TIEA » Tax Research UK

India demands better information exchange

Development, Secrecy jurisdictions, TIEA Comments Off

Jul 072010

India will pitch for deeper tax information exchange agreements at the G-20 to make such pacts more effective in facilitating the flow of crucial data on tax evasion.
New Delhi is expected to present a detailed paper on the issue at the forthcoming Seoul meeting, urging that domestic laws of countries must support such agreements for effective information exchange.

“These agreements should ensure that there is actual flow of information and benefits for countries entering them (agreements) in checking evasion,” said a finance ministry official privy to the discussions. In some countries, for instance, domestic laws relating to privacy protection tend to come in the way of sharing information with other countries, defeating the very purpose of such pacts.

India also wants improvement in the quality of information that is shared under TIEAs to make such agreements more meaningful.

Good for India.

They’d do well to pursue this agenda.

Time the OECD realised this is the 21st century

OECD, TIEA Comments Off

Jul 012010

I note Bloomberg covered the conference of the British Swiss Camber of Commerce conference (which must have been a humdinger of a do). Somehow it’s only just come to my attention, but of particular note was this report:

The OECD has no agenda to push for an automatic exchange of information, Pascal Saint-Amans, head of international cooperation and tax competition at the Paris-based OECD said. In the surrounding European Union, where some nations apply an automatic information exchange, the interest paid to a resident of another member state is routinely sent to that country’s tax authorities. “Automatic exchange of information is not on the agenda,” Saint-Amans said. “It’s not even on the hidden agenda. The standard is the exchange of information on request.”

I should add I know Pascal. he’s a nice guy. But he and the OECD are just so far removed from the realities of the 21st century it’s breathtaking to think they are given opportunity to influence let alone create this debate.

The world is in financial crisis. The world needs every penny of tax revenue it can get to solve that crisis. The tax fraudsters are running amok still – the international tax gap running to hundreds of billions of dollars a year, and yet the OECD still peddles an arcane system of information exchange invented in the ear of the steam ship.

The technical capacity to exchange tax information automatically exists. I’ve explained how the problems of defining income can be overcome. I’ve explained that the data to exchange has to exist in law.

So what is missing? Just the political will needed at the OECD to actually tackle tax fraud. That’s it. That’s what’s missing. You’d really believe that they go out of their way to help fraudsters on the basis of the comments they make – because that’s what their ludicrous system of information exchange – which cannot and never will work effectively – does.

C’mon Pascal – wake up, smell the coffee and realise you’re right here, bang in the middle of the 21st century and start talking about creating systems to meet current need. OK?

Let’s not celebrate the TIEA between St Kitts and and the Faroe Islands

TIEA, TIEAs Comments Off

Mar 292010

Progress on Exchange of Information in the Caribbean – News – Bahamas Financial Services Board.

The Bahamas want to celebrate:

The Organisation for Economic Cooperation & Development announced today that Anguilla, St. Kitts and Nevis and St. Vincent and the Grenadines have become the 23rd, 24th and 25th jurisdictions to move into the category of jurisdictions that are considered to have substantially implemented the standard since April 2009. Since that time almost 370 agreements have been signed or brought up to the internationally agreed tax standard.

During the past week Saint Kitts and Nevis, Saint Vincent and the Grenadines and Anguilla, an overseas territory of the United Kingdom, have signed a total of 14 tax information exchange agreements. These signings bring the total number of agreements signed by each jurisdiction to at least 12 that meet the internationally agreed tax standard.

St. Kitts and Nevis and St. Vincent and the Grenadines today signed agreements with Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden. These agreements add to agreements St. Kitts and Nevis had already signed with Australia, Monaco, The Netherlands, The Netherlands Antilles, Aruba, United Kingdom, Denmark, Belgium, New Zealand and Liechtenstein, bringing their total to 16 agreements. St. Vincent and the Grenadines has now signed 16 agreements that meet the standard, including its existing agreements with Australia, Austria, Denmark, the Netherlands, Aruba, Liechtenstein, Belgium, Ireland, the United Kingdom and New Zealand.

Oh come on, let’s take this seriously. Is anyone really saying St. Vincent and the Grenadines and Greenland or St. Kitts and Nevis and The Netherlands Antilles TIEAs really contribute in any way to financial transparency.

It’s time for the OECD to draw a halt to this farce of claiming compliance on the basis of such l agreements which they know, and everyone else knows, have no substance at all.

The UK gives a boost to automatic information exchange

TIEA Comments Off

Mar 252010

The new UK penalties for offshore tax evasion give a massive boost to automatic information exchange, a Tax Justice Network demand. As the budget note says:

The mechanics of the penalty frameworks will remain the same, but the absolute level of the percentage used to determine the tax-geared penalty will be determined by the jurisdiction in which the non-compliance arises.

Where the non-compliance occurs in a jurisdiction which has provision to exchange information on savings income automatically with the UK, the penalty percentages will be the same as those in the current Schedules (i.e. the same as for non-compliance arising in the UK).

