The Price of Fairness
This new film, which features TJN Director John Christensen, explores the notion that human beings have an evolutionary tendency towards selfish behaviour and asks whether the widespread dislike of inequality is rooted in the human need for cooperation. Continue reading “New film: The Price of Fairness”
Tax Justice Network is recruiting a Head of Operations.
The Head of Operations will lead TJN’s corporate functions, with a particular focus on Financial and Reporting Systems, Human Resources, Governance and Accountability policy, procedure implementation, contract management, risk assessment and management processes, legal compliance as well as oversight of virtual office facilities. The Head of Operations will also support the Board of Directors and will provide additional support to TJN’s Senior Advisers. The job-holder will liaise closely with the Chief Executive Officer and with the Programme Directors and Communications team.
The post is part time (60% – FTE 37.5 hours per week).
A job description is attached. If you are interested in applying for this post please submit a full CV and supporting letter explaining your interest and suitability for the post.
Applications should be sent by email to:
Liz Nelson – [email protected]
Closing date: Friday 21 April, 2017
Provisional date for interviews: Tuesday 25th April, 2017
[embeddoc url=”https://www.taxjustice.net/wp-content/uploads/2017/04/TJN-Head-of-Operations-JD-Final.pdf” download=”all”]
This week is the global week of action for tax justice and on Wednesday 5th April activists from the Tax Justice Network and Methodists for Tax Justice held a protest outside the London offices of Price Waterhouse Coopers.
The global week of action for tax justice is happening one year after the release of the Panama Papers. The Panama Papers were the latest in a series of large leaks from the offshore world that have revealed the true extent to which lawyers, bankers and accountants have facilitated the hiding of vast amounts of money in offshore financial centres by individuals and companies. One year on, these facilitators of financial impropriety have suffered few consequences and continue to operate with impunity.
Continue reading “Protesting PwC: Professionals Without Conscience”
The Panama Papers revealed a systemic challenge to global governance, in which the big players are major banks, multinationals and the biggest financial centres of all. Unsurprisingly, much of the coverage of the Panama Papers focused on juicy, individual stories: political conflicts of interest, criminal money laundering and HNWI tax evasion in exotic locations. But when you look at all the data, you see a different picture.
With a few friends of TJN, we’ve been running some of the numbers on Panama, to see just where this small jurisdiction fits in the global game. The picture is inevitably partial – a leak from Jersey or Delaware would show other angles. But what is revealed is a clear snapshot of one part of the systemic business making use of secrecy. Not necessarily for corrupt purposes… but when your business is not engaged in some sort of unsavoury activity, you don’t need secrecy, so the use of secrecy is a pretty good red flag for further investigation.
First, we asked Daniel Haberly, an economic geographer at the University of Sussex, to look at the role of banks in the database from the Panama Papers, which includes the earlier Offshore Leaks data that relates to a network of company formation agents primarily in the British Virgin Islands. The analysis looks at the home country of banks that act as intermediaries to set up anonymous companies, and the host country role – where local affiliates of banks (from anywhere) are the intermediaries.
The graphic (click for full size) shows clearly that Switzerland is the biggest player, being home to banks that account for half of all the entities looked at; and also one of the leading host economies for intermediary banks. The UK is home to more than a quarter of the bank intermediary activity, but hosts very little; while Singapore shows a reverse picture, hosting a quarter but being home to less than 10%. As suggested in earlier analysis, the US role here is relatively small – with so many of its own states providing anonymous company formation.
Bilateral relationships are also revealed, sometimes less predictable than others. For example, Jersey’s disproportionately large role is due to business from UK banks; while its fellow Channel Island of Guernsey, in contrast, is largely reliant on business from Swiss banks. German banks support activity in Hong Kong and above all Singapore.
