EU relaunches CCCTB: A step towards unitary taxation

This week saw the re-launch of the European Union’s Common Corporate Consolidated Tax Base (CCCTB). The purpose of the CCCTB is to harmonise the rules around how multinational corporations are taxed across the European Union, and to switch from OECD tax rules to a unitary approach with formulary apportionment (more on that below).

The CCCTB was originally launched in 2011, after many years of discussion, but in the EU’s own words the proposals proved ‘too ambitious’ for member states. The immediate proposal now is but a baby step towards the bigger goal and we welcome the intention; but there is a long way to go before this will significantly impact on multinational profit-shifting, and there are important weaknesses that must be addressed even in the existing proposal.

What is the CCCTB?

The most ambitious part of the CCCTB is an attempt to create a single, harmonised tax base for multinational companies with operations in Europe. This means that large companies will report their profits across the whole European Union. Those profits will then be apportioned among countries, based on the real economic activity taking place in that country (e.g. people and sales), so that countries can then choose how much to tax those apportioned profits (i.e. there will be no harmonisation of rates).

This system is intended to lower compliance costs for multinationals operating across multiple EU jurisdictions, but also to prevent multinationals from apportioning their profits to low or no tax jurisdictions where they have few or any staff, starving countries where they are really operating, of tax revenues.

As our research into US multinationals has shown, there are a number of EU jurisdictions which offer near-zero effective tax rates in order to poach the taxable profit from their neighbours. The CCCTB would go a very long way towards addressing this anti-social behaviour, and many of the high-profile avoidance cases such as Google and Facebook.

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All of this has the potential to make a huge difference to the fight against tax avoidance and evasion. Tax avoidance is facilitated by mismatches between legislation between different countries, and by companies shifting profits from high tax to low tax countries.

As Tove Maria Ryding, from our partners Tax Justice-Europe said:

“We all stand to benefit from this proposal. When multinational corporations are not paying their fair share of taxes it means that we have to pay more taxes and that there is less money in the public sector for hospitals and schools. This is a big step forward.”

Why now?

The CCCTB has been in the works for a very long time. The European Parliament reported on the issue in 2005. The European Commission launched the proposals the first time in 2011. At that time the proposals were killed off by vocal opposition from member states, and as measures such as this require the agreement of all member states, the proposals were dead in the water.

Back in 2011 the most vocal opponent of the CCCTB was the United Kingdom, who saw it as a threat to their goal to create a “competitive” system of corporate taxation (aka a tax haven). With the UK now choosing to leave the EU, this proposal may now have more legs. Although in theory the UK could still block it, interfering with the rules of a club that they are seeking to leave would do very little to improve their negotiating position in the Brexit negotiations. However, it must be said, that the UK were not the only opponents at the time.

It is also clear that we are moving on from the world of the mid-2000s when these proposals were first made when too many people thought that tax avoidance by multinationals simply wasn’t an issue. It is clear that the EU is responding to the demand for more action following the many high profile stories of tax abuse, including most lately, the Panama Papers.

Will it work?

Of course the devil will be in the detail, and there is still long road to travel before the measures are implemented. The most ambitious parts of the CCCTB, the consolidation of the tax base and apportionment of profits between nations is still being negotiated and so could never happen.

But even without the ‘third C’, two CCs are an important step forward, particularly for developing countries which have often been the victim of companies using Europe as a tax haven. The proposals also contain a number of other measures for dealing with mismatches between tax rules in different countries. As Francis Weyzig of Oxfam Novib told us:

“This [the anti-avoidance package without consolidation] is the core of the package that really matters to developing countries. If agreed, it will be a big improvement. It will do away with all patent boxes in EU member states, eliminate the double Irish, eliminate Dutch hybrid structures (multi-billion dollar overseas cash boxes) widely used by US-based multinationals, and replace the harmful Belgian notional interest regime with something less harmful.”

Others have highlighted that the elimination of patent boxes is ‘compensated’ by the introduction of massive tax deductions for R&D. In combination with other elements, this risks the overall package seeing the EU take a further step down the foolish road of tax ‘competition’ – a race to the bottom which no state, nor its citizens, can win. This has the potential also to make the EU more of a problem for lower-income countries, as they seek to exert their own taxing rights.

