Tax Research UK

FT.com / Asia-Pacific / India - China makes foray into Mauritius .

As the FT notes:

China’s state-led approach to foreign investment is muscling India aside in its traditional “backyard” by investing $700m in a special economic zone in the Indian Ocean island of Mauritius to service Beijing’s expansion in Africa.

Ramakrishna Sithanen, the vice prime minister of Mauritius and minister of finance, said China was “extremely aggressively” pursuing its objectives in Africa via Mauritius with a wave of strategic investments on the island.

Let’s put this another way - the use of Mauritius as a quite abusive tax haven continues. That’s the real truth here.

Richard Murphy Tax Havens

Tax haven risks corruption, OECD warns Ghana | Business | guardian.co.uk .

As the Guardian notes:

Ghana has had a stern warning from the Organisation for Economic Co-operation and Development to ensure that its emergence as a tax haven does not fuel corruption and crime in west Africa.

Ghana is becoming an offshore financial centre but Jeffrey Owens, head of the OECD’s Tax Centre, said: “The last thing Africa needs is a tax haven in the centre of the African continent.”

The OECD is in talks with Ghana to guarantee the country “adheres to the highest standards and integrity”. Owens said Ghanaian officials “are aware of the risks they are running”.

They might be. But let’s be clear, they’re not the real moves and shakers behind this. As the Guardian also notes:

Barclays Bank has been advising Ghana’s government on establishing its financial centre.

Wilson Prichard, a researcher at the Institute of Development Studies at Sussex University said:

Aside from the general social costs associated with the operation of tax havens globally, in the absence of a very strong regulatory framework and very strong standards of transparency there’s a particularly high risk that a tax haven in west Africa, which is home to major oil wealth and high levels of corruption, could facilitate large-scale corruption and tax evasion, and pose a correspondingly large risk to good governance and economic growth in the region.

But Barclays are backing it anyway.

And you want a better example than that of the complete and utter social irresponsibility of banks in the face of the risk of corruption, fraud and social breakdown?

It would be hard to find unless it is PricewaterhouseCoopers’ support for the development of a tax haven in Jamaica.

This is the financial services industry pursuing profit at cost to society at large. There’s nothing new about that. But the time has come to stop it.

Richard Murphy Barclays, Development, PWC, Tax Havens

U.K. Treasury Confirms 10,000 Tax-Amnesty Disclosures - WSJ.com.

The Wall Street Journal reports:

Ten thousand people have disclosed previously undeclared offshore income and gains under the U.K. government’s New Disclosure Opportunity tax amnesty, meaning revenue authorities can begin collecting unpaid tax, interest and penalties, the U.K. Treasury said Thursday.

“Now the NDO is closed, [HMRC] is beginning the job of using the data we have obtained from banks to identify people who have not made disclosures despite having hidden their money offshore,” said Dave Hartnett, the permanent secretary for tax at the Revenue and Customs department. “We are starting our investigations, and penalties can be up to 100% of the tax not paid.”

There’s going to be a great deal to do. In the two amnesties in 2007 and 2009 (now closed) about 53,000 people have admitted offshore tax evasion.

What is very clear from data from the Crown Dependencies alone is that this is only a small proportion of the total number of accounts held there on which non-disclosure of income earned to HM Revenue & Customs has been requested.

I just hope adequate resources are now made available to tackle this issue with considerable vigour as is essential. That means, I suggest, a positive recruitment process of high grade staff, strong admin support to pursue considerable numbers of people and a ’shock’ regime designed to create real fear amongst those who are acting (and let’s be blunt about this) criminally at cost to the rest of  us in society.

Richard Murphy Secrecy jurisdictions, Tax Havens, Tax evasion

I’m biased about this one, but I warmly recommend it.

Richard Murphy Secrecy jurisdictions, Tax Havens

Global Financial Integrity (GFI) released today a statement — dubbed the New Haven Declaration — which debuts a new partnership between humans rights and financial transparency advocacy groups.  Today’s announcement follows a meeting of prominent human rights and financial transparency organizations at Yale University in early December, 2009.  The groups discussed the link between illicit financial practices, secrecy in global finance and their adverse impact on human rights.