Where the non-compliance arises in a jurisdiction which has agreed to exchange information with the UK, but does not automatically share that information, the penalty percentages will be 1.5 times those set out in the existing Schedules.

Where the non-compliance arises in a jurisdiction which has not agreed to exchange information with the UK, the penalty percentages will be double those set out in the existing Schedules.

The new penalty frameworks for offshore non-compliance will apply to income tax and capital gains tax.

So the UK is implicitly giving a boost to automatic information exchange. Good for us!

Tax-Haven Crackdown ‚ÄòBig Success’ says OECD

TIEA, TIEAs Comments Off

Jan 202010

Tax-Haven Crackdown ‚ÄòBig Success’ as OECD Begins Review Process – Bloomberg.com.

As Bloomberg notes:

Cracking down on tax havens has been “one of the big success stories” of the Group of 20’s efforts in the financial crisis, the OECD said, as the Group shifts from naming-and-shaming to ensuring compliance with tax standards.

The Paris-based Organization for Economic Cooperation and Development said 195 tax-information exchange agreements were signed last year as countries faced fresh scrutiny from the G- 20, up from 23 in 2008. Nineteen countries that had been branded as not sufficiently meeting international standards were removed from that category on the OECD’s so-called gray list.

Well, if big is relative and better then the nothing the OECD achieved from 2002 to 2008 then this is correct.

But it’s a very, very long way from a major success.

As I’ve noted time and again the Tax Information Exchange Agreements the OECD promotes can only be useful if there is also automatic information exchange to provide the ‘smoking gun’ proof that a person is undoubtedly the beneficial ownership of a financial structure in another jurisdiction. Without that the number of requests under TIEAs will be miniscule – hundreds maybe a year – and that has not deterrent effect.

Second, saying that signing 12 such agreements is enough to establish international acceptability is ludicrous. There are more than 12 countries in the G20 for a start, 27 are in the EU, there are over 230 tax jurisdictions in the world (some say slightly more). Why 12?

The goal has to be comprehensive coverage of Tax Information Exchange Agreements which can only eventually be achieved on a multilateral basis and full automatic information exchange on the beneficial ownership (for now) of all offshore structures (where offshore simply means ownership is one jurisdiction but the transaction is recorded in another) with in the long term income and other data all exchanged as well.

Then we beat tax fraud for good.

And other fraud.

And money laundering.

And a great deal of crime.

And corporate corruption.

And bribery.

And why would anyone be opposed to that?

The OECD needs to be brave: it’s horizons are too limited. Now is the time for it to break out and go for real reform.

Swiss private banks want to renege on information exchange

Switzerland, Tax evasion, TIEA 24 Responses »

Jan 152010

Swiss private banks want clearer legislation over bank secrecy. - swissinfo.

Switzerland has got itself off the so called OECD grey list of tax haven states by committing to more than 12 new or revised Tax Information Exchange Agreements and Double Tax Agreements including the latest for of the OECD standard information exchange clause which gets round bank secrecy.

And now the backlash has begun amongst Swiss private bankers. it’s reported that:

The Swiss Private Bankers Association (SPBA) on Thursday asked the government to look more carefully at the details of renegotiated double taxation agreements. Parliament was also urged to draw up a legal framework to allow concessions without breaking banking secrecy laws.

Speaking at the SPBA annual media presentation in Bern on Thursday, Anne-Marie de Weck, president of the Geneva Private Bankers Association, said it was time to defuse the legal minefield before more controversies erupted.

“We strongly believe parliament should adopt a strong legal framework to clarify the application of these [measures to align Switzerland with international tax demands] and clear up the uncertainty,” she told swissinfo.ch.

Such measures include the renegotiation of 12 double taxation treaties in the last 10 months with another 18 in the pipeline. The SPBA welcomed the decision to amend the treaties but questioned why a clause on exchanging tax information, demanded by the Organisation for Economic Co-operation and Development (OECD), had been included in agreements with some non-member countries.

It’s been included for good reason: the world knows banking secrecy facilitates crime. That is not by chance. That is its purpose.

The Swiss can say what they like, but if they renege on these deals they should expect substantial economic sanctions to be imposed on them as a nation state. And the only reason for their suffering will be to assist criminals from elsewhere.

They may decide to do that. But they would be very unwise to do so. The world has had enough of such crime and will no longer tolerate it even if Swiss bankers will.

Remember it is only a year or so ago that Swiss bankers admitted that maybe half of all cash in Swiss banks was illicit. They really do not have a leg to stand on.

This could have been quote of the year

Secrecy jurisdictions, Tax Havens, TIEA Comments Off

Dec 292009

Gordon Brown said at the G20:

We have agreed that there will be an end to tax havens that do not transfer information upon request. The banking secrecy of the past must come to an end.

It could have been the quote of the year.