Finally, Richard Murphy raises a fundamental problem with the current hopes for a CCCTB: that the data generated under International Financial Reporting Standards is simply not fit for tax purposes. Can accounting standard-setters finally rise to the challenge, or is there a need to develop separate tax reporting standards?

Unitary tax: the direction of travel?

How far the EU will manage to go with the CCCTB is an open question. There will be many, including the TJN, keeping a close eye on how these proposals advance. But we are heartened by the Commission’s appetite to move to a unitary basis for taxing multinationals. Other economic blocs around the world are likely to give increasingly serious consideration to such an idea – especially as the OECD’s BEPS reforms are increasingly seen to have failed to reduce the gross misalignment of taxable profits with real economic activity.

The Kleptocracy Curse and the threat to global security

This is well worth watching: journalist and author of Author of ‘Fragile Empire‘ and ‘This Is London‘ and Ben Judah presents his report at the Hudson Institute on how kleptocrats and what he calls the ‘global wealth defence industry’ (or the secrecy and tax avoidance/evasion industry) is wreaking havoc on the global economy and represents a serious threat to international peace and security. He draws on our research on quantifying offshore funds and our Financial Secrecy Index. Continue reading “The Kleptocracy Curse and the threat to global security” →

The OECD information exchange ‘dating game’

The automatic exchange of information between countries’ tax authorities has been trumpeted as a game changer for the fight against tax evasion. But the publication of the latest data shows that many countries, including some tax havens, are being very selective about who they are choosing to share information with. It seems many OECD countries prefer to play this kind of ‘dating’ game among themselves…

Continue reading “The OECD information exchange ‘dating game’” →

UN Expert backs the Tax Justice Network’s Financial Secrecy Index in the battle to protect human rights

The next United Nations secretary-general Antonio Guterres has a lot on his plate. But when he takes over from Ban Ki-moon to head the United Nations on the 1st of January 2017 one of his priorities must be to eliminate tax havens. Continue reading “UN Expert backs the Tax Justice Network’s Financial Secrecy Index in the battle to protect human rights” →

Whistleblowers on film…

A new short film was released earlier this year by German broadcaster Deutsche Welle called ‘Whistleblower – Alone against the system’. Continue reading “Whistleblowers on film…” →

Yet another “last chance” for Italian tax evaders to comply with the Italian tax code

Old Italian “habits” die hard, says Lecturer in Accounting and Taxation at Nottingham University Business School and member of the BEPS Monitoring Group Tommaso Faccio. As if the voluntary disclosure programme they offered citizens less than two years ago wasn’t bad enough, here comes yet another one, less than two years later… Continue reading “Yet another “last chance” for Italian tax evaders to comply with the Italian tax code” →

Podcast: Iceland: offshorisation, collapse and recovery. What are the lessons?

In the October 2016 Tax Justice Network podcast: we look at the offshorisation of Iceland’s economy, its collapse and recovery. What are the lessons? Also, Brazil adds Ireland to its tax haven black list and Panama threatens anyone who dares call it a tax haven with a new law…plus more scandal and unique analysis you won’t find anywhere else. Produced by Naomi Fowler for the Tax Justice Network and featuring Sigrun Davidsdottir, journalist, blogger and podcaster, journalist Ingólfur Sigfússon and John Christensen of the Tax Justice Network.

Continue reading “Podcast: Iceland: offshorisation, collapse and recovery. What are the lessons?” →

Brexit, Pound Sterling, and the Finance Curse

You're going down

You’re going down

The significant fall in the value of the pound Sterling since the Brexit vote is likely to increase retail price inflation in Britain in the coming year.  Many low income households will suffer steep rises in their costs of living.  But in the long run might Sterling’s decline help rebalance the UK’s economy, which is burdened with an over-sized financial sector and increasingly geared towards being a tax haven for the world’s rich and powerful?

