Page 53 – Tax Justice Network

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

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 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

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

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?” →

Tax Justice Network Sept 2016 Podcast: #AppleTax, #BahamasLeaks and a conman offshore story

In our September 2016 September 2016 podcast: Continue reading “Tax Justice Network Sept 2016 Podcast: #AppleTax, #BahamasLeaks and a conman offshore story” →

The Tax Justice Network in Kenya and Israel

Two important events this month: Tax Justice Network Africa organised the 3rd International Tax Justice Academy on the 12th-16th September 2016 in Nairobi, Kenya. Continue reading “The Tax Justice Network in Kenya and Israel” →

#BahamasLeaks: New Leak Rips Open Bahamian Secrecy

We just put out this press briefing in reaction to the leaks from the Bahamas. Continue reading “#BahamasLeaks: New Leak Rips Open Bahamian Secrecy” →

Report: new data disproves US corporations’ false narrative on taxes

From Americans for Tax Fairness, a major new report about corporate taxes in the United States. It’s called Corporate Tax Chartbook: How Corporations Rig the Rules to Dodge the Taxes They Owe, and it contains many useful facts, such as this:

Corporate profits are way up, and corporate taxes are way down. In 1952, corporate profits were 5.5 percent of the economy, and corporate taxes were 5.9 percent. Today, corporate profits are 8.5 percent of the economy, and corporate taxes are just 1.9 percent of GDP.

Continue reading “Report: new data disproves US corporations’ false narrative on taxes” →

Our September Spanish language Tax Justice Podcast: Justicia ImPositiva, nuestro podcast de septiembre 2016

Welcome to Justicia ImPositiva, our third monthly podcast/radio show in Spanish. Bienvenid@s a Justicia ImPositiva, nuestro tercero podcast/programa radial mensual en castellano (abajo en castellano) Continue reading “Our September Spanish language Tax Justice Podcast: Justicia ImPositiva, nuestro podcast de septiembre 2016” →

Apple’s tax affairs: a symptom of the robber-baron culture

Updated with further information about Brazil’s decision – see below.

Now also on Angry Bear, Middle Class Political Economist

From the Financial Times:

More precisely, a group of 185 American CEOs has sent letters, co-ordinated by the Business Roundtable lobby group, to the leaders of 28 EU member states to try and get the European Commission to row back from claiming €13bn in underpaid taxes from Apple. They call the attempt a “grievous self-inflicted wound”. Continue reading “Apple’s tax affairs: a symptom of the robber-baron culture” →

Now Brazil puts Ireland on its tax haven blacklist

We have for years remarked that one of our informal markers of a tax haven is loud tax haven denials. See our ‘we are not a tax haven‘ blog for more. There’s probably no place more vocal than Ireland, where there seems to be a veritable industry of tax haven deniers, which specialises in cherry-picking convenient facts and making a pudding of them. (The other big Irish tax myth is that it was the 12.5 percent corporate tax rate that created Ireland’s Celtic Tiger: no, it wasn’t.)

Let’s state it clearly: Ireland is a big tax haven for multinational corporations, even if it isn’t particularly secretive. Or, in more succinct form, for those who have difficulty reading small text:

Ireland is a tax haven.

Continue reading “Now Brazil puts Ireland on its tax haven blacklist” →

Quote of the day – tax crimes and traffic offences

Michael West

From Michael West, an Australian tax journalist:

“In Australia, Part 4a of the Tax Act deems that the principal purpose of a transaction should be commercial (rather than tax driven). In light of the proliferation of tax haven activities by Australian companies this law, Part 4a, must be the most highly disregarded and disobeyed law in the nation, perhaps only topped by traffic offences.”

It’s an interesting story, not least because it has unearthed a hard-to-get number that we haven’t, from memory, seen before:

“The IPO documents for Intertrust estimate in 2014 the “total value of the global trust and corporate services market … was estimated at approximately €5.6 billion in revenue.”

Continue reading “Quote of the day – tax crimes and traffic offences” →

Report: why we need to tax corporations now, more than ever

Update: now on Naked Capitalism, where it’s attracted a lot of interesting commentary

Last year we published a document entitled Ten Reasons to Defend the Corporate Income Tax, outlining how the tax is under constant attack, in country after country, and explaining why it is one of the most precious of all taxes. Now there’s another fascinating paper, rich in insight and detail, from US economist Kimberly Clausing, entitled “Strengthening the Indispensible U.S. Corporate Tax.

While US-focused, it contains a lot of material that provides extensive further support for our own generic document, and argues that the corporate income tax is becoming more, rather than less, important in our tax system(s). It also argues that tax rates for capital, which is currently taxed at lower rates than labour is, should be harmonised with the labour rate, and supports so-called ‘formulary apportionment‘ approaches to taxing U.S. corporations internationally.

We’ll start by highlighting a graph: Continue reading “Report: why we need to tax corporations now, more than ever” →

Report: the investor case for country by country reporting

From the FACT coalition:

New Report: Investors at Risk by Lack of Corporate Tax Disclosures

September 12, 2016

Shareholders Increasingly Stymied by Opaque Corporate Tax Practices as Authorities Crack Down, Finds New FACT Analysis

Apple Tax Ruling “Just the Tip of the Iceberg”

WASHINGTON, D.C. – Investors are at an increasing risk due to the lack of information disclosed by companies about their tax practices, according to a new report published today by the Financial Accountability and Corporate Transparency Coalition (FACT Coalition)—a non-partisan alliance of more than 100 state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices.
Continue reading “Report: the investor case for country by country reporting” →

ICAI report

Ireland is a tax haven.

New Report: Investors at Risk by Lack of Corporate Tax Disclosures

Shareholders Increasingly Stymied by Opaque Corporate Tax Practices as Authorities Crack Down, Finds New FACT Analysis

Apple Tax Ruling “Just the Tip of the Iceberg”

Thank you!