"The links between human rights and financial transparency are undeniable," said GFI Director Raymond Baker.  "An estimated $1 trillion is siphoned out of poor countries annually.  Further, some 18 million people die each year from causes stemming from economic deprivation.  Of these, ten million are children under the age of five who die from diseases for which vaccines are available."

"The New Haven Declaration makes clear that the solution to these interconnected problems lies in increased transparency and accountability in the global financial system," said Baker.

Signed by such groups as Amnesty International, Human Rights Watch, Oxfam, Global Financial Integrity, the Center for Applied Philosophy and Public Ethics, the Open Society Institute Justice Initiative, Tax Justice Network, and the National Council of Churches, the following statement "represents a vanguard partnership in human rights, economic development, global poverty alleviation, and global financial accountability," said Baker.

The statement and list of signatories follows:

New Haven Declaration On Human Rights and Financial Integrity

Human rights and international financial integrity are intimately linked.  Where poverty is pervasive, civil, political, and economic rights often go unrealized.  Today, large outflows of illicit money - many times larger than all development assistance - greatly aggravate poverty and oppression in many developing countries.

Illicit money leaves poorer countries through a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money-laundering techniques. Much of this money is permanently shifted into western economies.

Reducing these illicit outflows requires greater transparency and integrity in the global financial system. Achieving this is a prerequisite to creating an economic framework that is open, accountable, fair, and beneficial for all.

We call upon the United Nations, the G8, G20, WTO, IMF, World Bank, and other international fora, as well as on national governments, world leaders, faith groups and civil society organizations to recognize the linkage between human rights and financial transparency. We further call for decisive steps to ensure that developing countries can retain their resources for sustainable growth and poverty alleviation, which they must achieve if the human rights of all people are to be realized.

The undersigned individuals and organizations shall be working together in the coming months to pursue this agenda and look to add additional voices to this effort.

Amnesty International
Human Rights Watch
Oxfam
Global Financial Integrity
Center for Applied Philosophy and Public Ethics
Open Society Institute Justice Initiative
Asia Initiatives
Task Force on Financial Integrity and Economic Development
Tax Justice Network
Christian Aid
National Council of Churches
Harrington Investments, Inc.
Asociación Civil por la Igualdad y la Justicia
Thomas Pogge, Yale University
Robert Hockett, Cornell University
Frank Pasquale, Seton Hall

I have now added my name to that list.

Click here to read Raymond Baker, Thomas Pogge, and Arvind Ganesan’s op-ed in the Huffington Post introducing the New Haven Declaration.

Richard Murphy Corruption, Development, Secrecy jurisdictions, Tax Havens

FT.com / Comment / Letters - Unjust for Iceland to take sole responsibility.

From the FT today:

Sir, The president of Iceland’s refusal to approve repayment to the British and Dutch governments should be welcomed (January 5). The pause gives the Anglo-Dutch governments an opportunity to withdraw their demand for full repayment from the government of Iceland, a country whose population at 317,000 is somewhat smaller than Leicester’s.

The UK and the Netherlands, with a combined population of 76m, should cease to use economic force majeure on a tiny country, and accept the principle of co-responsibility for the crisis. Repayment of the nationalised losses of a private bank amounts to €12,000 per Icelandic citizen, and will inevitably impact harshly on their lives and public services. By contrast the cost to Dutch and British taxpayers of the bail-out will be about €50 per capita.

We understand the strong desire of the present government of Iceland to restore the country’s tattered reputation.

But anyone reading the financial press in 2007 and 2008 (as opposed to the academic reports commissioned by Iceland’s chamber of commerce) would have known that Iceland’s banks were far from risk-free. That was why British and Dutch depositors enjoyed good rates of return on their deposits.

The British and Dutch governments have sound political reasons for protecting small savers lured into shark-infested financial waters. What is unjust is that the tiny population of Iceland should be forced to bear the full costs of the laxity of Icelandic, British and Dutch regulators and the reckless behaviour of private bankers and risk-takers.

Ann Pettifor and Jeremy Smith,
Advocacy International,
London NW1, UK

I agree.

We have to recognsie small states cannot bail out banks.

But at the same time we have to demand openness, transparency, accountability and appropriate taxation cooperation from them as well. Which is precisely why the day of the tax haven / secrecy jurisdiction has to be over.

Richard Murphy Secrecy jurisdictions, Tax Havens