The Tax Justice Network Podcast, October 2015

In the October 2015 Tax Justice Network Podcast:

We look at the ‘remittance cartel’, their ‘taxing of the poor’ with monopoly prices in a juicy $450-500 billion market. Also: ‘comfort letters’ and the game changing European Commission ruling that the tax agreements between Luxembourg, the Netherlands, Fiat and Starbucks constitute illegal state aid. We analyse the rich country club of the OECD’s BEPS proposals for reform of the global corporate tax system: will it really address corporate tax avoidance and evasion?

 

The taxcast is also available here.

Featuring: John Christensen of the Tax Justice Network, economist, lawyer and senior Tax Justice Network advisor James Henry, Somalian wife and mother Shamso Abdullahi (interviewed by CCTV Africa), and Pope Francis.

Produced and presented by @Naomi_Fowler for the Tax Justice Network.

You can subscribe to our youtube channel https://www.youtube.com/user/TackleTaxHavens or email Naomi [at] taxjustice.net to be added to the subscriber email list. You can also follow @TheTaxcast on Twitter

 

Fiscal Policy and Human Rights in the Americas: mobilizing resources to guarantee rights

There is a new initiative emerging from the international strategy meeting, “Advancing Tax Justice through Human Rights,” held in Lima, Peru in April 2015:

Via email from Niko Lusiani of the Center for Economic and Social Rights (CESR):

The first-ever thematic audience of the Inter-American Commission on Human Rights (IACHR) on fiscal policy, begins today in Washington, DC.

Economic policies – and consequently fiscal policies – are not normally debated by human rights accountability bodies, but working together we are increasingly building the foundations for them to become forums for fiscal accountability.

Various participants interested in the initiative in Lima teamed up to petition the Inter-American Commission to hold this hearing, and we produced a report – Fiscal Policy and Human Rights in the Americas: mobilizing resources to guarantee rights along with it. (English summary here.)

We’d encourage you to share this news with your networks, watch live here on Thursday, Oct 22nd at 14:45 (local time in Washington DC) and participate on Twitter: #derechosyfiscalidad #tax4humanrights.

 

 

 

European Commission determines state sponsored tax avoidance schemes illegal

Today the European Commission is expected to announce that the ‘comfort letters’ signed between European tax havens and companies are a form of illegal state aid. Continue reading “European Commission determines state sponsored tax avoidance schemes illegal” →

Will civil society shake up the world of tax treaties?

Data source: index based on the forthcoming ActionAid tax treaties dataset

Data source: index based on the forthcoming ActionAid tax treaties dataset

When a multinational company makes a cross-border investment, the relevant tax treaty between the two countries will generally sort out which country gets to tax which part of the ensuing activity and income streams. (Read more about tax treaties here.) A key question is this: how do the ensuing taxing rights over the ensuing income get shared out between a) the country receiving the inward investment (which is the source of the profits, often a poor country); and b) the country where that multinational has residence (often a rich country)?

Given political realities, it’s hardly a surprise that most tax treaties, following an OECD model, generally favour ‘residence’ over ‘source.

Now Martin Hearson has an interesting new post about the UK-Senegal tax treaty. Take a look at that graph (click to enlarge). Continue reading “Will civil society shake up the world of tax treaties?” →

Finance Uncovered: a proper introduction

FinUncovered.png.600x600_q85
We’ve linked to Finance Uncovered on several occasions — not least this week — but never as comprehensively as this. From the Byline website, a proper introduction, which nicely illustrates our operating model.

 

Introducing Finance Uncovered

Global finance has no borders – neither do we. Finance Uncovered is a network of investigative journalists and campaigners from over 50 countries. Nick Mathiason explains how we follow the money and what’s been uncovered so far.

Three years ago, Tax Justice Network director, John Christensen asked me if I would run a course to equip journalists with skills and tools to investigate tax abuse, money laundering and corruption.

On the spot, I said “yes”. Continue reading “Finance Uncovered: a proper introduction” →

What will BEPS fix, and who will gain?

Prof. Sol Picciotto, a TJN Senior Adviser and co-ordinator of the BEPS Monitoring Group

Prof. Sol Picciotto, a TJN Senior Adviser and co-ordinator of the BEPS Monitoring Group

A guest blog by Sol Picciotto, co-ordinator of the BEPS Monitoring Group.

