South Street Arts Centre, Reading, England – Thursday 6 & Friday 7 November, 8pm
Caroline Horton & Co with China Plate and the Bush Theatre present 2 special preview performances.
“This is my world, I am the king, I make the rules and everyone else can f**k off. This is off-shore.” Continue reading “ISLANDS (or how to play dirty and get away with it) – preview in Reading”
We’ve just blogged a theological view of tax avoidance, in which we highlighted an excellent short, pithy blog by TJN Senior Adviser David Quentin with an equally excellent headline: People talking out of their asset classes.
It’s worth reading in full; we have decided on reflection that it’s important (and good) enough to haul it out from underneath our previous blog, and make it into a stand-alone piece.
The analysis finishes like this:
“This should be fairly obvious to anyone who thinks about this stuff for any substantial amount of time, which suggests to me that people who have been thinking about it for most of a lifetime and are still purporting not to see it are probably distracted from the analysis by the thought of all that juicy extra cash accumulating in their own holdings of corporate equities. Or “talking out of their [asset cl]asses”, as I like to think of it.”
So read on.
A new report from Argentina’s CEFID-AR looks into the evolution of Argentina’s transfer pricing legislation. A short summary follows.
From the dictatorship that began in 1976 and lasted until 1983, the OECD’s so-called ‘arm’s length method’ for tackling transfer pricing was explicitly incorporated into several relevant laws such as the Investment, Intellectual Property and Corporate Tax laws. The arm’s length method asserts that when related companies within the same corporate group trade across borders with each other, it is possible to establish an “arm’s length” price for the transaction, as if they were independent unrelated entities trading in a genuine market.
In many, if not the majority of, cases, calculating an arm’s length price requires that companies search for so-called ‘comparable’ market prices even when no such comparable prices exist in practice. This fiction underpins much of multinational corporate tax avoidance today. Before 1976, such transactions were analysed by the tax authorities and, where necessary, by the courts by applying an “economic reality” criteria, which considered payments for services, royalties and interests as equity movements between related parties.
By now the arm’s length criteria has become deeply rooted into national legislation: OECD methods were incorporated into the Corporate Tax Law in 1998. Tax authorities now seem to have serious difficulties in presenting successful cases to the tax courts, because the discussions almost inevitably focus on the eligibility of the chosen comparables. Ironically, even when it is obvious that comparable transactions and companies are not adequate because small independent companies never have the same cost structures as multinational companies, tax authorities nevertheless seem to be losing their cases time and again.
Moreover, legislative changes keep going in the same direction: since 2013 they have favoured the movement of capital to tax havens and secrecy jurisdictions that are considered to be “cooperative jurisdictions”. Eight of TJN’s 10 top secrecy jurisdictions are today considered to be “cooperative”: Germany, USA, Switzerland, Luxembourg, Cayman, Singapore, Japan and Jersey. It should be clarified that no relevant information for transfer pricing purposes has been obtained through the agreements signed with these jurisdictions. Nevertheless, because they are “cooperative”, no transfer pricing documentation needs to be presented in cases in which a company in Argentina has activities with a said-to-be unrelated party in such jurisdictions. And the so-called Sixth Method (that requires the prices of commodities to be compared with publicly known commodity prices at the shipping date) is not even required to be applied in such cases either.
The research does not measure the impact of transfer pricing manipulation in capital flight; that will be the subject of a second study on this topic.
This research was carried out by Veronica Grondona, under the supervision of Jorge Gaggero, on Argentina’s transfer pricing manipulation and capital flight, (In Spanish, Fuga de Capitales IV. Argentina, 2014. La manipulación de los “precios de transferencia”) It was produced for CEFID-AR (Center for Economic and Financial Development of Argentina) and carried out in collaboration with “Systems of Tax Evasion And Laundering” (STEAL), a project (#212210) financed by the “Research Council of Norway” (NUPI); being the issue of capital flight the focus of a work program of CEFID-AR (which began in 2006 and is planned to last until 2015), coordinated by Jorge Gaggero.
From Christian Aid, a new report exploring morality and taxpaying. Its introduction notes:
“Many developing nations are seriously affected by the way in which some multinational companies manipulate their profits to allow them to pay little or no tax in the countries in which they are operating. As Esther Reed observes in her paper, this simply feels wrong to most people.”
