2009 September » Tax Research UK

Fred Goodwin said something like that

Sep 252009

BBC NEWS | World | Americas | Cayman Islands fears as debts grow.

There will be no income tax; there will be no property tax. We are not asking the United Kingdom for anything. I wouldn’t expect the UK to give me anything; I wouldn’t expect their taxpayers to pay for anything in the Cayman Islands

So said McKeeva Bush, PM of the Cayman Islands yesterday on BBC Radio 4.

But then, once upon a time Fred Goodwin would have said of RBS:

There will be no problem; there will be no liquidity crisis. We are not asking the United Kingdom for anything. I wouldn’t expect the UK to give me anything; I wouldn’t expect their taxpayers to pay for anything in RBS

The trouble was that Fred ignored the implict guarantee that allowed him to operate as irresponsibly as he did: so is McKeeva Bush. But the Foreign Office are not.

Good that they’re not this time.

Cayman remains bust.

Switzerland’s Last Day As A Tax Haven

Secrecy jurisdictions, Switzerland, TIEAs 2 Responses »

Sep 252009

Switzerland’s Last Day As A Tax Haven – Forbes.com.

Forbes says this is so becasue it now has 12 tax information exchange agreements or double tax agreements.

As a result the OECD says it is ‘internationally compliant’ and no longer a tax haven.

Which shows how inadequate is the OECD standard and how daft is the definition of a tax haven.

But take comfort: it remains a secrecy jurisdiction.

Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.

$690bn a year

Development, Tax management 44 Responses »

Sep 242009

As the Tax Justice Network notes on its blog, Germany’s Finance Minister, Peer Steinbr?ºck, has just written this:

"Citizens are aware of the hundreds of billions of euros and dollars used to prop up banks. Bonus payments in the financial sector now go hand in glove with massive job losses in the real economy.

The political answer to this crisis must encompass more than improved regulatory regimes, risk-management strategies, and capital requirements. How governments handle the burden-sharing between Wall Street and Main Street will determine social cohesion, market stability, and political leaders’ reputations for years to come."

And what are the details of his plan?

"A global financial-transaction tax, applied uniformly across the G20 countries, is the obvious instrument to ensure that all financial-market participants contribute equally. German Foreign Minister Frank-Walter Steinmeier and I suggest the G20 take concrete steps toward implementing a tax of 0.05 per cent on all trades of financial products within their jurisdictions, regardless of whether these trades occur on an exchange. Retail investors could be exempt."

TJN just signed a letter endorsing this idea, and it follows statements in support of it from Britain’s chief regulator, and from France’s Foreign Minister, Bernard Kouchner.

Note that Steinbr?ºck’s proposed tax rate, at 0.05%, is ten times greater than Kouchner’s, at 0.005%. So how much would this new proposal raise?

"Based on calculations by the Austrian Institute for Economic Research, such a global tax at 0.05 per cent could yield up to $690bn a year, or about 1.4 per cent of world GDP. This tax would not unduly burden financial-market participants, yet it would raise a significant amount of money to finance the costs of the crisis."

Phew! (We presume that figure refers to what would happen if the tax prompted no change in behaviour.) And we like the end of Steinbr?ºck’s article:

"There is a clear-cut case for a global financial transaction tax: it would be just, would do no harm, and would do a lot of good. If there is a better idea for fair burden-sharing, let’s hear it. If there isn’t, let’s have this tax now."

Hat tip to TJN

The questions Jersey needs to answer

Banking, Guernsey, Jersey, Secrecy jurisdictions 13 Responses »

Sep 242009

Jersey’s made its excuses. Now it needs to provide answers to questions about what has been happening at Lloyds in the island. I suggest those questions are:

1) Why did Lloyds create the Hong Kong payment structure for a Jersey based fund described in the recent Panorama programme?

2) If Lloyds did create it to, as suggested by the salesman who was filmed, get round the European Union Savings Tax Directive why did it do that?