What will BEPS fix, and who will gain?

The launch this week of the final reports from the G20/OECD project on Base Erosion and Profit Shifting (BEPS) has sparked two frequently asked questions. The first is: can we give examples of methods used for tax dodging by multinationals which will not be fixed by these proposals?

The answer is: they will not “fix” any.

Continue reading “What will BEPS fix, and who will gain?” →

Seychelles: the ex-billionaire and the captured state

sivaWe’ve never laid down hard and fast definitions of the terms ‘tax haven’ or ‘secrecy jurisdiction’ because there’s so much to say about what makes these places tick, and no short definition captures the whole picture. But we offer this way of thinking about these places.  Among other things, it says:

“Secrecy jurisdictions tend to be ‘captured states’, where offshore financial services tends to be deliberately insulated from any domestic political opposition, and relevant laws and approaches to the industry are instead created by small numbers of professional insiders in the jurisdiction in collaboration with offshore financial services interests from elsewhere.”

Continue reading “Seychelles: the ex-billionaire and the captured state” →

Finance Uncovered: how Africa’s biggest cell phone firm shifts billions offshore

Graphic-MTN

From the Mail & Guardian

From Finance Uncovered, a TJN-founded project, a press release about a story that is (among other things) front page of South Africa’s influential Mail & Guardian newspaper.

Finance Uncovered reveals how Africa’s biggest cell phone firm shifts billions offshore

The Finance Uncovered global network of investigative reporters have today published a cross-border investigation into South African telecoms giant MTN exposing how billions of rand from its subsidiaries in Ghana, Nigeria and Uganda have been shifted to a shell company in the small island tax haven of Mauritius.

The two year investigation spanning five countries was published today in South Africa’s Mail and Guardian, ?the U?gandan Observer ?and G?hana Business News.?

A report in Nigeria will follow shortly.
Continue reading “Finance Uncovered: how Africa’s biggest cell phone firm shifts billions offshore” →

On tax credits, economic misunderstandings and the poor

The UK economics writer Chris Dillow has an excellent post making some basic points about tax credits, following a recent speech by the UK’s finance minister (or “Chancellor”) George Osborne, where he says:

“We simply can’t subsidise incomes with ever-higher welfare and tax credit bills the country can’t afford.”

Which begs the question of who “we” and “the country” are.

The first part of Dillow’s response is:

“For a lot of the country, it is not tax credits which are unaffordable, but the cuts in them.”

Continue reading “On tax credits, economic misunderstandings and the poor” →

So: what kinds of corporate tax schemes won’t BEPS stop?

BEPS-actions-illustrationThere have been a few inquiries from people in the media looking at our (and others’) recent critiques of the OECD’s recently-released BEPS project proposals to tackle international corporate tax avoidance. One pertinent question is this: which schemes, specifically, won’t BEPS stop?

Prof. Sol Picciotto, a TJN Senior Adviser and co-ordinator of the BEPS Monitoring Group, a network of tax justice groups looking at the project, provided the following answer to this question from a French journalist. Continue reading “So: what kinds of corporate tax schemes won’t BEPS stop?” →

New study: U.S. Fortune 500 cos have $2.1 trillion offshore

From Citizens for Tax justice, via email:

“Today Citizens for Tax Justice and the U.S. PIRG Education Fund released, “Offshore Shell Games,” a new study which found that nearly three-quarters of Fortune 500 companies maintained at least one tax haven subsidiary in 2014, with just 30 companies accounting for 62 percent of earnings stashed offshore.

All told, Fortune 500 companies collectively maintain 7,622 tax haven subsidiaries and hold $2.1 trillion offshore, avoiding up to $620 billion in U.S. taxes. Continue reading “New study: U.S. Fortune 500 cos have $2.1 trillion offshore” →

GATJ: OECD tweaks to tax rules for multinational corporations fall short on transparency, inclusivity

From the Global Alliance for Tax Justice, a press release on the OECD’s BEPS process, which we wrote about yesterday:

“The Global Alliance for Tax Justice (GATJ) is urgently calling for a United Nations-based follow-up process to the “flawed” OECD Base Erosion and Profit Shifting project, in order to deliver an effective and transparent global system for taxing multinational corporations.  The Global Alliance for Tax Justice, representing regional networks of civil society groups around the world, says a truly inclusive global tax body and public country-by-country reporting for multinationals are two key measures that need to be established.”