TJN’s John Christensen and Nick Shaxson have long argued that Sterling has been over-valued for decades, harming the real productive economy while boosting the City of London.  They cite the City as an example of what they term the Finance Curse, a Political economic phenomenon comparable to the Resource Curse which afflicts mineral and oil and gas exporting economies.  Contradicting the entrenched orthodoxy that what is good for the City is good for Britain as a whole, Christensen, Shaxson and Duncan Wigan have argued that hosting the City has harmed Britain’s development:

“The accelerated rise of finance in recent decades has damaged Britain’s alternative economic sectors, as productive activity cedes ground to financial rent extraction.  Many of the harms, in cause and effect, are similar to those of a widely studied Resource Curse afflicting mineral-rich countries.  Under the Resource Curse rents are extracted from the earth – but under the Finance Curse rents are extracted from the economy and society more broadly.”

Evidence of what are known as the Dutch Disease effects of Sterling’s over-valuation can be seen in Britain’s current account and trade deficits, both of which have worsened significantly in recent years.  As Simon Head notes in an article, ominously titled The Death of British Business:

“The UK has long depended on heavy flows of investment from abroad to make up for the weaknesses in its own corporate and financial institutions. In 2015 the UK ran a deficit in its external trade in goods and services of 96 billion pounds ($146 billion in 2015), or 5.2 percent of GDP, the largest percentage deficit in postwar British history and by far the largest of any of the G-7 group of industrialized economies.”

Evidence of rent-seeking can be seen in the ways in which large global financial institutions, including banks, pension funds, hedge funds have been able to overcharge their clients, and extract subsidies through being ‘too-big-to-fail’.  As economists Gerald Epstein and Juan Antonio Montechino argue in their recent study of financial services in the United States:

“These mechanisms (for overcharging) include the monopoly or oligopoly power of large banks in important financial sub-markets; overly complex, non-transparent financial products that allow financial institutions to overcharge and underperform; government subsidies that allow banks to borrow funds at subsidized rates from investors who believe they are ‘too-big-to-fail’; and a lax monetary and regulatory environment that allows finance to operate with too much leverage and too little capital at risk, thereby generating asset bubbles that feed both outsized financier income and dangerous instability.”

Epstein and Montechino’s analysis of the US economy applies to the UK economy, with extra bucketloads of adverse outcomes.  These include state capture at least as great as that Wall Street imposes on the Hill; the criminalisation of Britain’s banks to the extent that Bill Black, a leading criminologist in the U.S. describes London as the “financial cesspool of the world”; and a long term preference on the part of banks to direct lending towards the property markets and short term trading in highly liquid assets.

Productivity is arguably the key crisis facing the UK economy, which by most measures has one of the lowest productivity levels amongst major economies.  We would cite this as evidence of how the Finance Curse has afflicted Britain by lowering investment in infrastructure, training, research, and developing technologies of the future. The combination of a passive state tradition and a financial sector obsessed by short term returns has starved the economy of the long term investment needed to boost productivity.  In this context a Sterling depreciation is unlikely, by itself, to be sufficient to improve productivity and achieve the desired boost to exports.

The question is whether Sterling’s decline will be sufficient in the longer term to induce a reverse of the Finance Curse by boosting investment in non-financial exporting sectors and attracting more high flying graduates away from the massively over-rewarded jobs in the City.  An alternative scenario suggested by Simon Wren-Lewis in a recent blog is that the British government succumbs to the overweening political influence of the financial sector (itself an important feature of the Finance Curse) and pampers the City with further tax cuts and de-regulation.

Most economists are agreed about the short term inflationary impact of Sterling’s post-Brexit fall.  Britain is a major importer of goods and services and the currency shift has caused a serious deterioration of the terms of trade between Britain and most of the rest of the world.  In theory, the changed terms of trade should boost the export sectors – including the City of London – but it takes a long time for investment-starved export non-financial sectors to rebuild productivity and expand market share at a time when global demand is highly constrained by weak consumer demand. To make matters worse, uncertainty over access to the EU’s single market, especially for financial services suppliers who will need a ‘passport’ to ply their wares across the single market, has seriously impacted investor confidence.

