There has been an interesting outbreak of pragmatism that endorses tax haven behaviour on the blog and in the press this weekend, all of it the result of George Osborne's Swiss tax deal.
So let me be clear, of course we need tax havens. Without them we couldn't:
- undertake mass tax evasion
- hide multinational company profits from tax
- launder drug money
- launch attacks on the tax systems of democracies
- ensure counterfeiters have a secure base from which to trade
- facilitate insider dealing
- help kleptocrats loot their countries
- hide the trail of people traffickers
- provide asymetric information to markets that increase risk and threayen global financial collapse
- shift wealth from the poor to the rich.
So of course we need them. It's so obvious they add to the stock of human wellbeing.
That's why the UK gave them a big vote of confidence last week. And it is no doubt why so many friends of tax havens are celebrating the fact.
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What about “Put the UK under foreign ownership.”
http://newsthump.com/2011/08/29/government-hands-private-investors-opportunity-to-buy-poor-people/
Patriotism is the last refuge of a scoundrel; pragmatism is the first.
Don’t forget: facilitate the financing of terror groups like Al Qaeda!
Yeah, and how about … Arms dealing. Bribery. Sanction busting?
Oh yes
Them too
Also don’t forget “tax havens” giving homes to an investment fund (and various other participating companies) to advertise itself as “low risk” after a high court judge ruled the investment strategy is very “high risk” and to advertise it as otherwise is to “recklessly mislead the public”. And then try telling hundreds of pensioners who lost their life savings courtesy of “tax havens” that they are a “good idea” and they will probably lynch you!
But the loss of pensioners’ life savings is nothing compared to the mayhem that tax havens wreak across the world
Next moth (October 2011) the world’s population will reach 7 billion.
Of these 1.billion people do not get enough food to be healthy and lead an active life,
A further 1 billion are inadequately fed resulting in 25,000 people dieing every day of hunger or hunger-related causes. That is one person dieing every three and a half seconds …
And even more disturbing; every year 15 million children die of hunger – 9 million of them before they reach their fifth birthday.
As Richard (and others) have continually reported (see this blog going back years) if the fat-cats/companies paid their taxes the revenue rescued would considerably reduce this death toll. But tax dodging/evasion/avoidance is to a great extent facilitated by the likes of George Osborne, their influential “friends” and their precious tax havens.
Tax havens are hell on earth catering exclusively for those devoid of morals or ethics.
If humanity is to be redeemed we must eradicate them from the face of the earth.
You hit the absolute heart of the issue
You don’t think people set up consumer investment scams and frauds in the UK? I’m sure I read in the paper the City of London Police have just sucessfully prosectued a number of people for ‘conspiracy to defraud’ over precisely this.
What makes you think law enforcement against this sort of thing (and counterfeiting, drugs, money laundering etc.) is so special here? Even if they do catch the villains they are out again in 3 years. The UK (and Europe in general) are a complete joke when it comes to criminal justice.
Im an accountant in an offshore tax haven, you obviously will all disagree with what i do however i just wanted to state that we have yearly training on anti money laundering, and constant update on terrorism funds and drug related dealing etc. I never had any of this in the uk. None of the practices here are underhand, everything is transparent and legal
I have never denied the appearance of compliance is high
And the substance is the abuse goes on
Stopping abuse is more than form filling
But you obviously do not realise that
Which is precisely why you do not see the issue
In the UK, accountants, solicitors, IFA’s etc who don’t carry out customer due diligence and make suspicious activity reports with regard to money laundering can be banged up if they pocket the proceeds of crime. (14 years max for money laundering and 2 years max for regulatory offences).
So if they aint training you, your nominated officer either has it all sorted himself, or he’s not doing his job.
Silly me
Of course that stopped all tax haven abuse overnight
And I forgot there has never been a professional involved, ever
Ohhhhh Ohhhhhhhhh! There have been professionals involved (although they might not actually realise the risk of swapping their nice middle class life for a prison cell actually exists!)
You never know, with a half decent investigating officer, it might actually happen. What fun!
I should add: there is no stutotory time limit of Fraud or Proceeds of Crime (money laundering) prosecutions…
It is very naive, if not ludicrous, to think that an accountant sitting at a desk looking at bits of paper would be able to spot the proceeds of drug dealing, and other illegal activities.
We know this because large sums are being laundered all day, every day.
On the odd occasion where fraudsters, and criminals, are discovered the extent of their activities is more often than not, astounding. Yet, for a long time, they got away with it, and in some cases are never prosecuted. Why is that?
If you are not discovering any dodgy deals, then you need to look, much harder.
“”But tax dodging/evasion/avoidance is to a great extent facilitated by the likes of George Osborne, their influential “friends” and their precious tax haven””
Are you suggesting that tax dodging in the UK only really started last May?
Trying to link this malaise with individuals and political parties discredits those seeking greater parity in taxation,
As I have said tirelessly, your comment ignores the fact that lobbying impacts continually and despite it from natural Tory allies Labour did more to close down tax haven abuse than any other UK gov’t in history
It was not perfect at all and I criticised it but that is fact
To deny it is to undermine attack on tax havens
And as such it is you who is solely responsible for playing party politics here by setting up straw man to excuse abuse
There were 3 Labour governments in the past 13 years – I’d be interested in knowing what exactly they achieved in cutting tax avoidance and evasion in that period. They decided not to introduce a general anti avoidance law in 1999, much as suspect will be the case when the Aaronson report is given to this government.
Lets be pretty frank (and honest, for once), vested interests ensured that tax avoidance and tax havens flourished just as much under 3 Labour led parliaments as it is flourishing under this coalition government. Denying this is simply factually wrong.
