Page 56 – Tax Justice Network

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” →

UK tax authority: too close to big business, too far from the public – report

The UK’s tax collection agency is more secretive than MI6 and crippled by corporate interests according to a new report launched in the House of Commons yesterday.

Corporate interests now exercise a significant amount of control over HMRC, it says – and it is hard not to agree. All of the non-executive directors of HMRC come from the world of business. There are no representatives of individual tax payers or experts from the world of academia. The current Executive Chair of HMRC, Edward Troup, once called taxation ‘legalised extortion’. Before taking over at the tax collection agency he worked at a law firm linked to companies contained in the Panama Papers. Mr Troup later said his legalised extortion quote had been taken out of context, yet according to Full Fact it came from a 1997 FT article which appeared to be arguing against a General Anti Avoidance Rule (GAAR).

Continue reading “UK tax authority: too close to big business, too far from the public – report” →

MEP support for #LuxLeaks whistleblowers, back in court. (Again)

You may have heard that Luxembourg prosecutors aren’t satisfied with the 12th chamber of the Criminal Court of Luxembourg’s verdicts for the so-called #LuxLeaks whistleblowers Antoine Deltour and Rapahel Halet and they are appealing. That means these two men will once again face a Luxembourg court, probably by the end of the year. It was bad enough that these public spirited heroes were dragged through the courts in the first place, with Deltour receiving suspended 12-month jail time and a €1,500 fine and Halet sentenced to suspended 9-month jail time and a €1,000 fine. Continue reading “MEP support for #LuxLeaks whistleblowers, back in court. (Again)” →

The Bahamas tax haven – a (re-)emerging global menace?

Update: as it happens, The Economist has just published an excellent story about the Bahamas, subtitled The Bahamas Cocks a Snook at the War on Tax Dodgers. (Our only beef with that subtitle is that this is about so much more than just tax.)

We’ve periodically remarked on the Bahamas as a secrecy jurisdiction of great concern. Like Panama, it’s generally had a greater tolerance of dirty money than most modern offshore centres: more of a willingness to turn a blind eye and to overlook noncompliance by Bahamas-based actors of its own rules and laws.

The purpose of this blog is to flag up the Bahamas in a more pointed way: as a major wrecking-ball threatening global efforts to clamp down on cross-border financial secrecy.

The Bahamas has hosted an offshore centre for crime and tax evasion for decades, and it has historically had a higher tolerance for dirty money than most tax havens. Its secrecy score of 79 in our Financial Secrecy Index is one of the world’s highest. Treasure Islands summarises an important component of the Bahamas’ history and identity, via Chicago gangster Al Capone’s moneyman, Meyer Lansky: Continue reading “The Bahamas tax haven – a (re-)emerging global menace?” →

Apple’s iPhone 7 launch: but what about the taxes?

Apple is launching its iPhone 7 today. In the context of the recent Apple tax scandal, and the imbroglio involving the company, the European Commission, and the U.S. Treasury, we thought we’d share some images that some of our partners have created, to celebrate the event.

Before seeing the images, if you want something to read, perhaps take a look at Prof. Mariana Mazzucato’s penetrating analysis of just how much government support Apple has enjoyed, in its construction of the iPhone. It’s entitled ‘The Entrepreneurial State’: Apple Didn’t Build Your iPhone; Your Taxes Did. Her book The Entrepreneurial State, looking at how heavily such companies rely on government support, has been highly influential. Click on the fun video, which we blogged recently.

Here is a first image: thanks to Eurodad for forwarding this collection. Continue reading “Apple’s iPhone 7 launch: but what about the taxes?” →

On our recent event on beneficial ownership in Buenos Aires

The Second International Conference on Beneficial Ownership Registries took place in Buenos Aires on August 31st and September 1st. The event was held again at Argentina’s Central Bank and was co-organized by the Tax Justice Network, Argentina’s General Prosecution Office (Ministerio Público Fiscal), Fundación SES, Latindadd and the Red de Justicia Fiscal LAC. It was sponsored by Argentina’s Anti-corruption Office. Continue reading “On our recent event on beneficial ownership in Buenos Aires” →

UK moves forward on Country by Country reporting

They said it would never happen – but here it comes. From the UK lower house of parliament, an amendment to legislation which looks like this:

This is very welcome news, even though the amendment is far from perfect. Continue reading “UK moves forward on Country by Country reporting” →

Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional ‘competition’

Prof. Thomas Rixen

Prof. Thomas Rixen, who has written a lot about tax ‘competition’ (aka tax wars) in the past, has a new article looking at similar dynamics in the area of financial regulation. Entitled Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional competition, it points out that the shadow banking sector, many of whose players were implicated in the global financial crisis that erupted almost a decade ago, is heavily entwined with offshore financial centres. Typically, this involved banks sponsoring off-balance sheet vehicles, located in places like Cayman or Luxembourg: these supposedly took risk off the banks’ books, but then returned to haunt the banks when they blew up, causing widespread economic disaster. Continue reading “Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional ‘competition’” →

Press Release: Has the European Commission’s Apple decision signalled the beginning of the end of tax wars?