The passport issue is a potential nightmare for the City.  Even before the Brexit vote the European Commission and major Eurozone governments were pushing for banks trading in Euro denominated bonds and securities to do this business in financial centres where the Euro is the domestic currency.  That excludes London.  With the UK at the table, the City was able to resist these pressures.  Brexit changes that political dynamic, leaving London (and its satellite tax havens in the Channel Islands) highly vulnerable to regulatory changes adopted in Brussels.  To give some idea of the scale of this vulnerability, according to newly released data from Britain’s Financial Conduct Authority, approximately 5,500 UK registered companies, mostly engaged in financial services, depend on EU passport rights and stand to lose them as a result of Brexit.

Former IMF Deputy Director Ashoka Mody argues that Sterling’s fall might be a blessing in disguise.  He agrees the regressive impact of the short term inflationary effect, but shares TJN’s view that the over-sized City of London has created an unbalanced economy (and an overpriced currency) to the immense disadvantage of most other industries – real estate being an exception since so much inwards investment heads into the property markets of London and other major metropolis.  As Mody notes:

“The banking-property complex has been a parasite on the British economy, creating pathologies of financial vulnerability and exchange rate overvaluation.”

Indeed.  And we would argue that the pathologies run deeper since overdependence on a single sector leads to state capture, constant lobbying to remove the social protections needed to protect citizens from corrupt financial practices, and path dependence on a mobile industry – financial services – which is largely rent-seeking in its outlook and short-termist in its actions.

It suits the City and its property-owning clients to boost Sterling’s value in order to attract offshore investment into the UK property market, which has become another must-have asset class alongside artworks and luxury yachts in the investment portfolio of the high net-worth class of global investors.  Yet at some stage in the near future the latest UK property market bubble will inevitably pop, probably causing financial market crisis on at least the same scale as the 2008 collapse.  The uncertainty caused by Brexit may well have brought that inevitable collapse forward, further exposing the structural weaknesses of the UK economy.

At this stage it is impossible to predict how long Brexit uncertainty will dampen investment and the value of Sterling.  Some argue it might take as long as a decade for the dust to settle.  A lot can be achieved over that period towards rebalancing the British economy.  The focus of infrastructure investment can move away from the capital towards the regions which host productive sectors.  Research and development funding can be boosted to attract more graduates away from the financial services.  Property market inflation could be abated by adopting a land value tax and dropping subsidies to the buy-to-let owners.  The City’s speculative impulses could be dampened by raising capital adequacy requirements and applying a financial transactions tax.  Labour productivity could be boosted through investment in training and applying a living wage across all sectors (which would also reduce the huge wealth transfers from taxpayers to employers whose underpaid staff are forced to rely on housing benefits).

None of this is likely to happen, however, without an activist state willing to pursue a development strategy that will require a significant pruning back of Britain’s over-sized financial services sector and its role as the world’s largest tax haven.  This will require a sharp and politically courageous break from a development strategy that has placed tax haven London and its spiderweb of offshore secrecy jurisdictions at the very heart of the British economy.

Like Wren-Lewis, we fear that the City, and its cheerleaders within the government, will react to the Brexit fallout by demanding further subsidy (tax cuts and deregulation, underwritten by the too-big-to-fail compact), and key policymakers will shy away from the long, hard slog of tackling the Finance Curse.  For this reason, we share Wren-Lewis’ conclusion that it remains “hard to see any silver lining in the Brexit decision.”

With thanks to Andrew Baker at SPERI for comments and suggestions

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TJN’s work on the Finance Curse is part of a wider EU funded research programme, Enlighten, looking at slow-burn crisis in the European Union

 

Our October 2016 Spanish language Tax Justice Podcast: Justicia ImPositiva, nuestro podcast de octubre 2016

Welcome to this month’s podcast and radio programme in Spanish! ¡Bienvenidos y bienvenidas a nuestro podcast y programa radiofonica! (abajo en castellano). This month:

GUESTS this month: Rodolfo Bejarano, an economist at Latindadd, the Latin American Network on Debt, Development and Rights. Juan Valerdi, an economist at the University of La Plata and former adviser to the Central Bank of Argentina. The Deputy Director of the Chilean website, El Mostrador Ivan Weissman Senno, who exposed the private pension fund tax haven scandal. The author of “Treasure Islands”, Nicholas Shaxson.