I am on record for criticising Labour
But they did support EU Code of Conduct, EU STD and OECD
And they did introduce DOTAS scheme
Tories are driving through reliefs for tax haven activity and new reliefs for non doms
Difference is very real and stark
PS and Aaranson seems very determined to me
So respectfully I think your judgment pretty poor
@ Hugh
Of course the PSG is not suggesting that George and his sycophantic city mates are responsible for dens of inequity such as the Isle of Man, Jersey and Guernsey.
However it is George and his like who recognise the continuing convenience of these pigsties and will protect and develop them for their own selfish profit.
It’s all about morality rather than ethics and if you never learn anything else in your life remember this:-
“The ETHICAL man knows he shouldn’t cheat on his wife.
The MORAL man wouldn’t.”
I like that definition but I think it may be the wrong way round
The moral person knows right and wrong
The ethical person does the right thing
I bank in your so called “offshore tax havens”.
As a (long time) expat I am not entitled to open a UK mainland based bank account due to the rules and procedures introduced over the past few years.
So, as I wish to maintain my savings in British pounds, I bank in the Channel islands. I comply fully with declaring income to the relevant authorities, and did so even when witholding tax was an option.
I am certain that most of the cash held offshore is in accounts just like mine, and cannot understand all the idiotic suggestions of terrorism, money laundering, and people traficking.
I rather suspect that people are winding you up Mr Murphy!
Which is of course why nearly every fraud involves a tax haven
And Swiss bankers admit half their cash is illicit
Stop being gullible I suggest
Did you read my post before your reply Richard?
I assume that you accidentally cross posted, otherwise your reply make no sense, please fix it.
Sure I read your comment and my response was completely reasoned as were those of others
My suggestion is simple: you are just the sort of gullible apologist for tax havens the offshore industry loves
I do not doubt the legitimacy of your actions but please do not for a minute extrapolate widespread innocence from this because candidly that would just confirm my hypothesis
@ Billy
In most jurisdictions complying fully with declaring income to the relevant authorities is simply what we are all bound to do by law. It is a criminal offence if you fail to do this
Regrettably some very rich people and large companies have the power and money to set-up secretive and complicated trust funds and shell companies with unknown shareholders in offshore tax havens making it impossible to even trace let alone tax this wealth.
Ordinary people with relatively modest amounts of money (and I am not suggesting that you are “ordinary” or “modest”) with everyday bank deposit/savings accounts in places like the Isle of Man, Jersey and Guernsey would be the first to get “shopped” by these duplicitous governments as part of their PR campaign to hoodwink the world into believing they are innocent.. The total amount exposed would be insignificant compared to the $millions that pass through these places everyday
Meanwhile the “real money” which these islands economy depend will remain well and truly hidden – that is until Richard and a growing number of people are successful in dismantling these places.
If anyone is being “wound-up” it may be you!
Well and accurately said
Hopefully this ditty survive Richard’s censorship …
Isle of Man, Jersey, Guernsey trash
Where greedy pigs hide their cash
Banks, funds and accountants too
Into a trough they selfish spew
Tax evasion is their game
Well-known people you can name
Fiddling here, deceiving there
Of the poor they show no care
The largest companies take delight
As third world countries they do blight
No shame or conscience on display
Unseen and hidden sworn to stay
Money comes and money goes
Source and purpose no one knows
Secrecy and silence is the order
No controls inside their border
Poorer countries suffer to endure
While the rich their wealth do ensure
Benefiting from whispers from within
A confidential nod and a knowing grin
And African despots use their skill
Whilst a lack of food their people kill
Palaces and limousines by the dozen buy
As the sick and frail in thousands die.
So those of you in the Manx pigsty
Not for ever will you the law defy
Because all that’s good will soon decree
A timely end to your anarchy
(Reproduced with the kind permission of Salohcin Sregor)
I noticed an interesting article on foreign IT companies in Indian and transfer pricing:
http://timesofindia.indiatimes.com/tech/enterprise-it/strategy/How-foreign-IT-cos-reduce-tax-liability-in-India/articleshow/9821265.cms
Foreign IT sevice companies in India (Cap Gemini, IBM and Accenture etc) make less profit per employee than equivalent Indian IT companies (TCS and Infosys), and the Indian tax authorities think the foreign companies are using transfer pricing to avoid Indian taxes. Both sets of these businesses in India make most of their revenue/profits from providing services to companies in the US and UK via offshoring (moving the work to India) and onshoring (sending the Indian staff to the US/UK etc). TCS and Infosys make about 45% of their revenue from the onshoring side.
What the article misses is that India has been a low tax haven for IT service companies and as Som Mittal says:
“Till March 2011, these companies were covered under Section 10A and 10B of the Income Tax Act (which exempt income from taxes),” he says. “There is no motive for them to undervalue transactions.”
I wonder if Indian IT service companies have been extensively involved in transfer pricing their profits from their US and UK branches (which are mainly staffed by intra company transferees from India) to India to avoid US and UK company income/corporation tax.
Dear Richard Murphy,
I work in the banking sector in Miami Florida.
I can assure you, that we have encountered all the same things that you’ve identified (money laundering, tax evasion, etc etc), right here in Miami. There are rules that govern our conduct, but if you’re smart, then you can get around those rules quiet easily. And that’s here in the United States.
My point is, frankly – I don’t believe tax havens have a monopoly on the illicit type of trade you describe. Virtually every bank profits from it globally – even here in America.
But tax havens would have us believe they don’t
That’s the rather silly claim they make
I don’t dispute others do as well – but many banks seem more than willing to turn a blind eye to such things