Press release – for immediate release

Has the European Commission’s Apple decision signalled the beginning of the end of tax wars?

Today, the European Commission has ruled that two tax rulings issued by the Irish tax administration on the tax treatment of Apple’s corporate profits represent illegal state aid under EU law. As a consequence, Apple has to pay up to €13 billion of taxes plus interest to Ireland. This sum due to the Irish exchequer can be reduced if other countries from Europe, Africa, the Middle East or India or the United States decide to claim a share of those profits. This lays bare the core of a global problem: secretive tax rulings issued by tax haven states are not an instrument for the avoidance of double taxation, but a tool for the achievement of non-taxation of profits. In practice such rulings destroy fair market competition and undermine the tax sovereignty of democratic states.

This decision is remarkable on at least three counts.

Continue reading “Press Release: Has the European Commission’s Apple decision signalled the beginning of the end of tax wars?” →

Second high-level symposium on beneficial ownership transparency in Buenos Aires, August 31st/September 1st

Tax Justice Network together with Argentina’s Anti-Corruption Office, Argentina’s General Prosecution Office (Ministerio Público Fiscal), the Central Bank and other NGOs including Fundación SES, Red de Justicia Fiscal LAC, Latindadd and CIPCE will host a two-day event involving government and civil society concerning the need for registries of beneficial ownership (click here to see full program in spanish). The second edition of this event which first took place in 2015, will be held again at one of the main halls of Argentina’s Central Bank and will be one of the principal gatherings of government agencies and NGOs from the region to discuss this topic.

Continue reading “Second high-level symposium on beneficial ownership transparency in Buenos Aires, August 31st/September 1st” →

The UK’s North Sea oil revenues: Giving it away?

New analysis of the UK’s North Sea oil and gas suggests that the combination of tax giveaways by the government, and aggressive avoidance by multinationals, means that the country may actually be subsidising the extraction of its natural resources. And this at a time of continuing ‘austerity’ measures, that a UN treaty body has harshly criticised for driving poverty and inequality, undermining citizens’ human rights.

Continue reading “The UK’s North Sea oil revenues: Giving it away?” →

The US Treasury just declared tax war on Europe

Update: here’s our research director Alex Cobham’s interview with Share Radio which goes through the key points.

On this quiet August day, the US Treasury has fired the first shots of a tax war with Europe. And while it’s wrapped up in a claim to defend international tax cooperation, it looks more like an attempt to prevent an effective measure against international tax-dodging – carried out, not least, by US companies. At the same time, the US continues as the leading hold-out against the automatic exchange of individuals’ financial information; and to resist the growing tide of public registers of the beneficial ownership of companies. The stage is set for a prolonged battle.

By publishing a white paper titled ‘THE EUROPEAN COMMISSION’S RECENT STATE AID INVESTIGATIONS OF TRANSFER PRICING RULINGS’ (h/t @RichardRubinDC), the US has signalled an end to a period of quiet tension. This long post considers why this matters; then sets out the main contents of the white paper; before concluding with an assessment of what is possible in the ensuing hostilities.

Implications

We explore the white paper’s main points below, but note first its significance. For one thing, it confirms just how bad relationships between the US and the Commission have become on the subject of corporate tax. The white paper is the opposite of gentle diplomacy – and quite close, in parts, to an outright threat. Continue reading “The US Treasury just declared tax war on Europe” →

Corporate tax cuts: why the old analyses don’t stack up any more (did they ever?)

Last month Pascal Saint-Amans, head of tax for the OECD, spoke to the Wall Street Journal, in an article subtitled The argument against taxing capital income relatively more than wages is losing its force. He said:

“For the past 30 years we’ve been saying don’t try to tax capital more because you’ll lose it, you’ll lose investment. Well this argument is dead, so it’s worth revisiting the whole story,” Pascal Saint-Amans, the OECD’s tax chief, said in an interview.”

This particular article came to our attention via the Fair Skat blog, which sketches out the implications – and they are highly significant. The usual story goes something like this: Continue reading “Corporate tax cuts: why the old analyses don’t stack up any more (did they ever?)” →

Our August Tax Justice Network podcast: are the big four accountancy firms really the ‘big one’?

In our August 2016 podcast: The Big Four accountancy firms: Are they in fact more like the Big One? And should they be broken up? Continue reading “Our August Tax Justice Network podcast: are the big four accountancy firms really the ‘big one’?” →

Public procurement — the next frontier for tax justice campaigning?

Matti Ylo?nen

This guest blog by Matti Ylönen is partly based on an academic article Cities as World Political Actors: “Tax haven free cities” initiative and the politics of public procurement.

Public procurement — the next frontier for tax justice campaigning?

The international movement for tax justice and tackling secrecy jurisdictions has come of age. Many of the demands that were deemed impossible a decade ago have reached the political mainstream, even though progress has often been painstakingly slow, sometimes hindered by loopholes that have weakened even the most progressive initiatives.

Where are the next frontiers for tax justice campaigning? It is interesting to draw a comparison with other, much older strand of campaigns on reforming the international trade rules.

For decades, these trade campaigns have progressed along two distinct paths.