Con la conducción de Marcelo Justo y Marta Nunez, en el Podcast de Justicia ImPositiva este mes…

INVITADOS: Rodolfo Bejarano, economista de Latindadd, la Red Latinoamericana sobre Deuda, Desarrollo y Derechos. Juan Valerdi, economista de la Universidad de la Plata y ex asesor del Banco Central de Argentina. El Subdirector del sitio Chileno de Internet, El Mostrador, Ivan Weissman Senno, que destapó la Administradora privada de pensiones con sede en paraíso fiscal.  Y el autor de “Las islas del Tesoro”, la historia de los paraísos fiscales, Nicholas Shaxson.

El enlace de descarga para emisoras (mp3 transmisión gratuita)

http://traffic.libsyn.com/j_impositiva/JI_10.mp3

También para emisoras, para nuestro ‘trailer’ click aqui

Subscribase a nuestro canal de youtube en el playlist de Justicia ImPositiva aqui

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O envien un correo electronico a Naomi [@] taxjustice.net o [email protected] para ser incorporado a nuestra lista de suscriptores.

Sigannos por twitter en @J_ImPositiva

En el próximo mes de noviembre: claro oscuros de la recaudación fiscal en América Latina: las cosas han mejorado, pero la evasión sigue siendo masiva y el gasto social bajo. Mientras tanto en Colombia hay avances gracias a los Panama Papers: investigan a 1200 empresas. En Guatemala la oscura relación entre iglesia y lavado de dinero. Y en nuestra Breve Historia de los Paraísos fiscales, les contaremos como con la plena incorporación de Estados Unidos se cierra el círculo de la globalización de los paraísos fiscales.

Is it ‘smart’ to avoid your taxes? US Americans believe not

US Americans apparently share a fundamental civic commitment to taxpaying. That’s not what you might think from the anti-tax rhetoric that has been a strong feature of Republican politics. Presidential candidate Donald Trump may have avoided paying any federal income taxes for nearly two decades and famously claimed that that makes him ‘smart’. Well, that’s not a sentiment that’s shared by voters. According to Vanessa Williamson, a fellow in governance studies at the Brookings Institution, Continue reading “Is it ‘smart’ to avoid your taxes? US Americans believe not” →

Global tax reform: update on progress and next steps

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The Methodist Tax Justice Network, the Global Alliance for Tax Justice and one of our senior advisors Professor Sol Picciotto have just published a very useful up-to-date account of where the OECD and G20 have got to on tax reform, along with a useful explanation of the Unitary Taxation alternatives which you can download here. Continue reading “Global tax reform: update on progress and next steps” →

Facebook UK tax – TJN statement

Facebook UK’s accounts for 2015 were published today, online at Companies House. TJN Director of Research Alex Cobham commented:

“Facebook UK’s accounts show specific issues, but point also to the real problem: that major multinational companies appear to be able to pick and choose, unlike the rest of us, where and how much tax they will pay. British Prime Minister Theresa May has said her government will fight back against tax avoidance – if she is serious, she will immediately implement the tax transparency measure that was passed in the new Finance Bill so that the public can see which companies are meeting their UK responsibilities.

“There are two main points of interest in these accounts: first, it appears that Facebook UK has paid no tax, despite the misleading spin being put on the company’s position; and second, Facebook continues to claim that its UK operations are significantly less profitable than elsewhere.

“We can already see headlines stating that Facebook paid more than £4 million in tax last year, and comparing that favourably to what it paid the preceding year. But in fact, Facebook has used the accounting treatment of share options for staff – that is, of large payments to what are likely to be typically the most highly remunerated individuals – to create a tax benefit of around £15 million. The effect is that the £4 million tax charge of last year, and a further £11 million of future tax payments, will be cancelled out completely. So in practice Facebook UK appears to have paid http://humanrightsfilmnetwork.org/kamagra nothing in corporate tax to the UK public purse – less, even, than the £4,327 in 2014 that sparked public outrage.