3) What is the purpose of the European Union Savings Tax Directive if not to stop tax evasion – which is what the EU says its purpose is?

4) If a structure is designed to help customers avoid the requirements of the European Union Savings Tax Directive isn’t it entirely foreseeable as a consequence that some might use that opportunity to evade their obligation to pay tax?

5) If Lloyds did create this structure at some obvious expense why shouldn’t it ask its salespeople to promote its availability, and the attractions of using it? Was the salesman therefore an exception – or was he just doing his job?

6) If the salesman was just doing his job isn’t this evidence of systemic abuse?

7) Could a payment structure of the sort described in the programme be set up by a relatively junior employee?

8_) If a junior employee could not set up this structure who could?

9) Will the JFSC review look at the authorisation of this structure? If not, why not?

10) Is it a requirement under Jersey’s anti-money laundering regulations to report suspected tax evasion wherever and whenever it arises, and whether with regard to taxes due in Jersey or elsewhere?

11) If a customer seeks to avoid application of the European Union Savings Tax Directive isn’t it at least plausible to assume one reason for doing so might be that they are evading tax?

12) If it is plausible that a customer refusing to exchange information with their domestic tax authority under the European Union Savings Tax Directive might be tax evading shouldn’t an anti-money laundering suspicious transaction report be submitted in each and every such case?

13) If a bank promotes a scheme that makes it easier to evade tax should it be reported as facilitating a money laundering transaction?

Those in Guernsey also have questions to answer:

14) Why would Northern Rock only operate a bank account for a shell corporation and not for a real trading entity?

15) Is it ethical to point out to someone asking if he might tax evade the availability of shell corporations for this purpose?

Many from Jersey and Guernsey like to comment on this site.

Now answer these questions – all of them.

It’s not just tax, it’s regulation too – and the route map is on its way

Secrecy jurisdictions 1 Response »

Sep 242009

Bloomberg notes:

UK Chancellor of the Exchequer Alistair Darling called for the Group of 20 to draw up a “blacklist” of countries whose regulatory systems pose a risk to the world’s financial system.

The finance minister said Britain wants to extend the G- 20’s effort to set standards on taxation and bank rules to cover countries that have a poor record overseeing institutions and allow wealthy individuals to hide cash.

“Just as we have been tackling tax havens, we also need to go after those countries that offer regulatory havens where mainstream regulators here and in America and in Europe can’t get the information they need,” Darling said in an interview on Bloomberg Television today. “If you don’t comply you get until March next year then you will be blacklisted.”

Brown and Darling meet G-20 leaders in Pittsburgh today and will urge colleagues to take up the issue at its next meeting in November. They also want the group to offer help to nations that intend to improve their regulatory structures.

Step 1 is to term these places secrecy jurisdictions.

Step 2 is to define secrecy jurisdictions as places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.

Step 3 is to analyse these places. Unless something very odd happens the Tax Justice Network will publish data (about 2,000 pages of data) on all 60 locations that we think qualify as secrecy jurisdictions next week.

Step 4 is to then rank them for significance. Unless, again, something very odd happens the Tax Justice Network and its partners will publish this ranking in late October or early November.

What we’ll provide is the route map to tackling this issue, once and for all.

David Blanchflower slates George Osborne | ToUChstone blog: A public policy blog from the TUC

Conservatives, Economics Comments Off

Sep 242009

Public spending again: David Blanchflower slates George Osborne | ToUChstone blog: A public policy blog from the TUC.

Quoting Blanchflower in the New Statesman:

Mr Osborne, I really don’t know which economists are advising you on this brilliant strategy to increase unemployment, but feel free to give me a call.

Even the CBI does not buy the need for cuts.

And by next May people might have worked out it menas real harm for their way of life.

There’s just a chance the Tories might still lose this one if they continue as they are.

