FT.com / Companies / Retail & Consumer – Woolworths turns into click n’ mix .
No mention of tax avoiding UK VAT, which is the basis for the relaunch from the Channel Islands in here.
So I thought I’d give it a quick mention to remedy the omission.
Jun 252009
FT.com / Companies / UK companies – Companies demand boardroom code shake-up.
The UK’s biggest companies are pushing for a reworking of the code of best practice for British boardrooms to allow more flexibility to opt out of its guidelines.
Markes & Spencer and British Airways and SAB Miller are among the companies urging changes.
And you thought we were heading for tougher regulation? Good heaven’s no: the chums still want to work with and be regulated by their chums. And they want to then have it endorsed as being good for us.
14 July – in the City
Tax Havens
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Jun 252009
JustShare Debate: ‚ÄòOffshore Financial Centres: Blessing or Curse?’
Tuesday 14th July 2009, 1.05pm, St Mary-le-Bow Church, EC2V
Offshore Financial Centres, more commonly known as tax havens, have been the focus of much media and popular attention this year. This debate will explore whether tax havens create opportunities for entrepreneurship in the developing world, or whether they encourage exploitation and undermine good governance. The speakers will be Howard Bilton (Chair of the Sovereign Group) and John Kay (Economist and Financial Times columnist), and John Whiting (Tax Policy Director at the CiOT) will be in the Chair. The debate will end by 2pm but will be followed by Fairtrade refreshments for any able to stay. All welcome
Jun 252009
Fascinating article in the Financial Times a day or so ago under the above title. It said (in summary):
In recent years, the biological sciences have moved considerably to ensure greater transparency where there are potential conflicts of interest between research and financial remuneration, providing mechanisms for whistle-blowers to report conflicts of interest. Regrettably, these requirements are extremely weak in the social sciences and business schools. Tenure was meant to ensure academic freedom, not protect academics from financial wheeler-dealing. Academia would do well to ask whether, and how, this needs to change.
That is undoubtedly true. Let’s take an example of the paper I have been examining this week by Clemens Fuest of Oxford University. The paper in question seeks to suggest estimates of transfer pricing abuse are “dramatically overestimated”. I’ve explored why this is not true, but let’s stick to the point of this blog. Clemens Fuest is, according to his own biography a:
member of the Academic Advisory Board of Ernst and Young AG, Germany
Fine. So be it.
But Ernst & Young are major suppliers of transfer pricing services.
They are in all the world’s major tax havens.
They oppose country-by-country reporting.
The papers he reviewed attacked transfer pricing malpractice through tax havens and promote the use of country-by-country reporting.
And Clemens Fuest did not disclose this conflict of interest in the paper he published for the UK’s Department for International Development.
That is a massive oversight.
The E & Y appointment may not have influenced his thinking. He may not even be paid by E & Y for all I know. That’s not the point. He has formal association with those who vested interest in the argument he proposes. It was his duty to disclose the conflict of interest. He did not.
I consider that profoundly unethical.
I think the Department for International Development should withdraw the paper for that reason. Any conclusion it proffers is unreliable. It is not possible to be sure they are objective. That’s sufficient grounds for doing so.
Jun 252009
From the Jersey Evening Post:
UP to 180 jobs in Jersey are to go at the Lloyds banking group – just under a third of the 600 the group employs in the Island.
Of course the Lloyds / HBOS merger is blamed – but it’s not the case that one third of all employees are going in the combined group so that is a smokescreen.
The reality is Jersey is sinking.
It needs plan B.
Has it got it?
Stephen Timms was speaking at an OECD / NGO forum in Paris this morning.
He confirmed the UK’s support for country-by-country reporting.
And he confirmed that the UK has asked the OECD to undertake a technical study of it.
Country-by-country reporting continues to make progress.
Isle of Man due to signal shift in tax policy – Isle of Man Today .