Of course the data is for one law firm over 40 years and one network of company formation agents up to around 2010, so may not be a great guide to current business models. But what it does show is that the role of individual clients, or of particular small jurisdictions, is almost incidental: the structural driver of the secrecy business has been the global banks, and the rich countries that they call home. Responsibility for offshore entity banking is not evenly distributed throughout the rich world, however, but rather seems to be heavily concentrated in Switzerland and the UK, whose banks have a combined 76% market share for this particular dataset. The scale of activity by British banks also underscores that even though a jurisdiction may curtail offshore banking activities at home, its banks may nevertheless be leading players in these activities overseas.
The strong third-place position of Singaporean banks as offshore entity intermediaries, together with Singapore’s first place ranking as a host jurisdiction within which foreign banks operate, also lends credence to arguments that increased international pressure on traditional wealth management centres such as Switzerland may be displacing activity to up-and-coming centres in Asia. This underscores the need for a global approach to transparency – as of course does the rise of the US as a tax haven of choice for many.
Taking a wider lens, economist Yama Temouri of Aston Business School used ORBIS, the biggest global database of corporate balance sheets, to look at the sort of multinationals that have subsidiaries in Panama. Two countries which feature relatively little in the Panama Papers are seen now as prominent: multinationals based in the USA and Spain are responsible for around a fifth each of all the recorded Panama subsidiaries, with the UK and Switzerland following behind with less than a tenth between them.
The analysis also shows that while banks are important players in Panama, confirming the findings above, the use of this secrecy jurisdiction is common to all the major industry sectors. ‘Other services’ including is by far the biggest category, and taken together with banking and insurance makes up around half of all Panama subsidiaries – but beyond that, the full range from construction to telecoms, and from machinery to tobacco, is represented.
Of course we’re not claiming for a moment that all the multinationals using Panama entities are aggressively avoiding tax, nor that they are committing any crimes. But the alarm bells should ring when such entities are seen: why would global businesses set up in jurisdictions that combine such limited real economic activity and such powerful secrecy characteristics, if not for the purpose of hiding things from regulators and/or tax authorities elsewhere?
[We’ve been having a comical non-exchange with Monsanto, in which despite numerous requests through various channels, the agri group refused to provide even a ‘no comment’ to the question of whether or not a particular Panama-registered company with that name is or was part of their structure. We were interested in part because the entity in question is claimed to have a director who died many years ago. Which wouldn’t suggest very high standards of governance…]
Even this quick run through the data makes clear the systemic involvement of banks and multinationals in the global secrecy business. Central too, rather than helpless victims or innocent bystanders, are the rich countries and their dependencies which run the game. And we shouldn’t forget the big 4 accounting firms (on whose association with tax haven use, Yama Temouri’s paper has incidentally won an award).
Finally, the Panama Papers confirm – for anyone who still needed this to be confirmed – that corruption is not a poor country problem. It might be closer to the mark to say instead that corruption has long been a rich country way of doing business. What is exciting now is that this is increasingly understood, by policymakers and public alike. The Panama Papers have made concrete for many what was already felt: that financial secrecy offers impunity and an escape from laws and taxation, for elites at least.
Analysis of the data by Matt Collin, a research fellow with the Center for Global Development, confirms this. Matt concludes that the Tax Justice Network’s Financial Secrecy Index, our ranking of ‘tax havens’, is:
“one of the most reliable predictors of a country’s dealings with Mossack Fonseca… A 10% increase in a country’s FSI is associated with an approximately equivalent increase in the number of entities from that country named in the Panama Papers. A one standard deviation increase in the FSI – roughly equivalent to moving from Norway to Jersey – leads to about a 90% increase in the number of entities. Other measures carry less predictive power”.
So, one year on from the Panama Papers what have we learned about how the offshore world uses secrecy?
Responsibility for offshore entity banking is not evenly distributed throughout the rich world, but seems to be heavily concentrated in Switzerland and the UK, whose banks have a combined 75% market share for this particular dataset. The scale of activity by British banks also underscores that even though a jurisdiction may curtail offshore banking activities at home, its banks nevertheless appear to be leading players in these activities overseas.