And it’s obviously crucial to investigate this. Here is the press release: Continue reading ““Good” companies may have to pay more tax than law requires, say theologians”
Finance minister Wolfgang Schäuble
In this article on why tax matters often need to be addressed at a global level, German finance minister Wolfgang Schäuble discusses the urgent need for new international rules to protect tax sovereignty and warns against the dangers of tax wars, commonly but misleadingly known as ‘tax competition.’ Continue reading “Quote of the day: Wolfgang Schäuble on tax wars”
There’s been a lot of news this week about a meeting in Berlin where finance ministers and tax bosses from 51 countries signed an agreement to implement automatic information exchange, a standard which we’ve been calling for for years and which is finally on the agenda.
Germany’s finance minister Wolfgang Schäuble was probably not so very far off the mark when he said
“Banking secrecy in its old form has had its day”
But this is just the beginning of the story. More excitable commentators have declared that “Bank secrecy is dead“, which is nonsense on many levels (not least that “banking secrecy” is just one of many flavours of financial secrecy that need to be examined here, and banking secrecy remains alive and well (if a little bruised) in places like Switzerland.) Continue reading “Who’s not coming to dinner? Some notes on the information exchange laggards”
From the Financial Transparency Coalition, a blog by Naomi Fowler, entitled Feeding The 1%: New Report Exposes The Disturbing World Of Agricultural Investors, Financial Secrecy And Land Grabs. It looks at a report by campaign group GRAIN, which produces evidence indicating that an avalanche of investment into agriculture after the 2008 global food crisis is predatory and that many investors have “little or no background in agriculture”. It finds
“a worrying picture emerges of what happens when speculative finance starts flowing into food production” when deals are scrutinised in detail.
GRAIN focuses on investments made by Indian billionaire Chinnakannan Sivasankaran – one of the world’s largest farmland holders. As Fowler’s blog notes: Continue reading “New report: food speculation in poor countries, via tax havens”
Qalaa chair and CEO Ahmed Heikal with former EU President José Manuel Barroso, March 2013
The European Commission has launched a series of investigations into the tax structures of companies like Google, Apple and Amazon, for fear that they are siphoning off tax revenue from Europe.
Far less attention has been paid to the role of institutions like the EU-backed European Investment Bank (EIB) in financing this offshore trade, particularly when it comes to developing countries.
Could this change? The Tax Justice Network’s Illicit Finance Journalism Programme has discovered that hundreds of millions of euros have flowed to companies linked to the secretive British Virgin Islands (BVI) though an Egyptian private equity fund, Qalaa Holdings. Continue reading “How Europe’s Investment Bank flouts its own tax haven policies”
Our quote of the day comes from Tim Hames, director general of the British Private Equity and Venture Capital Association, via an excellent article on London by Charles Goodhart, which is well worth reading in its own right.
‘As far as the professional middle class is concerned London has become a form of gigantic black hole dragging everything into it. To choose to build a career anywhere else is, at best, to be deemed eccentric and, at worst, a disturbing indication of a lack of ambition. In England, it is often London or bust.’
Anyone familiar with our work on the Finance Curse will recognise this immediately. As one cross-country academic study put it, highly remunerated finance “literally bids rocket scientists away from the satellite industry.”
London’s gains (or the gains of a lucky segment of Londoners) are so often obtained at the expense of others in Britain.
We have often commented on the fact that the OECD, a club of rich countries, dominates rule-making on international tax while its much broader (and more legitimate) counterpart (perhaps one might say ‘competitor’), the UN Tax Committee, has been left in the shade. Not only has the OECD (and its member states) ensured that the UN Tax Committee is under-resourced and under-supported; it has also sought to intervene powerfully in the UNTC’s decision-making processes to make sure it doesn’t deviate from the OECD’s jealously guarded “international consensus” on international tax.
They’ve just had a meeting in Geneva, which Martin Hearson has analysed here.
We’re going to highlight – perhaps a tad mischievously – one short paragraph from his report, as a teaser to invite you to read on.
“Unusually, the record of the discussion identifies the dissenters as the Chinese, Brazilian and Indian members of the committee. It is worth noting that none of these three individuals are still members of the committee.”
Continue reading “UN Tax Committee meeting: dissenters absent?”
From Micah Challenge in Australia, an event that comes ahead of the G20 world leaders’ meeting in Brisbane due on November 15 and 16. They introduce it in their press release:
“On Saturday 8 November, hundreds of concerned Australians dressed as corporate accountants will transform part of Brisbane’s CBD into a tax evader’s paradise of palm trees, mocktails, beach chairs and briefcases to shed light on the issue of multinational tax dodging.”
See more on Facebook.