“The second point to note from Facebook’s accounts is that even with this effective incentive to declare UK profit and the associated tax liability for this year, the UK operation still appears to be relatively unprofitable. Globally, Facebook declares a profit equal to roughly 20% of its revenues. In the UK, the accounts show that over £200 million of revenues have instead given rise to a loss of £50 million. Is this a true reflection of the UK market’s worth to the global business? We may never know, because Facebook UK’s parent company is registered in Delaware – one of the most financially secretive jurisdictions, with no requirement to publish accounts, and a significant part of the reason why the United States is increasingly recognised as a leading tax haven.

“The public demand for multinationals to declare taxable profit where they do their business will not go away. Policymakers must step up and make this a requirement. After an amendment to the 2016 Finance Bill, HM Treasury now has the power to require multinationals to publish country-by-country information on where they do their business, where they declare their profits and where they pay tax. The government should enact this basic transparency measure as a matter of priority. Companies like Facebook can then decide whether they are happy to defend their tax strategies to the public – or if instead they will change their ways.”

Switzerland seen backing down on supporting tax haven USA

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A curious love-hate financial relationship

In July we wrote a blog entitled Luxembourg backing down on supporting tax haven USA. Now it’s Switzerland’s turn.

This concerns the OECD’s Common Reporting Standard (CRS,) a global scheme to share banking information. The United States isn’t a participating jurisdiction: it has its own FATCA project, which as we’ve remarked before, is good at ferreting out US taxpayers overseas, but provides relative little information in the other direction to help other countries enforce their own tax laws. Making the United States a giant tax and secrecy haven. Continue reading “Switzerland seen backing down on supporting tax haven USA” →

UN rights experts on Leaks: What else do we need to know to take action?

UN Human Rights experts have released a statement reacting to the latest leaks scandal, and calling for world governments to act together to establish a United Nations body that will work to end tax haven secrecy and offshore tax avoidance and evasion. This follows UN recommendations in the summer to enact legislation to create a charter on the rights of whistleblowers and adopt a “protected disclosure defence” to protect whistle-blowers and witnesses.

Continue reading “UN rights experts on Leaks: What else do we need to know to take action?” →

Beware the siren song of “tax certainty”

Back in July the G20 club of powerful countries issued a communiqué in which they enthused about “the benefits of tax certainty to promote investment and trade,” and they mandated the OECD and the IMF “to continue working on the issues of pro-growth tax policies and tax certainty.”

It’s taken as a given that something called ‘tax certainty’ is a wholesome thing. Here’s the Association of Chartered Certified Accountants (ACCA) giving it the old motherhood-and-apple-pie:

“Certainty, along with simplicity and stability, is one of the cornerstones of a good tax system: but why is it important? How can policymakers encourage certainty?”

Continue reading “Beware the siren song of “tax certainty”” →

Financial secrecy in football: time for action

Everyone has known for years that football is rotten to the core and financial secrecy is at the heart of the problem. Why then is no one doing anything about it? This post from the Offshore Game project originally features in the Independent. 

Continue reading “Financial secrecy in football: time for action” →

Quote of the day – the future of tax havens

From Joseph Stiglitz, writing in Vanity Fair:

“It will not be long before those nations that opt to continue with old-style secrecy will be labeled pariah states and be cut off from the global financial system.”

New and abusive games will continue to emerge to fill the vacuum left by old-style secrecy — including new forms of opacity — but he’s certainly onto something.

 

The article is a testament to Panama’s “commitment” to eliminate crime and secrecy from its financial sector.

Hat tip: Links.

Photo credit: Jérémy Barande / Ecole polytechnique Université Paris-Saclay

OECD threatens Bahamas with blacklisting, Bahamas wilts

The Bahamas approach to transparency

The Bahamas on transparency

The Spanish newspaper El Mundo is running an article in Spanish, whose headline translates as “If Bahamas goes on like this, it will go onto the G20 blacklist” – and the text in quote marks comes from Pascal Saint-Amans, head of tax at the OECD, the club of rich countries.