The Panama Papers are a snapshot of the major banks and leading financial centres, that have made a business for decades from the provision and exploitation of secrecy structures; with major multinationals high up on the client list. (And we haven’t mentioned the frequency with which big 4 accounting firms appear in the data – that can be for another day. Everything from billion-pound property transactions to the flightiest of fly-by-night, blink-and-they’re-dissolved operations…) The forces invested in the current system, and so allied against change, include some of the most powerful private sector actors in the world – and by extension, many of the jurisdictions in which they operate.
A year on, we still need a step change in international financial transparency as a necessary precursor to global progress against impunity and tax injustice. While policymakers increasingly pay lip service to the specific measures needed, real progress remains painfully slow.
The Bundesrat has today voted to recommend implementing a public register of the beneficial ownership of companies and trusts.
Great news from Germany, as the country takes an important step forward towards corporate transparency.
Continue reading “Germany moves forward on corporate transparency”
The following blog by TJN’s Nicholas Shaxson (currently on a book writing sabbatical) was originally posted on the SPERI blog and is re-posted here with permission.
By Nico Beckert
We are really pleased to publish this blog by Nico Beckert, which returns to a familiar theme for TJN. That is, how perceptions of corruption from Western experts too often hide the real perpetrators of corrupt acts.
Continue reading “Corruption in Africa: Misleading index and bribery by foreign companies”
In early September 2017, ten years after the collapse of UK bank Northern Rock, TJN will be publishing a special edition of Tax Justice Focus, guest edited by Professor Daniel Mügge (University of Amsterdam) which draws on fresh research from the EU-funded Enlighten programme. In this article Professor Mugge argues that faced with intractable problems of rising debt, and the obvious limitations to what financial regulators can achieve in the face of a hugely oversized financial sector, debt forgiveness must be added to the policy list if we are to avoid chaos in the global economy. Continue reading “Ten years on, dodgy debt continues to threaten global chaos”
In our March 2017 Taxcast: the high price we’re paying for our finance sectors – we look at staggering statistics showing how the US finance sector is a net drag on their economy.
Also, as the British government initiates Brexit divorce negotiations to leave the EU, we discuss something they ought to know, but obviously don’t – they’re actually in a very weak position. Could it mean the beginning of the end of the finance curse gripping the UK economy?
Featuring: John Christensen and Alex Cobham of the Tax Justice Network, and Professor of Economics Gerald Epstein of the University of Masachusetts Amhurst, author of Overcharged: The High Cost of High Finance. Produced and presented by Naomi Fowler for the Tax Justice Network.
Download the mp3 to listen offline anytime on your computer, mobile/cell phone or handheld device by right clicking here and selecting ‘save link as’.
“If you look at particular finance centres, say London and New York, the problem is that the net cost of this system is quite significant, it imposes a cost not only on people who use finance but for the whole economy. So, what we need to think about is what are the more productive activities that ought to be substituted for these excessive aspects of finance?”
Professor Gerald Epstein
“We might be seeing the start of the end of Britain’s grip by the Finance Curse”
John Christensen, Tax Justice Network on Britain’s weak position in Brexit negotiations
Want more Taxcasts? The full playlist is here.
Want to subscribe? Subscribe via email by contacting the Taxcast producer on naomi [at] taxjustice.net OR subscribe to the Taxcast RSS feed here OR subscribe to our youtube channel, Tax Justice TV OR find us on iTunes
Continue reading “Call for papers (one week to go), plus studentship and job”
By Alex Cobham
There are now a range of estimates of the global scale of tax avoidance. These include:
Continue reading “Estimating tax avoidance: New findings, new questions”
New figures published today by the Tax Justice Network provide a country-level breakdown of the estimated tax losses to profit shifting by multinational companies. Applying a methodology developed by researchers at the International Monetary Fund to an improved dataset, the results indicate global losses of around $500 billion a year. The figures appear in a study published today by the United Nations University World Institute for Development Economics Research (UNU-WIDER, in Helsinki).
