The following is what the TUC says it expects from the G8 on tax. I share its views. I should add I advise the TUC on tax matters:
The TUC welcomes the Prime Minister's intention to tackle multinational tax avoidance and evasion at the G8 summit in Northern Ireland on 17 and 18 June, but has warned that 'warm words will not be enough' - radical action is required at both the G8 and UK level to crack down on tax dodging.
In a briefing published today (Friday), the TUC has set five tests for the summit.
It also warns that the UK is not in a position to meet one of the changes the government says it supports at the G8 - company registers to assist information exchanges between countries - because the UK does not have a proper register of trusts or require the registration of the beneficial owners of UK companies.
The TUC briefing says that in order to be effective the G8 summit needs to:
- Use the new structures already required by US tax rules to introduce full multilateral automatic information exchange (AIE) of overseas earnings and holdings whether held by individuals or within trusts, companies or other structures.
- Ensure that all tax havens are included in any new agreements on AIE.
- Agree full disclosure of the beneficial owners of trusts, companies and other legal structures. These should be open to all and not just tax authorities.
- Support radical action by the G20 to tackle companies such as Google, Apple and Starbucks who do not appear to pay tax where they earn their profits. This should include country-by-country reporting.
- Involve developing countries and the UN in the multinational forums that are discussing tax and provide them with the technical help they need.
The TUC briefing comes as new polling published today by the International Trade Union Confederation (ITUC) shows that 85 per cent of voters in 13 countries (including six G8 economies) support policies to stop large and multi-national corporates avoiding tax.
The UK is ranked top of the G8 countries polled in terms of voter support to curb tax havens, with 96 per cent of voters in support of policies. Germany is second in terms of support (91 per cent), followed by Canada (88 per cent), France (82 per cent), Russia (75 per cent) and Japan (74 per cent).
TUC General Secretary Frances O'Grady said: 'It has taken years of campaigning to get governments to take tax justice seriously. But with voters across the globe hit by austerity and spending cuts, no politician can now ignore the corporations and super-rich individuals who say that tax is for the little people.
'But while we can welcome the intentions, the test will be in the delivery. Warm words will not be enough. This is why we have set the summit five tests, and warn the Prime Minister that he cannot be taken seriously in calling for the real owners of trusts and companies to be registered until the UK sets up its own register.'
Commenting on the poll findings, ITUC General Secretary Sharan Burrow said:
'Workers are paying for the financial crisis with their jobs, while corporations are denying ailing economies the revenue they so badly need.
'The sheer scale of tax evasion revealed by one corporate tax scandal after another is matched only by the injustice to workers and their families.
'In developing countries in particular, national economies are robbed of revenues which could be used to address critical needs of such as food security, health, poverty alleviation and education.'
TUC briefing on G8 summit tax issues
What the government says
David Cameron says his priority during the G8 Presidency will be the global economy.
He has said that he will use the UK's Presidency to help generate growth, jobs and prosperity for the long term. To achieve this, he says that the UK will focus on open economies, open governments and open societies to support free trade, tackle tax evasion and encourage greater transparency and accountability. He has put particular emphasis on dealing with tax issues. In this TUC briefing we examine what needs to be achieved at the G8 summit.
The UK says it has four objectives regarding these issues at Lough Erne. They are:
- Tackling tax evasion
- Improving transparency
- Dealing with tax avoidance
- Assisting developing countries
Tax evasion
The G8 deals with international issues and its focus should therefore be on tax evasion taking place across international borders, and most especially that linked to tax havens.
This issue has been the subject of previous international summits, most especially the London G20 in April 2009, and the failure of the measures taken on that occasion is the reason why the issue needs to be addressed again now.
But there is a big difference between 2009 and today. The G8 has an opportunity at Lough Erne not available to it any previous meeting.
This is the result of the USA's new commitment to automatic information exchange with countries all over the world that hold information on the foreign taxable income of US citizens.