Note our emphasis. There is much more in the press release, however: now read on.

(The GATJ is a body that emerged from TJN but is now organisationally independent from it.)

Our Spanish language podcast: Justicia ImPositiva, Edición 2

Our Spanish language podcast: Justicia ImPositiva, Edición 2Taxcast logo Spanish. En la segunda edición de Justicia ImPositiva nos vamos a México, a ver cómo el gobierno de ese país intenta forzar a las grandes corporaciones a pagar más impuestos. También hablamos con el economista y catedrático de la Universidad de Sevilla, @JuanTorresLopez, sobre el comportamiento irresponsable y criminal de los bancos y el discurso de austeridad. Además, les preguntamos a ustedes, si tuvieran un escoba, ¿cuáles paraísos fiscales barrerían? Analizaremos cómo se alimenta el círculo vicioso de los paraísos fiscales con John Christensen y Andrés Knobel de Tax Justice Network, quienes nos contarán las claves del funcionamiento de estos cuestionados territorios utilizados por los ricos y las empresas grandes para ocultar sus finanzas y sus transacciones. Bienvenid@s a este nuevo podcast @J_ImPositiva con @silvia1olmedo y @monicamarchesi coordinado por @Naomi_Fowler para @TaxJusticeNet

Press release: OECD’s BEPS proposals will not be the end of tax avoidance by multinationals

TJN logoPRESS RELEASE

EMBARGOED: 14:00 CET

See this press release in pdf form here.

See the BEPS Monitoring Group’s longer technical evaluation here (or in condensed form here.)

See links to further statements by others below.

OECD’s BEPS proposals will not be the end of tax avoidance by multinationals

Continue reading “Press release: OECD’s BEPS proposals will not be the end of tax avoidance by multinationals” →

Belize and the curious tale of the British lord

We take it all back

From Debrett’s: a strong interest in tackling crime

Britons have been titillating themselves recently with some sordid but quite likely untrue allegations made against UK Prime Minister David Cameron by Lord Michael Ashcroft (whom in making the allegations may have been motivated by pique or revenge.) 

We won’t dignify these allegations by spelling them out, but we will note that Ashcroft’s considerable financial fortune has been partly tied up with financial activities in the tiny tax haven of Belize. It has long worried us and many others that he had for so many years such a powerful influence in Britain’s ruling Conservative Party. Now, as Jesse Drucker reports for Bloomberg: Continue reading “Belize and the curious tale of the British lord” →

Dear Ambassador, the Bahamas is most definitely a tax haven

Update: condolences to those in the Bahamas who have suffered from Hurricane Joaquin which hit the islands on Saturday. We should add that those who have probably suffered most from the devastation have nothing to do with the Bahamas’ offshore financial industry.  

 The Bahamas’ Ambassador to the United States has protested “in the strongest terms” against that jurisdiction’s decoa_smllsignation as a tax haven by the District of Columbia.  The Ambassador claims the Bahamas’ inclusion is based “ on . . .  seemingly arbitrary and spurious grounds.”

TJN has written to the Ambassador to support the Bahamas’ designation as a tax haven.  Based on the evidence from our Financial Secrecy Index (the 2015 results will be published in just over one month), the Bahamas is among the most secretive and least cooperative tax havens on the planet, and appears to be going against the current by resisting pressure for change.  See here and here for example.

Here is the text of the letter we sent this morning to the Ambassador: Continue reading “Dear Ambassador, the Bahamas is most definitely a tax haven” →

World Bank president: corporate tax dodging ‘a form of corruption’

Jim Yong Kim

Jim Yong Kim

From a speech by World Bank President Jim Yong Kim:

“Some companies use elaborate strategies to not pay taxes in countries in which they work, a form of corruption that hurts the poor.”

That is a powerful statement from a powerful individual. This is indeed something that we’ve been arguing for many years.

It’s a welcome speech, containing a number of other peaches, such as:

“We reject “trickle-down” notions that assume that any undifferentiated growth permeates and fortifies the soil and everything starts to bloom, even for the poor.”