Continue reading “New estimates reveal the extent of tax avoidance by multinationals”
Welcome to this month’s 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:
The #LuxLeaks whistleblowers appeal verdict is in and once again it demonstrates what an upside down world we’re living in, when whistleblowers on the frontline of tax justice find themselves convicted for a second time for exposing information that was so clearly in the public interest. Disclosure of such information can be decisive for driving political change, and this is exactly why tax deals in Luxembourg were brokered behind closed doors. Now it’s time to swing the spotlight onto accountancy firm PwC not only for the disgraceful way they treated these whistleblowers, but to hold them to account for their role the whistleblowers exposed in siphoning off tax revenue from so many EU member states. You can read about the less known but truly shocking treatment of whistleblower Raphael Halet in detail here.
The Tax Justice Network’s John Christensen says today,
“This is a disgraceful verdict when you consider that the real villains are accountancy firm PwC and the Luxembourg tax authorities who should never have negotiated these secret tax deals which go against the grain of free trade and all of which will almost certainly be found to constitute illegal state aid.”
Continue reading “#LuxLeaks appeal verdict: tax justice heroes convicted again”
Foreword. The Tax Justice Network is a non partisan network of experts working towards transparency, so we do not take any position about countries’ territorial and political claims.
However, we do expect countries with a de jure (legal) or de facto (in practice) influence over other territories, to take responsibility for their power. We point fingers at the UK for the secrecy of the overseas territories and Crown dependencies (Cayman Islands, BVI, etc.), against the U.S. about the U.S. Virgin Islands and Puerto Rico, and now it’s time for China, its related territories and Taiwan.
Hong Kong, Macao and Taiwan are becoming great risks for global transparency, especially when it comes to automatic exchange of bank account information. (It is not clear how much power China has to influence Taiwan’s laws or what role it has played in keeping Taiwan out of the relevant international agreements. Regardless of who is to blame, participation in global automatic exchange should be ensured for any country accepting deposits and investments from non-residents).
This former British colony under the current control of China was ranked 2nd in TJN’s Financial Secrecy Index 2015. While it has committed to implement the OECD’s Common Reporting Standard (CRS) for automatic exchange of banking information in 2018, it has also decided to make it harder for other countries to obtain information from Hong Kong banks. Instead of signing the Multilateral Competent Agreement (MCAA) – that would have facilitated the automatic exchange of information with over 85 signatory jurisdictions – Hong Kong has chosen the bilateral route. Any country willing to obtain information from Hong Kong will have to manage to sign a bilateral agreement with it.
So far only the UK and Japan have come to such agreements with Hong Kong. However, in view of the potential sanctions by a future blacklist of the European Union (EU) and the OECD, Hong Kong is now considering signing (bilateral) agreements with other countries, especially with EU countries. Apparently signing the MCAA is also under consideration.
On top of the current bilateral approach to implement automatic exchange of information, Hong Kong is choosing “voluntary secrecy”. Others like Cayman Islands are also choosing “voluntary secrecy”, but at least they have signed the multilateral competent authority agreement (MCAA), so other countries should find it easier to obtain information from them.