This commitment was embodied in US law in 2010 in what is called the Foreign Accounts Tax Compliance Act (FATCA). This becomes operational in 2014. This Act specifically only applies to US citizens. All the FATCA agreements made by the USA are bilateral - which means that they are strictly between the USA and other individual countries.
But to make FATCA work, any country that wants to hold deposits from US citizens needs systems to provide this kind of information. Once in place, these can be used by other countries to demand the same automatic exchange of information to track the overseas income of their tax residents. Full tranparency has become a realistic possibility for the first time.
Almost certainly as a direct result of FATCA, together with strong campaigning against tax abuse by unions and others, UK ministers have changed their position on what is called automatic information exchange (AIE).
AIE happens when income earned in one country by a person who is resident in another country is automatically reported to the country where the person lives, whether the person involved likes it or not. This can be done bilaterally - that is between two countries - or multilaterally, which happens when many countries sign up to the same system. European countries are already used to the second system as a dilute form of this has been in operation in most EU states since 2005.
Until a little over a year ago the UK argued vociferously against AIE. It has now declared itself in favour if it, and most especially on a multilateral basis.
The power of automatic information exchange is that it exposes the people who hide money in tax havens to a much greater risk of discovery. This is especially true when AIE covers income held in the names of companies and trusts that a person owns or controls in a tax haven as well as funds in their own name.
The low or zero rate tax rates that tax havens have to offer lose much of their appeal if that income is declared to a person's tax authority in the place where they live. This is because the income in question will be taxed despite being located in a tax haven, as is usually required by law. AIE therefore makes tax evasion a lot harder.
The biggest consequence is not that lots of people are prosecuted as a result, but that behaviour changes as people either stop using tax havens or declare the income they have there.
The following things would help achieve the goal of defeating tax evasion through tax havens:
- A commitment to multilateral automatic information exchange;
- A demand that all tax havens take part;
- A clear commitment to fund the necessary development costs for the AIE systems that will have to be developed by the OECD;
- A commitment to make AIE cover individuals, companies and trusts or the whole process can be avoided far too easily;
- A commitment to cover a wide range of income sources and not just bank interest;
- A clear timetable for the introduction of AIE.
Anything less than this list will represent a failure to deliver by the G8.
Improving transparency
Automatic information exchange can only work if the information is available to exchange. The second challenge for the G8 agenda is to ensure that information is available.
Most people evading tax hide it in companies, trusts, foundations or other structures. These are very commonly set up and registered in tax havens, who require little or no disclosure by such structures.
To be effective automatic information exchange needs to apply to all funds - whether held by an individual or any of the companies, trusts and various combinations of them that accountants, lawyers and bankers put together.
Just as the UK has traditionally objected to AIE, it has defended the secrecy of these structures. But it has now changed its mind. Money laundering rules that apply around the world require that information on the beneficial ownership of companies, trusts and foundations must be known to any financial service provider that pays them any income. The UK therefore now says that AIE for such structures is not only possible, but will impose no significant burden.
To make this work the UK is now demanding that all countries have central registers of companies and trusts that record the information on their beneficial owners. This is a key - and welcome - G8 demand.
What to expect:
- That this demand that registers of beneficial ownership be created is made;
- That it will only be demanded that the register be open to tax authorities.
What is really needed:
A register open to the public as well as tax authorities - as that would stop a great deal of commercial fraud now undertaken through limited companies, trusts and other arrangements both on and offshore.
Putting our own house in order:
The UK's current company register does not record who really beneficially owns UK companies and so the UK fails way short of this standard at present. This poses a real problem for the government.
The UK company register has been so starved of resources and staff that hundreds of thousands of companies disappear from it - or are technically 'struck off' - each year simply because they do not reply to letters asking for the information they are legally obliged to file, again meaning we fall far short of desired standards in this country. Significant new investment is needed to ensure we run an effective register of companies in the UK, let alone one that properly records beneficial ownership.
The UK does not have a trust register, or anything approaching it and much work will be needed to create one. Serious investment is needed to establish the needed transparency for UK based structures. This is urgent.
