Page 95 – Tax Justice Network

How Seychelles became a paradise for dirty money and corruption

In 2012 Al Jazeera published a remarkable undercover television investigation into the Seychelles, where two African journalists posing as wealthy Zimbabweans were brazenly offered the sleaziest secrecy services. It’s a classic of offshore undercover investigation, and we at TJN have referenced it several times.

Now the International Consortium of Investigative Journalists (ICIJ) has done its own in-depth investigation, referencing the Al-Jazeera piece and then delving deeper into the Seychelles and its murky offshore sector. We paste a section below, but we’d urge you to read the whole thing.

The ICIJ piece notes: Continue reading “How Seychelles became a paradise for dirty money and corruption” →

Quote of the day: on corporate tax policy making

From Martin Hearson:

“What my clients are concerned about,” said my friend, “is political interference in corporate tax policymaking.” I found this quite startling. Is it possible that businesses consider corporate tax policy to be a matter for private negotiations between them and the government, rather than the subject of public (and even parliamentary) debate as part of the government’s budgeting process?

This is a question of profound and fundamental importance, and the nonchalance with which it is seemingly uttered is testament to the remarkable degree of ‘political capture‘ that large multinational corporations have achieved in the United Kingdom, a country with a large and boisterous democracy and a (fairly) effective press. For an example of the egregious anti-democratic processes at play, you only need to look at this brief summary entitled The Principles of Tax Policy at the UK parliament. Hearson continues:

“The UK’s corporate tax regime has been dramatically overhauled over the last ten years, with a plummeting corporation tax rate and vast swathes of the multinational tax base exempted. This is a serious structural change in our tax system, yet there’s been barely a peep about it in public debate. And we continue to sign tax treaties, with only a cursory discussion in parliament each time.

The more we can bring democratic debate into these issues – not just in rich countries like the UK but in developing countries too – the more the veil of secrecy can be lifted, and the more accountable and representative the tax policy making will be.

Tax dodging and the birth of the British Empire

As we’ve documented, the United Kingdom plays a central – if not the central – role in the modern global system of offshore tax havens, or secrecy jurisdictions. Now here’s a post from ActionAid, looking at (yet) another aspect of all this. Cross-posted, with permission.

Tax dodging and the birth of Empire
by Ruth Kelly, ActionAid.
I’ve always thought that the East India Company might tell us something about how the global tax system works. Watching Dan Snow’s recent BBC programmes, The Birth of Empire, made me realise that the Company had an even more active role in the tax system than I had imagined. Continue reading “Tax dodging and the birth of the British Empire” →

Tax, corporate responsibility and human rights: new paper

From the Boston University Law Review, a paper by Jasmine Fisher entitled Fairer Shores: tax havens, tax avoidance and corporate social responsibility. Its introduction contains this:

“The doctrine of corporate social responsibility provides a logical rationale for multinational corporations to adopt antiavoidance practices, in that the harm caused by tax avoidance outweighs any financial benefit that accrues from these practices.” Continue reading “Tax, corporate responsibility and human rights: new paper” →

Alliance Boots: tax cheats

We didn’t do anything illegal!

BOOTS AVOIDING TAXES RISKS PUBLIC HEALTH

JOIN WAR ON WANT, UNITE, MEDACT AND CHANGE TO WIN TO PROTEST BOOTS’ TAX AVOIDANCE AND ITS IMPACTS ON PUBLIC HEALTH Continue reading “Alliance Boots: tax cheats” →

Tax Justice Focus – the Human Rights edition

The latest edition of our newsletter Tax Justice Focus focuses on the theme of tax justice and human rights, perhaps the fastest-growing area of interest in the rapidly expanding global tax justice community.

Click here for the full edition of Tax Justice Focus, the Human Rights edition.

You can also access the individual articles below.

Continue reading “Tax Justice Focus – the Human Rights edition” →

The Price of Offshore Revisited – new material

We published a long rebuttal yesterday to an attack on TJN by two U.S. academics, supported by the lobbying arm of the British tax haven of Jersey, which has publicised it at a conference in London today. The attack focused quite heavily on our 2012 report The Price of Offshore Revisited, which estimated that there is some $21-32 trillion sitting offshore, substantially in conditions of secrecy and low or zero http://www.eta-i.org/provigil.html taxation.

In our rebuttal to the academics we promised to publish a second document today, backing the Price of Offshore Revisited with additional sourcing and information, and further explaining why we think our 2012 estimates were conservative.

This second document, containing a wealth of data, sources and analysis, is now available.