N.B. The Tax Justice Network apologises for the use of an image of a palm tree in this article to represent tax havenry. The palm tree trope is widely used across media to associate international tax abuse largely or exclusively with small tropical islands whose populations are predominantly non-white and/or Black-majority. Evidence shows that the vast majority of international tax abuse is driven by rich OECD countries like the UK, US, Switzerland, Luxembourg and the Netherlands – yet it is small island nations that are often targeted by international policymakers while rich OECD countries are afforded exemptions. This colonial and structurally racist situation is bolstered by the use of the palm tree/island trope in media coverage of tax abuse. While the Tax Justice Network took the internal decision years ago to ban the use of the palm tree trope in our publications, we have kept our past uses of the trope up in order to be transparent about our past actions, rather than erase them, and to reaffirm our commitment to reject the trope going forward.
Here’s a headline (see picture) that should send ripples across the whole of Africa. 
Kenya’s Business Daily reports that the Kenyan government is considering plans to withdraw tax exemptions granted to foreign investors, including ten year tax holidays on corporate profits and ten year withholding tax holidays on repatriated dividends and other remittances. Continue reading “Are Kenyan tax holidays over?”
A new (preliminary) report from the Tax Justice Network
Leading finance ministers are meeting in Berlin this week to initiate a new global standard for the automatic information exchange of tax data.
In a preliminary report,[1] Tax Justice Network evaluates the OECD’s common reporting standard, due to be enshrined in a new multilateral competent authority agreement at the Berlin summit.
Report authors Markus Meinzer and Andres Knobel[2] argue that the new global standard will not end bank secrecy, but it is a first step towards rolling it back. Continue reading “The End of Bank Secrecy? A new TJN report”
FEMINIST LEGAL STUDIES QUEEN’S and [vc_row][vc_column][vc_column_text]In the October 2014 Taxcast: never mind social welfare, how much is corporate welfare costing us? Across the US they’re going to start publishing the tax breaks and subsidies, and we take a look at the latest research in the UK. Also: Ireland announces it’ll abolish the so-called ‘Double Irish’ tax dodge after the EU Commission finds Apple’s tax deal is ‘illegal state aid’. But what will they replace it with? Australians discover the true state of the tax contributions made by their top companies and Tax Justice Network Africa makes history by taking the Kenyan government to court in an unprecedented case over a treaty with the tax haven of Mauritius.
‘we constantly have this debate about social welfare claimants shouldn’t be given benefits unless they have responsibilities, well may be we need to say the same thing about corporate welfare, that corporate welfare claimants shouldn’t be given assistance unless they behave responsibly” – Dr Kevin Farnsworth
Featuring: Tax Justice Network Director John Christensen, Greg LeRoy of Good Jobs First www.GoodJobsFirst.org and the University of York’s Dr Kevin Farnsworth. (Dr Farnsworth’s research on direct corporate welfare in the UK has not yet been released but as soon as it is we will give further details).
Produced and presented by @Naomi_Fowler for the Tax Justice Network.
On the move? You can download to listen offline here: http://traffic.libsyn.com/
You can subscribe to the Taxcast either by emailing naomi [at] taxjustice.net to be added to the mailout list or via our rss feed http://taxcast.libsyn.com/rss
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In his new book (only available in French at this stage) Belgian journalist Eric Walravens explores how tax wars within the European Union are destroying attempts to create fair markets. The subtitle says it all: Enquête Sur Un Chantage Qui Ruine Nos États translates as Investigation into a threat that is ruining our States. Continue reading “New book – Fiscal Dumping: Enquête Sur Un Chantage Qui Ruine Nos États”
We recently blogged about Colombia’s decision to blacklist Panama because of its hostile role as tax haven for all sorts of dirty, criminal and corrupt Colombian drugs money. We also noted that Panama had the temerity to be outraged.
Now, from PanAm Post, something that really should stick in the craw:
“Recently, the Santos administration placed Panama, a traditional Colombian ally, on its list of international tax havens. Panama’s inclusion on this list, however, should not be considered a negative. Panamanian officials should be flattered to have been recognized for their respect for private property, unlike the vultures in other Latin-American countries. . . the Colombian government behaves like vultures, scavenging at resources that don’t belong to them.”