“Voluntary secrecy” consists of countries choosing to send banking information to other countries, but refusing to receive it. This voluntary secrecy makes obviously very little sense in a new transparency initiative like automatic exchange of information because these countries could simply receive the information and then do nothing with it or simply throw it away. Instead, they want to legally ensure secrecy, either to promote their “fake” residency certificates in exchange for money (to allow foreigners to acquire their residency certificates and then lie to their banks about where the actually live) or to prove that they are not interested in either tax collection or the combat against money laundering and corruption. The OECD contemplates this “voluntary secrecy” by allowing countries that signed the MCAA to choose to be listed under Annex A. However, they are likely so ashamed of it – or they want to protect tax havens that chose this – that the OECD does not simply list the countries that chose voluntary secrecy. Instead, anyone interested in finding out who chose not to receive information has to look into the specific list of “activated exchange of information relationships” of each of the +100 countries that committed to the CRS. On each country’s list, one would have to compare (i) the countries from which each jurisdiction is receiving information, to (ii) the countries that each jurisdiction is sending information to. In the case of Hong Kong, its list of activated Exchange of information relationships shows that Hong Kong will send information to the UK and Japan, but will receive information from no country (not even from the UK and Japan). This proves it chose “voluntary secrecy”.
Macao was ranked 11th in the FSI 2015 edition. It has also committed to implement the OECD’s CRS for automatic exchange of information in 2018, but so far it hasn’t either signed the multilateral competent authority agreement (MCAA) to implement the CRS nor started to sign bilateral agreements (like Hong Kong did). It is still uncertain what route Macao will take (including “voluntary secrecy”), so we will give it the benefit of the doubt.
China was ranked 20th in the FSI 2015 edition. While its secrecy score is not as bad (as opaque) as that of Hong Kong and Macao, it still has room for improvement. China is now a party to the OECD Multilateral Tax Convention on Administrative Assistance in Tax Matters which serves as the legal basis to implement the OECD’s CRS for automatic exchange of information. China also signed the Multilateral Competent Authority Agreement (MCAA) to implement the CRS. However, it has not extended the coverage of either treaty to Hong Kong or Macao. This means that without pressure, Macao may follow Hong Kong and sign bilateral treaties to exchange information automatically.
After news about Taiwan becoming a tax haven, TJN started assessing its legal framework in the 2015 edition of the FSI. Given the lack of external assessments of Taiwan’s legal framework, Taiwan could not be ranked in the FSI, although its range of potential “secrecy score” (how secretive its legal framework is) is among the worst secrecy jurisdictions (or “tax havens”).
Taiwan has not even committed to implement the OECD’s CRS for automatic exchange of banking information let alone signed the multilateral competent authority agreement to implement it. On top of everything, Taiwan is exploiting this voluntary self-exclusion to promote itself as a tax haven. An email sent to the Tax Justice Network by a Taiwan Company told us the following
“almost all the countries will participate in this international reporting system in 2017 or 2018 but Taiwan will not, so we can provide the client a clever way to perfectly hide their asset in Taiwan. We search online recently the websites about offshore tax haven and read about your article about un-noticed tax haven—Taiwan (…)
The world famous tax havens such as Cayman and the Virgin Islands are the first countries to sign CRS, January 1, 2017 from the implementation, and promised to complete the first exchange in 2017; even the tax evasion protagonist Panama, for fear of G20 countries on its economic sanctions, and therefore on April 17 to join, with China, Hong Kong, Singapore, have become the second batch of signatories, starting next year. In the future there will be a third wave, the fourth wave of countries have joined, but Taiwan has not heard any relevant discussion, customers in Mainland China, Japan, Hong Kong, Singapore have noticed that Taiwan has not yet joined.”
The OECD should address this urgently.
Automatic exchange of information is a clear improvement towards transparency, in spite of all of its loopholes (especially lack of access by developing countries). However, if major financial centres like the U.S. and now also China, its related territories and Taiwan are off the hook, it is uncertain whether it will have any impact at all. Sanctions seem to be the only way to encourage global participation.
Now, do you understand why TJN (sadly) laughed at OECD’s comments about the “end of banking secrecy”?
Photo credit: Barbara Willi on Flickr under a creative commons license.
The Automatic Exchange of Banking Information, which is due to start this year requires nation states to implement domestic legislation to participate in the scheme. 