Tackling tax avoidance
Across the world multinational corporations do not appear to be paying the tax they owe in the right place at the right time.
It is unlikely that this G8 will make any progress on tackling tax avoidance. This is because tax avoidance by multinational corporations has been adopted as a priority by the wider G20 group. The OECD announced in February that they would deliver a report to the G20 in advance of its meeting in September, but is not yet complete. The best that can therefore be expected at the G8 are warm noises of encouragement to the G20 to take appropriate action.
We have no problem in principle with this being dealt with by the G20, but the prospects of real change are currently poor.
The OECD has said that 'what is at stake is the integrity of the corporate income tax' and that 'the international common principles drawn from national experiences to share tax jurisdiction may not have kept pace with the changing business environment'. But comments made by the OECD since February suggest that the fundamental reforms needed to ensure that multinational corporations pay tax where they trade are unlikely to happen. Instead mere tinkering with the existing, failed, rules is likely.
This is why we need a strong commitment from the G8 that its members will press the G20 for effective change.
What is needed:
- That the G8 support the demand for country-by-country reporting by multinational corporations, which would require that they publish data on their sales, employment costs and headcount, profit and taxes paid (as a minimum) by country, which information is not available at present;
- That the G8 support a programme of widespread reform of the global corporation tax system and the treaties that underpin it to ensure that tax is paid at the right place, in the right amount and at the right time, which is clearly not the case at present.
Assisting developing countries
Developing countries have a special problem with tax avoidance and tax evasion. Estimates vary, but most academic and development agency commentators agree that Africa, for example, loses more from tax abuse by multinational companies shifting their profits into tax havens through transfer mispricing than they gain from development aid.
Developing countries are very clear about what they need. First they need technical aid on tax matters. Secondly, they need reform of the global tax system to make sure they can find the profits to tax. But most of all they are clear that they need a voice at the table to be heard on this issue.
Unfortunately the G8 and the G20 exclude developing countries from their considerations. The OECD, which is tasked by these groups with solving these problems is also made up of the richer states, and with just over 30 members excludes most countries from its considerations. As a result developing countries feel excluded from a debate that has massive impact on them.
The TUC would like to see:
- The G8 bringing the UN and its tax committee (which is largely ignored by the OECD) into this debate as this would open representation to all countries;
- Specific proposals for technical assistance to developing countries to assist them in collecting tax, including allowing them to collect taxes on payments of royalties, copyright fees, rents and management fees which are very often not permitted under the OECD style tax agreements that developed countries ask them to sign;
- Increased aid to ensure that developing country tax authorities have the training and finance they need to recruit, train and retain the staff they need, many of whom leave to join international firms or their accountants at present as soon as they are qualified in tax.
The UK has not given much indication that these objectives will receive the support they deserve at the G8.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
And today Geoff Cook said………………
“Tax evasion is wrong, it leaves honest citizens to shoulder an unfair burden, because others do not pay their dues and it deprives developing countries of vital revenues.”
http://www.jerseyfinance.je/ceo-blog/g8-is-gr8-but-the-transparency-tango-needs-the-g20#.UbtIOMxwaUl
Well done Geoff, just add the word avoidance and we agree!
Indeed!!!!
“Ensure that all tax havens are included in any new agreements on AIE”
The problem is that if you plan carefully there are loopholes that mean that almost anywhere can be a tax haven and if you exclude certain countries they will simply drift into the arena to fill the vacant space, not to mention existing tax havens using it as an argument to say that there isn’t a level playing field. You also have the problem of the tax haven Delaware, the home state of the Vice-President of the USA.
That’s a bit naughty mentioning Delaware…..besides I can’t really see the US Congress really doing much to enforce any laws that they think will really hammer US business…..after all for the spiel about ‘green legislation’ they blocked just about everything.
Pity HMG seems determined to do the opposite and drive skilled manufacturing jobs offshore by ramping up the price of electricity through daft green levies that none of our competitors are actually doing.