But a few hours later we learned this was based on the OECD black, grey and white lists, all revolving around the useless Tax Information Exchange Agreements. And the wheels fell off the bus, like so much else about Gordon Brown’s year.

The TIEA programme is failing

OECD, Tax justice, TIEA 3 Responses »

Nov 272009

I have been looking at the Tax Information Exchange Agreements (TIEAs) that have, in the main, been signed as a result of g20 pressure arising in April this year.

There were 180 of these by 10 November, the cut off for my work. I think there’s one more now.

I have plotted them all. In doing so some interesting trends emerge. Take this table, for example. It shows the TIEAs signed by OECD non-compliant grey and black list states with each other.

I am well aware that this table is small: click on it and the whole thing comes up in a separate window.

I stress: the data relates to all TIEAs signed to 10 November 2009.

What the table shows is that 24 TIEAs are between grey list states (I know the total says 48 – but it does, of course, count each agreement twice). The implication is clear: these ‚Äònon-compliant’ secrecy jurisdictions listed by the OECD in April 2009 have been seeking to become ‚Äòinternationally compliant’ by signing TIEAs with each other. Remember when noting this that signing just twelve TIEAs makes a place internationally compliant. No information has ever to be exchanged: having the TIEA is enough.

I predicted this would happen as soon as I heard of this requirement. It was too obvious that this would be what they would do.

If I expand the sample to the jurisdictions covered by the Financial Secrecy Index published by the Tax Justice Network then 66 of the 180 TIEAs are between secrecy jurisdictions (expanded image is here):

Note that in some cases – like Andorra, Anguilla, Liechtenstein, Monaco and more like them the rate of TIEA with other secrecy jurisdictions is very high indeed. As is very clear: these places are seeking to run a closed shop where they are ‚Äòcompliant’ but will never have obligation to ever exchange any information because you can be sure none will be requested.

The rate of 66 out of 180 may not sound worrying, but it is. 67 of the remaining agreements are with Nordic states. Now I’m not chastising those Nordic states, but when 28 of all agreements are with the Faroe Island, Greenland and Iceland the standard is obviously wrong. Such agreements cannot be material to the setting of an international standard but right now they are 15.5% of all agreements.

So what’s left after insider dealing between secrecy jurisdictions and the Nordic states is excluded? Spain has just two agreements, Italy none, Canada 1, Germany 6, France a good (in this context) 11. But surely it is absurd that we aren’t measuring compliance in terms of the recipients of information and not the suppliers? Why is it Spain gets 2 and is told that secrecy jurisdictions need sign no more as they are compliant? That has to be wrong.

And so too are the absentees from the list very notable: India, China, Japan, Brazil, most of Africa, almost all developing countries. When will they get a deal from states that are willingly, knowingly and very deliberately abusing this new standard to sign deals with each other so that the people who need information to enforce their tax laws will not receive it?

The OECD standard for TIEAs is not good enough. It needs urgent reform. And very soon.

US – Swiss tax deal a tiny step forward, at best

Switzerland, TIEA, USA 2 Responses »

Sep 252009

A protocol signed Wednesday by the United States and Switzerland amending the U.S.-Swiss Tax Treaty falls short of ensuring effective information-exchange between the U.S. and Swiss financial institutions, said Global Financial Integrity (GFI) Thursday.

“The protocol signed Wednesday is an improvement on the existing US-Swiss Income Tax Treaty,” said GFI director Raymond Baker. “It establishes a stronger framework for and commitment to cooperation in mutual tax assistance matters, but there is still a ways to go before we have something in place that will enable the U.S. to effectively pursue tax evaders that hide assets in Switzerland.”

The amendment contains new language which stipulates that Switzerland may no longer rely on national laws to refuse a request for information. Thus, under the new protocol Switzerland may not reference its own bank secrecy laws to deny a request for information. GFI applauds this laudable win for U.S. negotiators and recommends that this new language be a standard part of all future treaty negotiations with other countries. GFI also recommends this provision be included within the current OECD model, on which the majority of international Tax Information Exchange Agreements are modeled.

But, GFI notes, the new agreement maintains the paradigm of information-on-request, as opposed to adopting an automatic exchange framework. Also, requests for information under the new agreement are required to be highly specific which can be an impediment in investigating tax evasion and fraud cases.

“Automatic exchange of information is the only practical way to ensure that countries are provided all relevant information with respect to their own citizen taxpayers who have accounts abroad,” said Mr. Baker. “Under the protocol signed yesterday, a request for information basically must include the name, rank, and serial number of suspected tax evaders, when in fact the end-game of many tax investigations is to discover the identity of tax evaders.”

The amended tax treaty will now go to the Senate Foreign Relations Committee for consideration, after which the Senate must approve it by a 2/3 vote before it may enter into force.

“The U.S.-Swiss agreement is a step forward,” said Mr. Baker. “But the protocol that will go to Congress for consideration falls far short of what is needed to improve U.S. access to information with respect to citizens with accounts in Switzerland.”