Continue reading “Panama voices call it “Badge of Honor” to be called a tax haven”
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A plucky group of Occupy activists are legally occupying Parliament Square in London, but face surprising levels of harassment by British police. Here is a short video about the occupation, in which the protesters highlight the flags of British tax havens flying across the street from Parliament – illustrating the closer relations between the U.K. and such notorious tax havens as Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, Gibraltar, the Turks & Caicos Islands, and so on. (Read about the British connection here.) Continue reading “Occupy protest highlights role of British tax havens”
Call for papers for a Research Workshop
SHOULD NATION STATES ‘COMPETE’? Continue reading “2015 Research Workshop: Call for Papers – Should Nation States ‘Compete’?”
In recent years we’ve been talking a lot about ‘competitiveness’ from the perspective of whole nation states. There’s a whole lot of nonsense that’s talked on this subject, and a whole lot of unnecessary damage caused to economies in the name of ‘competitiveness. Our blog about Bono and Ireland a few days ago was just the latest in our thinking in this area. There’s a whole lot more on this issue here.
Now here’s a fascinating article from September Continue reading “The myth of competitiveness: how to build a fairer city”
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By Gail Bradbrook, a TJN supporter who was at the Occupy protest:
“There is currently an occupation in Parliament Square, England, in protest at the capture of democracy by financial interests; a feature of what we at TJN call the Finance Curse.
TJN’s director, John Christensen, was amongst the speakers yesterday, with Tax Justice a major theme. A host of other expert speakers and workshops are happening, focussed on key themes such as inequality, public services and the environment. More information and photos are here and here.
I’ve been there for a couple of days, and seen firsthand the treatment of the peaceful gathering and protesters.
There has been ludicrously tight enforcement of bylaws designed specifically to prevent Occupy-style demonstrations after the first occupation three years ago, which was so successful in highlighting major issues of our time. (The byelaws had to be lightened for Parliament Square after they were legally challenged).
Protestors have been asked to stop sitting on pizza boxes because they count as “sleeping equipment.” We have been prevented from sleeping, our banners, tarpaulins and loud hailers have been confiscated. Other recent protests *have* been allowed to gather in this space with banners and loud hailers, but not Occupy Democracy; instead a round the clock watch of 30 Police have deployed tactics in a clear attempt to drain our energy.
Nevertheless, the protestors are in good spirits and ask anyone who can to come down and join in. We’d also love your help in sharing what is happening through social media, etc. There has been what feels like a media blackout, save for a less than helpful article in the Guardian.
The Finance curse also talks about the capture of the media. In a spectacular example of this, can you imagine an event where at night time, once the tourists aren’t around to see and in front of our iconic symbol of democracy, this level of intimidatory policing is used… without a word spoken about it in major news channels?
John Christensen adds:
I spent all day Sunday in Parliament Square and watched at first hand the constant harassment by British police officers and ‘heritage wardens’. Both groups seemed oblivious to the fact that the square is primarily an open forum for public democracy rather than nice area of lawn to provide tourists with photo opportunties.
I saw at first hand the police arrest an Occupy activist who had cut a piece of string on the the perimeter of the lawn which appeared to serve no purpose other than to deter people from joining the discussion.
Like other speakers, I was not allowed to use amplification equipment during my talk, and had to compete with noise from police helicopters, church bells, and unsilenced cars and motorcycles. I have attended other events at Parliament Square in recent years at which amplification equipment was allowed. The police were advised by Occupy’s George Barda of this inconsistency, but were adamant they would seize any equipment used for voice amplification.
I watched police officers harassing Occupy Activists who wanted to use plastic tarpaulins to protect their kit and as a groundsheet for sitting on.
I witnessed a huge and expensive over-policing effort which was clearly intended to deter others from joining the peaceful discussions and provoke retaliation from the participants. Happily, the latter kept their cool and avoided giving the police the opportunities to arrest they were clearly gagging for.
All this happened, ironically, at an event protesting the loss of democracy in Britain.
I think the rest of the world needs to wake up to how far the UK has gone down the road to losing even a semblance of democracy. As Gail notes above, the Finance Curse, which I spoke about yesterday at Parliament Square, also includes erosion of press freedom. This is clearly the case in Britain, where most of the media is owned and controlled by five media barons, many extensive users of tax havens, and where the BBC has long since lost its mojo (on the BBC, also see this.)
Wending my way home last night I couldn’t help feeling ashamed at living in a country which brags about having the Mother of Parliaments, when in reality democracy has become a sham.
British newspapers are today reporting a major step forward for the First Tax Mark, with energy giant SSE – the UK’s second larget energy supplier – becoming the first FTSE 100 company to be awarded the Fair Tax Mark. Continue reading “Energy giant SSE awarded Fair Tax Mark for tax transparency”