To read it, please click here.

We will post this permanently on our reports page. Feedback, as always, is most welcome.

Tax haven of Jersey to attack TJN with funded study. We respond.

June 6: updated with details of book project.

Jersey Finance, the lobbying arm of the finance industry in the offshore tax haven of Jersey, tomorrow will host a media event in London attacking TJN and our estimates for the size of the offshore industry, and publicising a supposedly independent academic paper, partly funded by Jersey Finance, which also focuses heavily on TJN and particularly on our estimates produced in our 2012 study Price of Offshore, Revisited.

We have produced a document that responds in detail to the claims and allegations made by Jersey Finance and by their two academics.

Please click here.

Our response is long and detailed, but for those with the time and energy, we feel it will be well worth it. All this adds clarity and exposure to these crucial issues. For a new (June 2014) analysis backing up the Price of Offshore Revisited with additional data, sources and analysis, please click here.

We paste a short section of the introduction to our report, below. Continue reading “Tax haven of Jersey to attack TJN with funded study. We respond.” →

Cartoon: Don’t be evil? Don’t be Google

From Doonesbury, With a nod to Google’s tax avoidance schemes. Good one.

More on Google’s tax avoidance and murky business here and here.

And while we’re on the subject of cartoons, here’s another good one.

The TJN app – now available in the Apple store

Recently we announced that TJN had launched a Tax Justice Network app for Android phones – your one stop mobile shop for the latest tax justice news, views and analysis.

We are delighted to announce that we now have a version available for the iPhone.

Find it at the iTunes store, here.

Feedback so far is that it is extremely simple and easy to use. Try it out!

Click here to see details of the End User Licence Agreement, instructions for how to change settings, the Creative Commons licence, and more.

Who’s in control – nation states or global corporations?

We probably know the answer to that one, but in raising the question The Guardian’s Gary Younge – always a perceptive commentator – misses out on an important aspect of the question: we, the people, want democratically accountable states in order to raise money and spend it on our behalves to achieve a variety of collective goals (education, health, justice systems, and other underpinnings of a modern economy). Continue reading “Who’s in control – nation states or global corporations?” →

Almost all Spanish multinationals use tax havens – Report

Via The Guardian:

“Almost all of the 35 companies listed on the Spanish stock exchange use tax havens, according to a report from Observatorio RSC, an organisation that monitors corporate social responsibility. The figures, based on company reports for 2012, show a 31.9% increase in the use of tax havens compared with 2010, with 33 firms (94%) using them.”

Brazilians will pay heavily for FIFA’s “obscene” tax abuses

See more anti-FIFA paintings at lunaticnews.nl

Four years ago we wrote about FIFA’s so-called African “tax bubble” where FIFA was forcing a poor African country to forego its potential football tax revenues in order to funnel yet more money into FIFA’s gilded Zürich headquarters and its lucrative empire. We quoted Professor Han Kogels of Erasmus University, Rotterdam, who said:

“They want to create their own tax haven. A fully exempt situation. That is, FIFA and its FIFA subsidiaries that are fully exempt from any tax whatsoever levied at every level – state level, municipal level. All sorts of taxes: consumption taxes, income taxes – you name it – it’s all exempt.”

Now, from Christian Aid, via email:

BRAZILIANS PAY PRICE OF TAX BREAKS FOR WORLD CUP SPONSORS, WARN CAMPAIGNERS Continue reading “Brazilians will pay heavily for FIFA’s “obscene” tax abuses” →

Directors’ duties and tax avoidance: a view from the U.S.

Last year we obtained a legal opinion from Farrer’s & Co which concluded that it was not possible to construe a director’s duty to maximise benefits to a company to include a positive duty to avoid tax. This opinion has helped to nail the urban myth (widely propagated by tax planners to their clients) that failure to engage actively in tax avoidance would constitute a breach of fiduciary duties.

Our attention has now been drawn to a blog by an influential U.S. lawyer noting the UK legal opinion and asking whether the same applies in the United States. The article addresses the issue of whether the business judgement rule, would inhibit directors from taking positive action to comply with prevailing tax rules or to not comply. Continue reading “Directors’ duties and tax avoidance: a view from the U.S.” →

Tax haven Britain: Boots Alliance and the use and abuses of Limited Liability Partnerships

Last year our friends at War on Want published a report revealing that Boots the Chemists – a fixture of most U.K. high streets – had dodged over £1 billion in the six preceding years since it was taken over by the Alliance group. War on Want have now sent a letter to HM Revenue and Customs (which we copy in full below), co-signed by TJN and others, requesting the tax authorities to investigate the use of Limited Liability Partnerships (LLPs) by Boots and other companies as a part of their tax avoidance strategies.