The Bahamas has been in the news recently: first, we wrote a scathing blog about how the Bahamas was a big hole in global efforts to build transparency, refusing to participate effectively in the OECD’s incoming Common Reporting Standard to share banking information across border. Very soon afterwards, an article appeared in The Economist whose subheading “The Bahamas cocks a snook at the war on tax-dodgers” said it all — and it received a fusillade of angry responses from Bahamas media. Then, a few days later, a series of “BahamasLeaks” international articles appeared in the media, co-ordinated by the International Consortium of Investigative Journalists (ICIJ,) confirming Bahamas’ role as a turntable for dirty money. Continue reading “OECD threatens Bahamas with blacklisting, Bahamas wilts” →

UN report recommends: go after tax havens, and protect whistleblowers

From the United Nations General Assembly, the fifth report of the Independent Expert on the promotion of a democratic and equitable international order. The summary goes like this:

“The report focuses on impacts of taxation on human rights and explores the challenges posed to the international order by widespread tax avoidance, tax evasion, tax fraud and profit shifting, facilitated by bank secrecy and a web of shell companies registered in tax havens. The Independent Expert calls for resolute action by the international community, including through the creation of a United Nations tax cooperation body, the adoption of a United Nations tax convention, the phasing out of tax havens, the revision of the Guiding Principles on Business and Human Rights to include the obligation of corporations to pay their fair share of taxes and the adoption of a financial transactions tax.”

As you can imagine with an introduction like this, here’s a lot of tax justice stuff in here, and TJN gets a number of mentions. It follows our earlier blog on calls by Rafael Correa, head of the G77 group of developing countries, for an international tax body. Among other things, the UN Independent Expert on the promotion of a democratic and equitable international order discusses the definition of ‘tax havens’ and refers to TJN’s alternative term ‘secrecy jurisdiction’ while providing further details on TJN’s Financial Secrecy Index (FSI) and the top listed jurisdictions on the FSI 2015 here (p9 and in the annex).

We’ll highlight only this section below for now, which is a recommendation for the following: Continue reading “UN report recommends: go after tax havens, and protect whistleblowers” →

Ecuador’s president calls for global tax body

President Rafael Correa

President Rafael Correa

Updated with additional information about Correa’s administration and exposés in the Panama Papers scandal; scroll down.

Ecuador’s president Rafael Correa has published a significant statement about international tax governance, and specifically the prospect of creating a global tax organisation. This is particularly important, given that Ecuador has just assumed the presidency of the G77 group of developing countries.

“A rapidly growing global web of tax havens is one of the key drivers of this inequality . . . 

No one country can tackle this complex, secretive global financial conspiracy alone. Coordinated and comprehensive global action is needed. Current moves towards greater transparency about the initial owners of money held in shell companies can be part of the solution, but modest efforts at achieving greater transparency are not enough. We need to scrap tax havens altogether.

Continue reading “Ecuador’s president calls for global tax body” →

EU Leaks – a new platform for whistleblowers

Antoine Deltour, Luxleaks whistleblower

Antoine Deltour, Luxleaks whistleblower

From the Greens / Europe Free Alliance in the European Parliament, a new initiative called EU Leaks:

EUleaks is a European platform where you can submit information in a highly secure and anonymous way.

Transparency and accountability are essential for democratic governance. The EUleaks project provides a platform for increasing transparency by providing a new tool for information in the public interest to be made available. EUleaks offers a venue for the realisation of freedom of expression as a fundamental right.

This comes in the context of a story which is summarised in a Guardian headline: Panama Papers: European parliament opens inquiry. (That is a fascinating story in its own right.)

More on EU Leaks from the website of Sven Giegold, who is a founder of the EU Leaks project (and a founder of TJN too, as it happens): Continue reading “EU Leaks – a new platform for whistleblowers” →

DFID’s work on international tax avoidance: in whose interest?

A new report by its own watchdog provides damning criticism of the UK government’s approach to tax as a development issue. At best, the government has ignored both international expertise and the views of the lower-income countries it claims to be helping. At worst, UK policy can be seen as pushing lower-income countries into supporting international tax rules that exacerbate poverty and inequality – and from which the UK government has itself has sought to benefit.

Such is the evidence presented that the government opens itself up to the possibility of a legal challenge over its failure to use aid for development aims, as required by legislation.

ICAI report

The Independent Commission for Aid Impact has released a report on the effectiveness of the UK government’s Department for International Development’s (DFID) efforts to tackle tax avoidance and tax evasion. Continue reading “DFID’s work on international tax avoidance: in whose interest?” →