The problem with these agreements is that people who are not even American are being swept up into them. People who owed zero tax are being gone after along with the big player criminals. FATCA is not workable in it’s present form as it harms innocent people abroad who happen to have an American in their family. Spouses who have zero income supported by a foreign person are giving sensitive private data to the U.S. all on nothing owed. I don’t support these current agreements. They can and should go after those off shoring money out of the country they live in but, should not implicate those by signing rights. The full understanding of what FATCA is going to do to low and middle income families is not being explained here. You can’t just tout the “good side” without talking about the damages to innocent families. That’s as wrong as FATCA in its present form.
So far I see no evidence at all to support your claims
Hardly surprising – FATCA is not operative yet
But banks are already reacting in anticipation. Read this, prepared by American Citizens Abroad:
http://bsmlegal.com/PDFs/American%20Citizens%20Abroad.pdf
It contains many first hand accounts of the damage FATCA is has ALREADY caused to ordinary people trying to lead normal lives. And this is just the prelude. It will get a LOT worse once full-fat FATCA goes into effect.
While a rational person would support the proposition that an individual and a company should be tax compliant in the jurisdiction where he/she/it resides, this proposal is dangerously close to proposing that the EU and the US adopt a citizenship based tax on the worldwide income of companies. Citizenship based taxation of worldwide income of individuals is already the law in the US and is a total failure and one of the reasons why FATCA is resisted so strongly by financial instiutions and US expatriots. In the EU and the UK the model is residency based taxation for individuals and the issue for the EU is quite different from the US when it comes to the application of transparency to persons (not companies). For example, Germany has an interest in transparency and reporting by a financial institution in the US for a ‘foreign account’ held by a German living in the U.S. Germany, but no interest in the disclosure of those same accounts held if that German citizen is resident in the US. Under US law, FATCA requires a every financial institution on the planet to hunt out, identify and disclose ‘foreign’ non US accounts of a US Person and report that account to the US Government REGARDLESS of where that citizen lives (even if that person is a dual citizen living in the country of his/her dual citizenship). FATCA trambles on national law and treats every account outside of the US as ‘foreign’ even as it relates to a US citizen living and paying taxes in the country where the account is located.
I strongly support a passport tax
And enforcing it
Mr Murphy I do not understand your position as it leads to terrible results as applied to individuals, and particularly, individuals with dual or perhaps even triple nationalities. The current US law is a perfect example of how citizenship based taxation does not work.
While the examples are numerous, and I would refer you to the American Citizens Abroad website, just consider how unfair it is for a US citizen living, for example in Canada, who pays his Canadian taxes, has a Canadian retirement account and savings and investment account, but also is taxed by the US government but receives absolutely no services for the amounts paid to the US. The US would want capital gains tax on the sale of his house despite the fact the house is in Canada, bought with Canadian earned and taxed cash and there is no capital gains tax on the sale of the house under Canadian law. His mutual funds and Canadian tax free funds are taxed by the US whereas Canada does not tax – and because of his perhaps accidental US status, he is discriminated against by banks on applying for Canadian mortgages and denied banking services. He, a Canadian citizen, would be treated very differently than his Canadian neighbor who does not have ‘US Person’ status, despite the fact they are both living in Canada. The economics simply does not work when it comes to citizen based taxation, and it is inherently unfair.
Moreover, the paying your ‘fair share’ to the US government argument for the privilege of being a US citizen also is full of holes – a US citizen living in HK will be taxed at 13% thus requiring a payment of the ‘delta’ to the US government (for nothing) but a US citizen in Germany with a high German tax obligation will pay the US little. Both are paying the US government their fair share? Citizenship based taxation for individuals simple does not work.
The individual has the option of renouncing US citizenship
If they do not wish to do so then clearly they must pay the price for it
Is that really so hard to understand?