Continue reading “World Bank president: corporate tax dodging ‘a form of corruption’” →

Tax avoidance by corporations is out of control; the UN must step in

Earlier this summer we blogged about how the powerful OECD bullied their way at the Addis Ababa financing for development summit to block developing country requests for a proper inter-governmental body to establish the groundrules for international tax cooperation.  Now, writing in The Guardian,  and comment on how the rich and powerful nations raged against the attempt by poorer countries to have some say in this crucial matter:

“When the developing countries proposed, at the last major financing for development conference earlier this year, to strengthen the tax cooperation work at the United Nations by transforming its technical committee on this issue into an intergovernmental organ, the developed nations raged in opposition, leaving the Organisation for Economic Co-operation and Development, an organization made up essentially of developed countries, as the dominant agent of international tax cooperation.”

For over a decade, TJN has argued that the OECD is not the appropriate body to set the rules for tax cooperation.  For half a century it has failed to create a framework that helps poorer countries to tackle tax evasion and avoidance.  Time and time again its initiatives, for example on information exchange processes, have offered lowest common denominator solutions.  Their latest project, the BEPS programme, has merely tried to patch up the arm’s length method, which has been proven time and again to not work.  With the BEPS programme coming to an end (and we will be reporting more on this next week) the time has come to end the OECD’s presumptious role as rule-maker, and to move to a global body which offers all nations equal representation at the decision-making table.

Read the full Guardian article here.

Christian Aid: new Swissleaks analysis shows harm to developing countries

An important new analysis from Christian Aid. Note the pull-out quote highlighting the problems with the OECD’s Common Reporting Standard, or CRS.

September 30 2015

Swissleaks Christian AidNEW SWISSLEAKS ANALYSIS REVEALS HOW TAX HAVEN SECRECY HARMS DEVELOPING COUNTRIES 

New, detailed examination of the SwissLeaks files by Christian Aid working with the US-based Financial Transparency Coalition (FTC) graphically reveals the harm tax haven secrecy does to the economies of developing countries.

The SwissLeaks scandal involves thousands of secret accounts at HSBC’s Swiss subsidiary HSBC Private Bank (Suisse), and the billions of euros held in them over a five-month period in 2006/2007. Continue reading “Christian Aid: new Swissleaks analysis shows harm to developing countries” →

How ‘competitive’ tax and incentive policies hurt small U.S. businesses

Not biased towards small businesses

The Competitiveness Agenda, in a pie chart

Cross-posted from the Fools’ Gold site:

Recently we have written about how supposedly ‘competitive’ national policies on tax and the financial sector in Britain tend to favour large multinational firms over smaller, more locally-based ones, and how they also tend to lead to less competition in markets too.

This is the result of what we sometimes call the “Competitiveness Agenda”, which pushes the idea that you have to pamper and give subsidies to mobile capital, for fear that it will flee to more hospitable jurisdictions. Of course the firms that are most able to flee (or partly flee) to foreign jurisdictions are naturally the internationally-focused ones – and that usually means larger multinational corporations. The smaller locally-focused ones, which are most wholly embedded in the local economy won’t generally flee.

Continue reading “How ‘competitive’ tax and incentive policies hurt small U.S. businesses” →

Pope Francis on inequality, tax evasion and corruption

Eric LeCompte of Jubilee USA Network has written a useful article on the occasion of Pope Francis’ visit to the United States, in which he’s highlighted some important historical quotes of his. For instance:

“Working for a just distribution of the fruits of the earth and human labor is not mere philanthropy. It is a moral obligation. For Christians, the responsibility is even greater: it is a commandment. It is about giving to the poor and to peoples what is theirs by right. The universal destination of goods is not a figure of speech found in the Church’s social teaching. It is a reality prior to private property. Property, especially when it affects natural resources, must always serve the needs of peoples. And those needs are not restricted to consumption. It is not enough to let a few drops fall whenever the poor shake a cup which never runs over by itself. Welfare programs geared to certain emergencies can only be considered temporary responses. They will never be able to replace true inclusion

– July 9, 2015″

Continue reading “Pope Francis on inequality, tax evasion and corruption” →

Switzerland: still the home of secret banking

"Are we Swiss all criminals?" The poster asks, in light of tax evasion and money laundering probes. Only a minority

“Are we Swiss all criminals?” The poster asks, in light of tax evasion and money laundering probes. Only a minority

There’s been a lot of press about Swiss banking secrecy being finished, because of certain improvements that have been made. We periodically issue reminders that this ain’t so, for many reasons. Just for instance:

Continue reading “Switzerland: still the home of secret banking” →