whitebandradar » Tax Research UK

The model is wrong

G20, Secrecy jurisdictions, Tax Havens Comments Off

Apr 032009

Good to see some picking up the message that there are serious problems with the OECD approach to tax haven listings. This came out overnight:

However, Richard Murphy, [a] founder of the Tax Justice Network and director of Tax Research LLP, says many tax officials think TIEAs are “not delivering and cannot deliver”.

"To make the network effective we would need several thousand," he writes in his blog on Tax Research UK.

"You can see we have a long way to go and no chance of really completing this process on a bilateral basis. The model is wrong.”

Although he does not dispute they have “been the right direction of travel,” Murphy hopes the G20 will push for multilateral agreements which could open enquiry to many countries.

After sleeping on the issue it is clear yesterday was one where progress was made. I believe that the commitments are genuine.

I’m equally clear we have a long way to go.

I happen to think we will get there.

And I also think that yesterday took that process forward. Not as far as it could. Not without creating problems. To continue the metaphor, the OECD’s bizarre behaviour landed us straight in some deep mud. But it was movement in the right direction.

What we got

Secrecy jurisdictions, Tax evasion, Tax Havens, Tax Justice Network 7 Responses »

Apr 022009

This has been an extraordinary afternoon – and one where it has been hard to blog.

Gordon Brown declared the end of the Washington Consensus this afternoon. I’m not sure that’s true – it has many devotees still. But on tax havens we have the following:

to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information

Good enough? Let’s put it like this. We have a list (although no one has seen it – it seems to have taken the OECD by surprise). I’m told it’s long and Switzerland is on it.

We have a commitment to ending banking secrecy. I do think they mean it. We have a commitment to information exchange.

We have sanctions. These are vital.

Let’s say what we also have but which is not in there but which is on documents Downing Street has shared with me:

A call from Gordon Brown to the OECD to include tax avoidance as well as evasion in this process. That is important. Tax information exchange agreements cannot deliver that. He intends to go further. His letter will, I’m told, be issued tonight.
A G20 commitment in the communiqu?© annexes to extend this process to developing countries. That is new.
Gordon Brown is calling for an extension beyond OECD processes.

I asked the PM a question about tackling tax avoidance and helping developing countries at his press conference. I am at present convinced there is intention to tackle both.

So what’s the big disappointment? No mention at all of automatic information exchange. Not a hint. But, and I think this important, it’s hard to see how after this the EU cannot commit to the revised EU STD now – and that is the prototype for automatic information exchange of the sort we want.

I am pleased, and I am disappointed. But overall I’m more pleased than disappointed. The tax haven initiative has been dead for eight years. It is not now. It is very alive, it is delivering real change and the environment for more change still has been created.

I and the Tax Justice Network will of course be demanding more, and will be pushing for all that is promised now. But, this is an historic day. Don’t doubt it.

A world first

Blogging, G20, Secrecy jurisdictions, Tax Havens 2 Responses »

Apr 022009

I got a question in to Gordon Brown at the PM’s press conference this afternoon.

It’s a minor first but I’ll claim it. I’ve just become the first blogger to ever ask a question of a world leader at an international summit.

And what is more – Gordon Brown seems to have given an honest answer.

Latest word

G20, Secrecy jurisdictions, Tax Havens Comments Off

Apr 022009

Just had another briefing.

The communiqu?© is strong.

Sarkozy can live with it.

But no ‚Äòblack list’.

Although time scales to avoid being on one are tight.

No conclusion yet on what the reference to sanctions will be.

The final draft communiqu?© is now being discussed. It’s still scheduled to go out at 3.30

The OECD may not be enough

G20, Green New Deal, Secrecy jurisdictions, Tax Havens Comments Off

Apr 022009

Fascinating noises coming out from the discussions.

One of the reasons why we won’t be getting a tax haven listing today is, I understand, that some countries (not just China too) want to base the criteria on more than signing up to 12 near useless OECD Tax Information Exchange Agreements.