Continue reading “Public procurement — the next frontier for tax justice campaigning?” →

Will the British government target tax dodging enablers at last?

Margaret Hodge

There has been much talk in Britain of new government proposals that tax advisors giving advice on tax avoidance could face large fines of up to 100% of the tax lost if their schemes are defeated in courts. We warmly welcome the principle of the thing: these players have been getting away with impunity when they market tax-cheat schemes to multinational corporations and wealthy individuals. In the case of the so-called Luxleaks scandal, where PwC was caught out marketing an astonishing array of socially abusive tax schemes to the world’s multinationals, the only two people to face any sanction were the whistleblowers who exposed the scheme. In 2013 UK Public Accounts Committee (PAC) heard that from one Big Four accounting firm officials that their company would flog schemes even if they thought there was only a 25 percent chance of surviving a court challenge.

In the words of Margaret Hodge, the PAC’s chair:

“What really depresses me is you could contribute so much to society and the public good and you all choose to focus on working in an area which reduces the available resources for us to build schools, hospitals, infrastructure.”

Continue reading “Will the British government target tax dodging enablers at last?” →

Why the Swiss case against whistleblower Elmer may hurt the bankers

Rudolf Elmer, the Cayman-based Swiss whistleblower who went to prison after spilling secrets relating to the Swiss bank Julius Baer, has long been victimised not only by the Swiss banking establishment, and Switzerland’s courts (which as we’ve extensively documented, seem to have played fast and loose with the law in order to nail him) – but also by much if not most of the Swiss media. In Switzerland he’s been demonised as a traitor and a criminal, and jailed too.

Such is the fate of the offshore whistleblower. Continue reading “Why the Swiss case against whistleblower Elmer may hurt the bankers” →

New report from UK parliament: tax justice to the fore

The UK’s All Party Parliamentary Group on Tax has published a report entitled A more responsible global tax system or a ‘sticking plaster’? An examination of the OECD’s Base Erosion and Profit Shifting (BEPS) process and recommendations. They consulted us (among many others) and the result is a really strong document of tax justice, with significance for all countries, since Britain is such a central player in the global system of tax havens. The APPG’s summary, via email, says: Continue reading “New report from UK parliament: tax justice to the fore” →

Finally, trade misinvoicing gets political

We recently helped publicise a report by the UN Conference on Trade and Development (UNCTAD) in our blog entitled Some countries “lose” 2/3 of exports to misinvoicing. As a reminder, trade misinvoicing is a form of money laundering that involves deliberately misreporting (on an invoice to customs) the value of a commercial transaction, so as to shift money illictly across borders. The study seeks to get a handle on the scale of the problem by studying mismatches between export data from the exporting countries (Chile, Cote d’Ivoire, Nigeria, South Africa and Zambia, in this case), and values reported by the importing countries, including hubs such as Switzerland, the Netherlands, the United Kingdom and United States.

There’s been some pushback against the UNCTAD study since we wrote that, and there’s lots to welcome here. In particular, the South African component in the report has prompted both business interests and South Africa’s respected chief statistician, Dr Pali Lehohla, to criticise the assessment. Continue reading “Finally, trade misinvoicing gets political” →

Book review: Global Tax Governance – What is wrong with it and how to fix it

A guest blog by Rasmus Corlin Christensen, with his kind permission, originally published @FairSkat Blog

One of the major 21st century challenges for politicians and polities at both the national, regional and international levels is the governance of ever-more global, mobile and flexible economic and financial flows. No more so than in the area of taxation, which looks likely to remain the last bastion of entrenched perceptions of national sovereignty, an undisputed cornerstone of the independent and authoritative government, the undeniable prerogative of national policy-makers in the face of growing global economic integration.

Or perhaps world leaders are slowly warming to the fact that they need international co-operation, if they want to address tax competition and the pilloried global tax system in any meaningful way? Peter Dietsch and Thomas Rixen’s recent edited volume on Global Tax Governance (sub-titled “What is wrong with it and how to fix it” – straight to the point) certainly seeks to leave you with the feeling that it is both desirable and irrefutable, “an idea whose time has come”, with reform proposals waiting for the Obamas and Merkels of this world to wake up and smell the coffee.

Global Tax Governance comprises fifteen chapters from a very strong line-up of contributors across the disciplinary divides, compiled by Dietsch and Rixen into 350-or-so pages of excellent reading. International tax competition and co-operation are not simple issues; they are multifaceted, difficult, wicked phenomena, so the diversity of inputs is both welcome and necessary. The chapter authors include economists, legal scholars, political scientists, and political philosophers. This provides a well-rounded gathering of perspectives, which covers many of the key stories of both the problems and solutions related to global tax governance. But there is no denying that this is first and foremost a political economy book – the pure economic and pure legal perspectives, for instance, are marginal. Still, for anyone looking for an intermediate dive into tax competition and the state and issues of international tax governance, this is, to my mind, the top place to start today. Continue reading “Book review: Global Tax Governance – What is wrong with it and how to fix it” →

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”

Has the European Commission’s Apple decision signalled the beginning of the end of tax wars?

Implications

Thank you!