Last year Itai Grinberg, Associate Professor at Georgetown University Law Center in the U.S., published an important paper entitled Beyond FATCA: An Evolutionary Moment for the International Tax System, providing a comprehensive overview of the emerging international architecture of financial transparency, with different models of information exchange (see below) jostling for supremacy.
. . . or at least that’s what seems to be suggested in an article entitled “Top executives join France exodus.” It focuses quite heavily (though not exclusively) on tax. “Exodus” is a pretty big word. Now let’s see. What does the article actually say?
This is shocking, if not surprising. How no one at HSBC will go to jail.
The Tax Justice Network has blogged repeatedly on the thoroughly toxic and dangerous tax deals that Switzerland has signed with Germany and the UK and others and is seeking to expand as a model to other countries. We have demonstrated on several occasions that the deals – which are supposed to apply withholding taxes on secret assets, in exchange for continued anonymity – are all but worthless, from a technical point of view (that is, they are absolutely riddled with loopholes, and will raise only a fraction of the promised sums; we have sent our detailed analysis to tax advisers in the UK, Switzerland, and to the Swiss Bankers’ Association and to UK HM Revenue and Customs, and challenged them to demonstrate how our analysis is wrong. Nobody has been able to: the best attempt, from Bill Dodwell of Deloitte, came nowhere close.) Worse, however, these deals have a deeper political purpose: to sabotage much broader progress on transparency in Europe, and on this score they have been a stunning success, with Switzerland playing a long game in alliance with Austria, Luxembourg and the UK in particular – and now finding an ally in the German Finance Minister, Wolfgang Schäuble (read more about the political chess games here.)
Switzerland’s so-called “Rubik” tax deals with Germany and the United Kingdom are effectively defunct, following robust challenges from the European Commission recently which require the deals to be watered down so drastically that they will be functionally almost useless.
Switzerland’s new clean money strategy is little more than smoke and mirrors.
TJN has been long been a critic of the OECD’s Arm’s Length system for addressing transfer pricing shenanigans (see TJN’s summary of what is involved here). A system that might have worked well enough 70 years ago is not fit for purpose today. About a year ago TJN published two articles summarising longer papers in [...]
The new site Tackle Tax Havens is now live. Aimed at the non-expert, we expect it to become a key tool.
Click here. And watch the video.
From the Tax Justice Network blog:
Misha Glenny has a good article in the FT today:
As the new Greek government struggles to convince Europe of its resolve to cut the country’s bloated public sector, it also has to decide whether to face down the real domestic threat to Greece’s stability: the network of oligarch families who control large parts of the Greek business, the financial sector, the media and, indeed, politicians.
The oligarchs have responded predictably: by accelerating their exports of cash. In the last year, the London property market alone has reported a surge of Greek money. And then there’s this, of course, not strictly a core tax justice issue, but these things are all intertwined:
ActionAid have produced another fine report, this time about the use of tax havens by multinational corporations listed on the FTSE 100. The statistics are staggering: for example more than half of the financial sector’s overseas subsidiaries are in tax havens. More precisely:
- The FTSE 100 largest groups registered on the London Stock Exchange comprise 34,216 subsidiary companies, joint ventures and associates.
- 38% (8,492) of their overseas companies are located in tax havens.
- 98 groups declared tax haven companies, with only two groups, Fresnillo and Hargreaves Landsdown, who did not.
- The banking sector makes heaviest use of tax havens, with a total of 1,649 tax haven companies between the ‘big four’ banks. They are by far the biggest users of the Cayman Islands, where Barclays alone has 174 companies.
- The biggest tax haven user overall is the advertising company WPP, which has 611 tax haven companies.
- The FTSE 100 companies make much more use of tax havens than their American equivalents.
- There are over 600 FTSE 100 subsidiary companies in Jersey (more than in the whole of China), 400 in the Cayman Islands and 300 in Luxembourg – all tiny tax havens.
Financial Secrecy Index – the G20’s broken promise
October 4, 2011. Today we launch our 2011 Financial Secrecy Index, the biggest investigation of global financial secrecy in world history. It combines a secrecy score with a weighting to create a ranking of the countries that most aggressively provide secrecy in global finance.
The new FSI, which follows our inaugural index of 60 jurisdictions published in 2009, considers 73 jurisdictions to reveal a world where most of the biggest suppliers of secrecy are either OECD countries, EU members, or their dependencies. Britain plays an especially prominent role.
Secrecy is alive and well
World leaders at a G20 summit meeting in April 2009 promised that “the era of banking secrecy is over” and put the OECD, a club of rich countries, in charge of implementing its wishes. Many people hoped this marked the start of a serious crackdown on tax havens, or secrecy jurisdictions.
But they have let us down. The rhetoric is trillions of dollars away from reality. The Financial Secrecy Index (FSI) reveals that financial secrecy is as entrenched as ever.
On September 9th the Cayman Islands introduced a bill for the establishment of new Special Economic Zones. The most Alice-in-Wonderland part of the bill is this bit, on page 14:
“A special economic zone shall be deemed to be outside of the Islands and not in the Islands.“
Emphasis added. So where will this zone be? It seems that it will, for the relevant purposes, effectively be ‘elsewhere’ – which, in practical terms, means ‘nowhere.’ This ‘it’s elsewhere, don’t-blame-us, we-can’t-regulate-this’ approach is what a lot of the activity of secrecy jurisdictions is designed to do – it’s not so common, however, to see this being made quite so explicit. This is tax havenry, pure and simple.
Who is responsible for this legislation, and who will be implementing it?