We have often written about the close relationships between the Big Four accountancy firms and governments around the world. Now Spinwatch in the UK has produced a fascinating case study (hat tip: Naomi Fowler). As Tamsin Cave, author of the report, notes:
"To see them as separate from our government is a mistake." The report shows, among other things:
ICIJ Releases Offshore Leaks Database Revealing Names Behind Secret Companies, Trusts
Crackng open the impenetrable world of offshore tax havens, users can search through more than 100,000 secret companies, trusts and funds created in offshore locales such as the British Virgin Islands, Cayman Islands, Cook Islands and Singapore. See the video here.
See also: How We Built The Offshore Leaks Database
Guest blog by Prof. Sol Picciotto:
Pascal St-Amans, head of the OECD’s Centre for Tax Policy and Administration, has been travelling the world reporting on the progress of the OECD’s Base Erosion and Profit Shifting (BEPS) project. This is an OECD initiative responding to justified outrage around the world about the international tax system, which is unfit for the modern age and allows multinational corporations to take the benefits from societies in which they operate, then skip paying their share. The OECD, a club of rich countries which has dominated the design of the international tax system, bears the greatest responsibility for the current mess. Recently U.S. tax expert Lee Sheppard, for instance, described the OECD-designed tax treaty system as `a load of nonsense . . . to make life comfortable for multinationals’.
Guest Blog by Markus Meinzer - reposted from the EUobserver Blog, with kind permission.
Last week, while showcasing draft EU laws on tax transparency, commissioner Algirdas Semeta told media in Brussels he is building "the most comprehensive information exchange system in the world."
He added: "The EU system will become even broader than the US system."
It is an astonishing claim.
The wide-reaching impact of the new US regime - the Foreign Account Tax Compliance Act (Fatca), which came into force on 1 January - has been demonstrated by a storm of angry reactions in worldwide financial centres.
Some of Semeta's proposals, notably his amendments to the EU Savings Tax Directive (EUSTD), do broaden the scope of information to be shared inside Europe and do go beyond Fatca.
But other elements of the US law are missing from the EU package.
Meanwhile, even if the European Commission now has the legal instruments to create a Fatca-plus system, there is no guarantee they will ever be used.
Christian Aid and the IF campaign have a very important and topical new report available, entitled Invested interests: the UK's Overseas Territories' hidden role in developing countries.
It is becoming increasingly recognised that huge amounts of investment in and out of developing countries is being routed via tax havens. Former UN Secretary-General Kofi Annan has remarked, accurately:
For a couple of minutes we published a blog on this subject, but we didn't realise it was embargoed until later today. Apologies. We will reinstate it this evening after embargo time. It will be worth waiting for!
Many politicians and accountants and lobbyists and, occasionally, economists, assert that high taxes discourage savings and investment and kill growth.
But is this actually true? What does the evidence say?
It's fair to say that the evidence shows that high taxes don't kill growth. For instance, high-tax countries grow just as fast (or slowly) as low-tax ones in the long run - though it should be noted that the low-tax ones seem to suffer the penalties of higher inequality and greater risk of economic crisis, with no consequent growth benefit. See, for example, this post looking at evidence compiled by the Financial Times, which concluded:
From the Financial Times:
"The government in Dar es Salaam has set itself the goal of reducing the tax incentives it offered to companies to below 1 per cent of its national output. It is a big call, given in the past two years it doubled to 4.3 per cent of gross domestic product, or $1.1bn."Should countries like Tanzania be giving tax exemptions? Well, the Tanzania Revenue Authority doesn't seem to think so. Still, from the FT article:
“Most countries including Tanzania [have] had little to show in exchange for the incentives offered,” the Tanzania Revenue Authority said in a presentation this year and it argued that tax exemptions do not top the list of reasons why companies invest in the country.
Posted from the Treasure Islands blog:
From the New York Times:
"Investigators found that life insurers in New York were seeking out states with looser regulations and setting up shell companies there for the deals. They then used those states’ tight secrecy laws to avoid scrutiny by the New York State regulators."That is offshore business, and the race to the bottom - yet again. In fact, I wrote about this very issue - with a particular focus on Vermont (and Bermuda) a couple of years ago. This shabby story involves both U.S. states such as Missouri, Delaware, Iowa, South Carolina, Nebraska, and Vermont - and offshore tax havens such as the Cayman Islands.
So what exactly is this all about?
From the Financial Times, reporting on a project co-funded by TJN:
"Campaigners have ratcheted up pressure on big companies by ranking retailers according to their corporation tax payments and “transparency”, in the latest effort to make corporate tax a reputational issue.
The Fair Tax Campaign, a spin-off from the Tax Justice Network pressure group, issued a report on Thursday that awarded marks according to a company’s tax disclosures, whether they paid an “acceptable” rate of tax on profits and whether they used havens."From the Tax Research blog of Richard Murphy, who has been co-working on this for six months:
Over the last six months I’ve been working with Meesha Nehru on the Fair Tax Mark, which we launched this morning. It’s got its own website here.