The OECD’s Global Forum conducted a (confidential) first-stage evaluation of the laws of countries that want to participate in the system to assess whether they are ready to do so. Now, the Global Forum is working on a terms of reference to assess countries once automatic exchanges are in place, to make sure they comply with the international standard called the Common Reporting Standard (CRS).
Continue reading “New Report – Delivering a level playing field for offshore bank accounts”
Today the Plateforme de Protection des Lanceurs d’Alerte en Afrique (PPLAAF) will be officially launched during a press conference in Dakar. We’re sharing the details with you here:
Continue reading “Launch of the African Platform to Protect Whistleblowers”
The OECD’s new terms of reference to assess the implementation by countries of BEPS Action 13 related to Country-by-Country Reports (CbCR) may penalise countries, especially developing ones, that try to obtain by their own means the CbCR’s valuable data needed to tackle multinational tax avoidance.
Country-by-Country Reports (CbCR) (to be prepared by multinationals with group revenues over EUR 750 million) will offer information on multinational economic activity, profits and tax paid broken down for each country where they operate. This CbCR “map” will reveal any misalignments between the location of real activity, and where profits are ultimately declared to hold both multinationals and tax havens to account.
Continue reading “The OECD – penalising developing countries for trying to tackle tax avoidance”
Second time lucky? About a year ago in Slovakia some opposition politicians pushed hard for a promising law to shed light onto anonymous ownership through shell companies. The Tax Justice Network supported their efforts by writing a letter to the Prime Minster at the time. Despite widespread public anger about corrupt practices, the law was blocked by the legislature. Now, after a second attempt the law has been passed, pretty much in its original form. This is great news.
An assistant to an opposition Member of the Slovak Parliament now takes up the story:
Continue reading “Good news from Slovakia: light cast onto shell companies”
We’re pleased to share this information on a very important new project – the Tax Disclosure Project – just launched by our friends at Finance Uncovered, a project originally set up by the Tax Justice Network.
The project is requesting that politicians around the world disclose their tax returns, and is inspired 
by the incredible work of journalist Umar Cheema of the Centre for Investigative Reporting. Umar succeeded in making Pakistan the fourth country in the world to publish the tax returns of its Parliamentarians. We interviewed him here on our monthly podcast below, the Taxcast back in 2015. It’s well worth a listen. It’s cued up to start from the special feature featuring his interview: Continue reading “Politicians and their tax returns: a new project from Finance Uncovered”
We’re pleased to announce this latest important book which you can download and read for free here. We’re sharing here a blog written by Alex Cobham of the Tax Justice Network, originally published here by the International Centre
for Tax and Development: Continue reading “An Alternative Approach to Taxing Multinational Companies: new book”
Today will be remembered as a milestone for progress on tax justice. We’d like to think of it as the first steps into a true post-#PanamaPapers era when real, concrete action was taken by Members of the European Parliament towards achieving financial transparency in the public interest. Today we’re suddenly much closer to ending anonymous ownership of companies and trusts that operate in the European Union.
Markus Meinzer of the Tax Justice Network says:
“This is a great moment for tax justice and for the European Union, set to lead again on financial transparency which counters corruption and helps restore fair market competition. The most important measure was the inclusion of public registries that cover all companies and trusts. But the EU Parliament went further and successfully pushed back on a fatal loophole that would have allowed senior managers of companies to be registered as beneficial owners. The icing on the cake is the broadening of the definition of a beneficial owner to a threshold of 10% of ownership/control in an entity (instead of 25% and above previously), and that a business relationship has to be terminated if no beneficial owner can be identified.”
So, what now? As transparency campaigner Richard Murphy says here,
“The coming months will be crucial to ensuring Member States do not backtrack on this step towards full company and trust ownership disclosure. The European Parliament, the Commission and the Members States will discuss the changes to the Directive in trialogue negotiations and a final decision is expected before the summer.”
Continue reading “A great day for tax justice: coming closer to ending anonymous ownership”