As the letter explains, HMRC appears to have allowed the use of LLPs to become an acceptable part of tax planning: Continue reading “Tax haven Britain: Boots Alliance and the use and abuses of Limited Liability Partnerships” →

In 2009-10, over 98 pct of Google’s and Oracle’s subsidiaries disappeared

. . . disappeared from view, that is. From the Social Science Research Network, an academic paper from last year:

“From 2009 to 2010, 98 percent of Google’s and 99 percent of Oracle’s subsidiaries disappeared from the Exhibit 21s filed with their SEC Form 10Ks. However, a March 2012 search of available public company registries revealed that at least 65 percent of the missing subsidiaries remained active as of the companies’ 2010 filing dates.”

Astonishing. There’s a lot of discussion in this paper about tax, of course.

On the non-perils of information exchange

Update: see TJN writer Nicholas Shaxson’s Five Myths about Tax Havens, in the Washington Post, April 2016.

Back in 2009 we wrote a long blog looking at tax havens’ arguments that if they give up information to countries with poor governance, all sorts of disasters will ensue.

We think it’s worth re-publishing the blog in its entirety: the arguments are generic, and remain pretty much unchanged. (And see a range of other arguments about tax havens here.) Continue reading “On the non-perils of information exchange” →

Illicit financial flows and human rights: attention grows with new report

We’ve just written about an important report by the CESR and Christian Aid on fiscal justice and human rights, as more evidence that the world is waking up to the crucial linkages between human rights and tax and offshore abuses. Now here’s another report, a policy brief from the Hague Institute for Global Justice entitled Curbing Illicit Financial Flows: The Post-2015 Agenda and International Human Rights Law. Continue reading “Illicit financial flows and human rights: attention grows with new report” →

Stiglitz: how to use tax to build an economy

Joseph_Stiglitz_Nobel_Prize_Laureate_at_Forum_Invest_FINANCE_2009

Joseph Stiglitz. Forum Invest, Creative Commons 3.0

Nobel Laureate Joseph Stiglitz has just published a White Paper with the Roosevelt Institute entitled Reforming Taxation to Promote Growth and Equity. It is a fascinating and clear piece of work, distilling a number of powerful tax principles – and it includes a section on formula apportionment (or unitary taxation).

We will highlight just a few things of note – most of which we’ve pointed out on several occasions, but are nice to see endorsed here: Continue reading “Stiglitz: how to use tax to build an economy” →

Quote of the day: fiduciary duties

From Adam Kanzer of Domini Social Investments, in an article regarding a recent Google shareholder vote seeking the adoption of a responsible code of conduct to guide the company’s global tax strategies:

“Imagine a legal obligation, based on principles of prudence and loyalty, that compels us to condone behavior that stifles innovation, destroys local and national economies, and shifts heavy financial burdens to our own clients and beneficiaries.
Fortunately, this obligation to minimize tax payments does not exist.” Continue reading “Quote of the day: fiduciary duties” →

Private equity: harnessing secrecy to fleece investors and taxpayers

The widely-read U.S. financial blog Naked Capitalism is running a fascinating post about the private equity industry, which involves the release of a number of apparently sensitive documents. The article notes:

“For decades, private equity (PE) firms have asserted that limited partnership agreements (LPAs), the contracts between themselves and investors, should be treated in their entirety as trade secrets, and therefore not subject to disclosure under Freedom of Information Act laws in any jurisdiction. Continue reading “Private equity: harnessing secrecy to fleece investors and taxpayers” →

Two lieutenants of leading EU finance critic defect to ‘the enemy’

That’s from an article in the Financial Times, which begins like this:

“The UK’s Investment Management Association has poached two key lieutenants of Sven Giegold, the German Green MEP who has been a scourge of the fund industry in recent years.”

This is of interest to us for two reasons: first that it (anecdotally) serves as a reminder of one aspect of the ‘capture’ of policymaking by the highly-remunerated financial sector; and second, that Giegold was one of the founders of TJN, and had been a doughty supporter of tax justice over many years. We wish him well in his continued endeavours.

Endnote: the FT’s headline writer calls Giegold a “market critic” – which is wholly inaccurate. Giegold has been a fierce critic of the corruption of markets.

That’s a very different thing.

Tax dodging and the birth of Empire

Thank you!