I gather compliance with the Financial Action Task Force 40 + 9 requirements on money laundering might be included (and this will be tough for some, where compliance rates are way below expected levels) and maybe IMF ROSC reviews. Neither are sufficient, but the expansion is good news.

Second, and just as significant, some are demanding that the model tax treaty to be used is not the OECD model, but the UN agreement. This is little used at present.

In practice for information exchange purposes there would be no impact – Article 26 of each agreement on information exchange is the same, but when it comes to broader issues the UN agreement is biased to developing countries. This would be good news, and a boost to our call for the Un to have a much more important role in taxation. It may be an unexpected bonus of the day.

Peston says tax havens are done and dusted

G20, Secrecy jurisdictions, Tax Havens 1 Response »

Apr 022009

Robert Peston has said on the BBC that tax havens are done and dusted.

God knows who he is talking to. I’m not getting that yet.

Nor is the BBC web site.

Stephen Timms is doing a briefing soon. We may learn more.

In the meantime there’s a media scrum 15 feet to my right where Bob Geldof is blogging.

Maybe I’ll tackle him on the tax haven issue. Like Bono he’s an abuser.

G20 news – 9.30

Development, G20, Secrecy jurisdictions, Tax Havens 1 Response »

Apr 022009

Tax havens were the one thing on which there was meant to be guaranteed delivery at the G20. Right now the tax haven paragraph of the communiqu?© is just about the only one that I understand has square brackets round it all. That means everything is up for negotiation.

What are the issues:

1) Is there a black list or not? Arguments a) some don’t want one because they don’t want some places on it e.g. China and Hong Kong and bizarrely Germany who is saying no EU state to be included – which is mad. b) Commit to one but don’t publish it now – best to get it right rather than rush to publication. c) Just do it.

Where am I? Camp b. I want the commitment – of course. But what I hear suggests the list is not right. I think three months would refine it and increase its chance of success.

2) Sanctions, or not? Three arguments again. a) No sanctions – seems to be the US position as far as I can tell several sources. That’s OK is you’re the US – you can make and enforce your own. That’s not OK for everyone else. I don’t think they’re objecting too strongly. b) Threaten sanctions but do not say what now – and spend a month or two refining this. c) Specify the sanctions now.

I incline to c on this one – the threat needs to be there. I suspect b more likely though.

3) What’s the listing criteria? It’s Tax Information Exchange Agreements I’m afraid – but as I persistently say this massively misses the point. a) Jersey has supplied 5 pieces of information in 8 years to the USA under its agreement – which changes nothing. b) They’ll take a long time to deliver. c) They only tackle evasion – and the tax haven issue extends to avoidance and regulation.

Not good news here. We need automatic multilateral exchange. But I have no doubt we’ll get it – the EU will deliver.

But as I’m saying in interview after interview – the real point is the issue is being discussed after 8 years of sidelining by George W Bush. That’s the big story.

Why be at the G20?

G20, Secrecy jurisdictions, Tax Havens 1 Response »

Apr 022009

Three reasons so far:

1) Bumped into Jon Snow from Channel 4 and got 6 of us blogger interviewed foirstr thing this morning

2) Met Tom Watson MP from the Cabinet Office to discuss my last blog within 20 minutes of getting here. Issues clarified.

3) Had briefing from the UK negotiating team on current state of play.

It would be hard to achieve that from anywhere else.

The WSJ on the G20 outcome

G20, Secrecy jurisdictions, Tax Havens 13 Responses »

Apr 012009

From the Wall Street Journal

Governments of the Group of 20 industrialized and developing nations are nearing agreement on measures aimed at cracking open secretive tax havens, but are divided over how harshly to punish those that don’t cooperate.

Officials involved in preparations for Thursday’s G-20 summit say the leaders will agree on guidelines for tax havens and outline sanctions for those that don’t sign on. But negotiations over whether to take the added step of publishing a blacklist of uncooperative tax havens — a measure that European governments have been pushing hard — were continuing.

The accord has advanced further than many governments believed possible.

I agree with this – it reflects what I hear.