Isle of Man Treasury Minister Allan Bell was due today to signal a major shift in the Isle of Man’s tax policy – with the aim of silencing the critics who accuse us of banking secrecy.At a Organisation for Economic Co-operation and Development (OECD) Forum in Paris, Mr Bell will announce that the withholding tax for EU-residents with offshore bank accounts here will be scrapped from July 1, 2011 – and the automatic exchange of tax information introduced.
Credit where it is due: this and putting all trust and company information on public record comprise our major demands of the IoM.
If they intend to do this I wlcome it, of courss. It’s a big step in the right direction.
But don’t say pressure has not worked.
Now for Jersey, Guernsey and ever onwards.
And having that other data on public record.
Jun 242009
As I note yesterday, the FT has noted that:
A ‚Ķ study, by the Oxford University Centre for Business Taxation, says tax losses from multinationals shifting profits that are down to faulty transfer pricing have been “overestimated drastically”.
It’s clear that the FT knew of this before the report was published so either the Oxford University authors or DfID drew this to their attention. It was a message someone wanted to get across. So I went to find support for their claim.
This is to be found in this text:
A key shortcoming of many existing studies based on mispricing is that they only take into account overpriced imports into developing countries and underpriced exports of these countries. But the mispricing approach also identifies underpriced imports into developing countries and overpriced exports. Both shift income into developing countries. Estimates of tax revenue calculations have to take into account income shifting in both directions. If only one direction is taken into account, the results are highly misleading. In this case, tax revenue losses due to mispricing are overestimated drastically.
This may be true: I leave it to the authors of these reports to comment. But that’s not the point. It is possible to say that this omission leads to the risk that the net estimates are overstated, if the claim made by the Oxford authors is true: that I agree. But is it possible to say, as they do, with apparent objective certainty, that the “tax revenue losses due to mispricing are overestimated drastically”?
For that to be a plausible conclusion without having done research on the mass of data used to reach the conclusions my friends and colleagues have come to in the work they have done there would have to be a body of evidence suggesting that:
- There is prima facie evidence that people want to shift money into developing countries through illicit financial flows based on transfer mispricing;
- That there is evidence of them actually doing this;
- That there is documented evidence of profits being overstated in these places as a consequence.
Anyone familiar with the literature on illicit financial flows knows there is no such prima facie evidence: I have seen none at all. I have never heard of people redirecting financial flows and profits to such places. I have never seen a tax agreement that considers the possibility. I have never heard of capital flight of any sort into such places. There is little evidence of profits being reported in developing countries. I have of course heard of remittances through informal channels: that we know of, but these are not corporate transfer mispricing.
So you have to ask, why should we expect anyone to test a hypothesis when there is no evidence that the phenomena exists? And secondly, how can anyone come to a categorical conclusion that such flows are so substantial and significant that they nullify the evidence of massive flows in the opposite direction when no evidence is put forward by them to support that hypothesis? Given that is the case I have to ask whether the Oxford paper qualifies as objective academic observation.
And there is another issue that the claim ignores, which is the fact that even if there was transfer pricing abuse into developing countries this would not in any way reduce the abuse that has been found that imposes such substantial cost on them. The transfers in would not match the transfers out. They would (if they occurred, which I doubt) be on different commodities and be by different companies because no one is going to do dual transfer pricing abuse in and out to arrive at a net correct position. So in fact the gains would be entirely unrelated to the losses, could not be netted off and would be a massive transfer pricing loss to developed countries; somthing we contend occurs but which has as its destination the, for multinational corporations, more attractive destination of a tax haven / secrecy jurisdiction. As such the inherent logic of netting off in the Oxford paper is fundamentally flawed whichever hypothesis is right. The reaklity is that the loss calcualtions stand up to scrutiny, it is the critique that fails.
In that case doesn’t it follow that the claim it makes that “tax revenue losses are overestimated drastically” is actually just “wildly exaggerated” or simply “plain wrong“?
Whichever is true one thing is certain: the Oxford paper is unambiguously flawed, without foundation and lacks any element of objective credibility when such extraordinary and categoric claims can be made in the absence of presentation of any evidence to support them.