You can’t criminalise those who have already committed the crime

Corruption, Switzerland, Tax evasion 1 Response »

Sep 242009

In a report Bloomberg notes:

European leaders should give up the attack on Swiss banking secrecy and accept a withholding tax on foreigners to avoid criminalizing wealthy taxpayers, said Konrad Hummler, managing partner of Switzerland’s oldest private bank.

“If there is really a desire to criminalize part of the elite in European countries, then it would be a bigger problem for these countries than for Switzerland,” Konrad Hummler said in an interview at the offices of Wegelin & Co. in Zurich. The “majority of European clients were not criminals but just diversifying away from their home country.”

The comment shows how far removed from reality Swiss bankers are: as a matter of fact half the money they handle is now acknowledged to be criminal in nature, including that made so by the crime of tax evasion. And yet they they suggest those who hold such funds should not be criminalised because they are ‚Äòan elite’.

I don’t buy the argument of one law for the rich and another for the rest. Swiss bankers obviously do.

Thankfully some balance was added to the argument:

Swiss banks are proposing an “unacceptable halfway house” and leaders of the Group of 20 nations are unlikely to accept it, said John Christensen, a director at the London-based Tax Justice Network.

“They are inadvertently confirming what everyone knows, which is that banking secrecy is hiding massive tax evasion by European elites,” Christensen said. “The public is pretty damn angry and those who are leading the attack on bank secrecy are in no mood to compromise.”

He’s right.

Dominican Republic calls for tax on tax havens to fund UN humanitarian goal

Development, Secrecy jurisdictions, Tax Havens Comments Off

Sep 242009

The UN reports:

Dominican Republic President Leonel Fern?°ndez today called on the United Nations General Assembly to consider a possible tax on tax havens, off-shore banks and international financial centres to make up for the damage the global economic crisis has wrought on efforts to achieve the Millennium Development Goals (MDGs).

“The only way to really tackle achieving the MDGs by the scheduled date of 2015 is for this General Assembly to help create the conditions for a real commitment by nations, governmental and non-governmental institutions to assume as a matter of urgency the tasks of economic and social development for peoples stricken by poverty, hunger, sickness and illiteracy,” he said.

“It cannot be argued that there are not sufficient resources to confront this huge task [of funding the MDGs],” he declared. “The diligent way in which the collapse of the international financial system has been addressed show us something that has always been on the lips of the people, that ‚Äòwhen there’s a will, there’s a way’…

“There are abundant resources in the world. What is happening is that they are distributed unequally and unjustly, and this is due, among other reason, to the existence of a global financial architecture prone to lack of transparency, secrecy, withholding of capital, evasion and fraud.”

He is absolutely right.

And this is the source of the funding needed to tackle the issue.

Which is why those who defend offshore and the massive injustice it permits are responsible for the deaths of thousands of people daily by hiding the resources, many of them stolen from the poorest countries in the world whether through corruption, crime or transfer mispricing, that are needed to remedy this massive injustice.

NB: I’m aware the Dominican Republic has its own issues to tackle in this regard – I’m highlighting the content of the message, not its source

The offensive secrecy of tax havens

Secrecy jurisdictions, Tax Havens 2 Responses »

Sep 232009

The offensive secrecy of tax havens | Vince Cable | Comment is free | guardian.co.uk .

Vince Cable in the Guardian:

To really end the secrecy tax havens offer, there must be effective information sharing between havens and all countries where their account holders are resident or are citizens. A truly global deal where this information is shared automatically would help countries rich and poor alike.

New accounting standards are also needed to force multinational companies to declare publicly the profits they make, and the taxes they pay, in every country in which they operate. That way anomalies would be quickly spotted.

Gordon Brown has made valiant efforts to build a legacy of caring for the poor in developing countries by prioritising debt cancellation and overseas aid commitments. An end to tax haven secrecy may be his last opportunity to ensure that legacy endures. He should seize the chance at the G20 to make the case persuasively.