In August 2009, France and Switzerland amended their tax treaty. The new treaty stated that the two countries would from now on exchange upon request all information necessary for tax enforcement, including bank information otherwise protected by Swiss bank secrecy laws. In the following months, one of France’s richest persons and her wealth manager were taped discussing what to do with two undeclared Swiss bank accounts, worth $160 millions. After a visit to Switzerland, the wealth manager concluded that keeping the funds in Swiss banks or bringing them back to France would be too risky. He suggested that the funds be transferred to Hong-Kong, Singapore, or Uruguay, three tax havens which had not committed to exchange information with France. After the tapes were made public, they were widely commented in French newspapers and eventually the funds were repatriated to France.
Looking at 2012, experts from the Brookings Africa Growth Initiative (AGI) and colleagues from think tanks based in the region have come together to produce this year’s issue of Foresight Africa, where they outline the top priorities for the continent for 2012 and beyond. AGI scholars assess what they see as the major challenges for Africa in the coming year and provide policy recommendations on how to manage these challenges and leverage opportunities to catalyze and reignite growth in 2012. Similarly, AGI and its partner think tanks identify country-specific challenges in Nigeria, South Africa, Senegal and Kenya.
In a study conducted between November 2010 and February 2011 on ill-gotten money and the economy, the Financial Integrity team looked at the experiences of Malawi and Namibia. We approached the project with an open mind and without any assumptions, finding that for Malawi, corruption and tax evasion as a percentage of GDP represent a significant drag on economic development.
OECD countries acknowledge that taxes must play a role in the process of fiscal consolidation as they battle unprecedented budget deficits. New OECD data in the annual Revenue Statistics publication show that the majority of OECD governments have stabilised their tax to GDP, with the average ratio moving up slightly from 33.8% in 2009 to 33.9% (1) in 2010. That’s still down from 34.6% in 2008 and well below the most recent high point of 2007 when tax to GDP ratios averaged 35.2%.
In this report, we first estimate the absolute size of a country’s shadow economy based on its own published estimate of its GDP and recently-reported data on the size of shadow economies published by the world bank. This, and other data we use, is what we think the best currently available for the purpose of this report and, as such, should provide the best estimates possible.
By the definition used here, economic activity in the shadow economy of a country will be tax-evading. So we next calculate an estimate of the amount of tax lost as a result of the existence of that shadow economy. We do this by looking at how much taxes are on average in the state as a share of GDP, and then apply the same tax share to the shadow economy, to reveal our estimates of lost taxes by state. We then compare these lost taxes to health care spending in each country surveyed. This data has also been compared by continent.
Law enforcement must be able to impose appropriate penalties when companies bribe officials to win contracts or gain undue advantages. But calculating and confiscating the proceeds of this crime is difficult. To help governments meet this challenge, the OECD and the World Bank/UNODC Stolen Asset Recovery Initiative (StAR) released today a new study on the Identification and Quantification of the Proceeds of Bribery.
“Countries’ ability to seize and confiscate the gains from bribery is integral to the international fight against bribery and corruption, ” said Mark Pieth, Chair of the OECD Working Group on Bribery, made up of representatives from the Parties to the Anti-Bribery Convention. “It’s a requirement of all countries that join the OECD Anti-Bribery Convention and the UN Convention against Corruption.”
The international community has repeatedly stressed the need to mobilise domestic resources in developing countries, as the most sustainable way of financing development and ending aid dependency. Yet, many developing countries are affected by a number of challenges that limit their capacity to collect taxes. One such challenge is multinational companies’ lack of accountability regarding their operations and more specifically regarding the taxes they pay. This report explains how the cross border nature of multinational companies’ operations combined with the absence of adequate transparency regulations have very damaging implications for a country’s ability to mobilise domestic resources. Although this is relevant for both developed and developing countries, the report focuses on the impacts for developing countries, which have weaker capacities to face this challenge.
Los días 6 y 7 de octubre de 2011, con motivo de la tercera conferencia anual del Grupo de trabajo sobre integridad financiera y desarrollo económico (en adelante, Grupo de trabajo) se reunieron en parís, Francia, representantes de la sociedad civil, gobiernos, políticos, académicos, periodistas y el sector privado.
his U4 Issue Paper looks at the potential of these initiatives to reduce illicit financial flows from extractive sectors, particularly those initiatives that target resource revenue governance. Section 2 provides a brief overview of resource governance challenges and the nature of illicit financial flows in extractive sectors, highlighting consequences for development in poor countries. Section 3 summarises international initiatives to improve resource revenue governance, focusing on information disclosure and certification. It also discusses their comparative achievements and factors for success. Section 4 sums up the potential for these initiatives and suggests priorities within them as well as the possible need for additional actions.
Last week Christian Aid welcomed the G20′s bold pronouncements on tax havens, financial transparency and development. President Sarkozy went as far as to say that havens that didn’t comply would be excluded from the international community. A whole programme of work on tax and development was agreed.
Our scorecard compares the recommendations made, with what the G20 actually delivered. The scores that we attribute to the G20 simply evaluate their response to that expert opinion.
In 2006 the Global Forum published a review of the legal and administrative frameworks in the areas of transparency and exchange of information for tax purposes covering 82 jurisdictions, entitled Tax Co-operation: Towards a Level Playing Field – 2006 Assessment by the Global Forum on Taxation. This publication was followed by four annual assessments, with the 2010 publication covering 93 jurisdictions.
Following the restructuring of the Global Forum, a program of indepth peer reviews was launched in 2010. This 2011 Report on Progress publication describes the progress made since the Global Forum launched its peer review mechanism in 2010.
The World Bank’s private-sector entity – the International Finance Corporation (IFC) – seeks to increase tax payments to the government in developing countries through supporting their natural resource projects. This report documents that this aim can be undermined by IFCclients’ tax planning. IFC’s response is that “it is not likely to be true in almost all projects within the extractive industries”.
IFC wants to “create opportunity for people to escape poverty and improve their lives” through private-sector development in poor countries. Oil, gas and mining companies are among those receiving support from IFC. For each project IFC mentioned, the generation of revenues for government in the form of royalties and taxes” are expected as a development outcome. It estimates that authorities in developing countries received 7 billion US dollars from IFC-supported extractives projects in 2009.
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