we found that the Lord Nimmo Smith commission had made a serious error of fact. In its findings the commission determined that Rangers Football Club had gained no sporting advantage over its competitors by offering its players a tax avoidance scheme which allowed them to keep more of their wages.

This finding was based on the proposition that the tax avoidance schemes were lawful and so in theory any other club could have offered their players similar incentives. But in fact, it was already known at that time that one of the two tax schemes (the ‘small tax case’) had been found by HMRC to be unlawful, and Rangers had at no point sought to challenge HMRC’s findings. It was our view that the Scottish Football Association had misled the inquiry as to the nature of Rangers’ tax liabilities.

Our report also looked at whether Rangers should have been allowed to play in Europe in the 2011/12 season, as UEFA rules require that clubs have no outstanding tax liability when they enter the European competition. In our report, we took the view that the use of an unlawful tax avoidance scheme, which HMRC had discovered and was seeking payment for by the time Rangers had to submit their application to play in Europe was not properly taken into account when the club was granted permission to play in Europe. This led to other clubs losing out on the opportunity.

Our report provoked considerable debate as to the timing of the tax liability in the small tax case, and whether the tax bill had formally become “a liability” at the time Rangers submitted its papers to play in Europe.

As a defence to our reporting, senior figures at the SFA briefed the Guardian to say that they had access to private correspondence between HMRC and Rangers showing that HMRC had agreed to extend the payment deadline, and this satisfied UEFA rules.

Now, more evidence has emerged from the Whyte trial which confirms what many of us knew all along – that Rangers knew that they had a tax liability to pay well before they submitted their licence application to play in Europe.

THE WHYTE TRIAL: BUSTING THE SFA’S ALIBI

Recently Craig Whyte, the former owner of Rangers Football Club was acquitted on charges of fraud brought over his purchase of the club in 2011. The prosecution alleged that Mr Whyte lied about how much money he had when he agreed to buy the club in 2011. The sale of the club went though for just £1, but with a commitment of substantial funds to meet the club’s large liabilities.

As part of the defence, Donald Findlay, Mr Whyte’s barrister, got Ranger’s previous owner, Sir David Murray to put on the record the financial state of the club in 2011. Crucially Sir David told the court that the club had an outstanding tax liability of £2.8m (the amount due in the small tax case) and that HMRC were demanding payment. According to Mr Findlay the board of Rangers knew about the small tax case liability from January, and Mr McIntyre, the former finance director put on record that the club had “no defence” in the tax case.

The significance of this, and multiple confirmatory pieces of evidence in the Whyte trial, is that it puts beyond any possible doubt that Rangers knew they had an outstanding tax liability, and one  which they were not going to challenge, at the time that they submitted their licence applicationto play in Europe in 2011.

A CASE TO ANSWER

Previously when questioned on this issue, Stewart Regan, the Chief Executive of the SFA held to the line that Rangers were challenging the bill. That is clearly not an accurate account of events.

So how did the SFA get it so wrong?

Here at the Offshore Game, we find it difficult to understand why there isn’t a queue of clubs, fan groups and journalists, beating a path to Hampden to demand to know which of these is the case.

Is the SFA interested in running a fair competition for all clubs in Scotland? Is it capable?

We asked the SFA whether the evidence in the Whyte trial had compelled them to rethink their position, they did not answer our request for comment.

THE NEXT SHOE DROPPING

Finally, we note that the Supreme Court judgment over Rangers’ appeal of the much bigger tax avoidance scheme (the imaginatively named ‘big tax case’) is due any time now.

The other aspect of our report, Doing SFA for Fair Play, relates to the Nimmo Smith commission’s decision not to consider sporting sanctions against Rangers – despite the evidence of having hidden side letters and the full payments to many of their players for a decade. This rested crucially on the elision of the big and small tax cases, with the erroneous assumption that both were considered valid avoidance schemes by HMRC.

That assumption was untrue at the time of the small tax case. In either case, a pivotal decision rested on a position that the SFA knew at the time to be wrong – because the small tax case scheme was already known to have failed as avoidance.

That the SFA allowed the commission to dismiss the possibilities of docking points, on the basis of information they knew to be wrong, raises serious questions over the SFA’s competence and probity. It also shows the decisions of the commission must be revisited – even if is to consider sporting sanctions and decide against them if they consider the offences to be sporting but not serious.

The pressure on the SFA to act will surely become irresistible if Rangers’ appeal to the Supreme Court is not upheld, since with that the Nimmo Smith commission’s assessment of the big tax case would be finally and definitively overturned. Even setting aside the existing error around the small tax case, it would be impossible for the SFA to maintain support for a decision based solely on a now-overturned legal position.

The equivalent would be for the IOC, for example, to argue that a failed drugs test carried out using new testing technology some years after an Olympic 100m final, on the winner’s stored sample, was somehow irrelevant information in respect of a previous decision not to strip the title because the drug test at the time appeared clean.

The BVI: Responsible for worldwide tax losses of $37.5 billion a year

An extraordinary report by consultants Capital Economics, for BVI Finance, claims that the British Virgin Islands are responsible for $1.5 trillion of assets invested around the world, and that these result in 2.2 million jobs and $15 billion in tax revenue. A better approximation would be that the BVI imposes global tax losses of $37.5 billion every year.

Continue reading “The BVI: Responsible for worldwide tax losses of $37.5 billion a year” →