Now you’ve lost me too Richard. I believe you have dual Irish & British nationality (and live in the UK). So are you saying that, as a UK tax-payer, you would be happy to pay additional tax to Ireland for the right to continue to hold an Irish passport?
I must say that, sad as I would be to relinquish my British nationality, I would have little choice if I was obliged to pay tax in the UK in addition to what I pay in France (almost certainly more than I’d pay on the same income if I lived in the UK). Surely residence-based tax is the only one that makes sense, as the country of residence is where you make use of the services provided?
If that’s not what you mean, perhaps you could explain what you do mean by a passport tax.
I am saying I would have to decide
But I would, of course, pay no more than that of the higher state
Unfortunately it isn’t as simple as saying you would “pay no more than that of the higher state”. Under the US system you would probably pay more than a resident citizen of either state.
It isn’t as simple as calculating the final tax bill for both countries and paying the higher of the two. Tax is paid under various schedules and the US system requires the individual to pay the higher of the US tax or the local tax for each schedule.
A good example of this is a US citizen living in the UK would pay more in income tax than they would if resident in the USA, but they would then also pay capital gains tax on the first penny of any gains to the US government, thus being prevented from using the UK’s capital gains tax allowance. Furthermore a UK resident US citizen would be unable to make use of any sort of tax efficient savings like an ISA to protect a small amount of income and capital gains from tax.
I suspect the vast majority of US citizens living abroad, especially those who have done so for many years have simply ignored the tax requirements and probably paid more tax than most US citizens resident in the USA anyway, but this new FATCA system will now locate and reveal them to the US government. This will no doubt include individuals who were born in the USA and moved during the first few years of their life back to their home country and have never held a US passport since they left. Other individuals that were born abroad to US parents and have never lived in the USA are far less likely to be reported under FATCA, but have the same liability.
See comment made on my proposed system that would prevent this
Forgive the above typo: The sentence should read: ” For example, Germany has an interest in transparency and reporting by a financial institution in the US for a ‘foreign account’ held by a German living in Germany, but no interest in the disclosure of those same accounts held if that German citizen is resident in the US.” The hazard of typing on an iPAD….also “FATCA tramples…”
“The individual has the option of renouncing US citizenship
If they do not wish to do so then clearly they must pay the price for it
Is that really so hard to understand?”
Mr. Murphy – the UK, EU, Australia, Canada…in fact no other meaningful country in the world requires that a citizen renounce or pay taxes (which may well be double taxation) when that citizen resides overseas. Only the US is treating its citizens like this, and it is completely unnecessary. I respectfully disagree and submit that what the US needs to do, urgently, if FATCA is going to work, is to come into line with the rest of the world and move to residence based taxation for individuals. This will cost the US nothing and will make the US more competitive and desirable. FATCA CAN work if its application is limited to US Persons living in the US with accounts overseas. It falls for many reasons when it is applied to US Persons living outside the US with what are for them ‘local’ accounts (they are only ‘foreign’ to the US government).
Why are you saying the US should not uphold it law?
And why do US citizens want to be exempted from it?
“The individual has the option of renouncing US citizenship.”
Why should they have to? For example if my company in the UK posts me to say Pittsburgh in the US and I pay all the appropriate US taxes, should I also be made to pay UK taxes as well even though I’m not living there or consuming any services in the UK and as a person under PAYE I’ve never had the option of avoiding tax anyway?
Should I be forced to give up my UK passport?
Perhaps the better argument might be….why does HMG have to spend so much? How much waste can be chopped out to support essential servics?
So you want something for nothing?
Do I summarise your argument correctly?
“So you want something for nothing?… Do I summarise your argument correctly?”
No. You have it completely reversed.
If you do not live in a country you do not receive any benefits from paying that country’s tax. You are not driving on its roads or being cared for in its hospitals, and your children are not going to its schools. In this case it is the country demanding tax purely on citizenship grounds that wants something for nothing.
Citizenship is a massive protection and benefit
You deny that?
Mr. M.,
I’ve got to admit you’ve kind of lost me a little….
….for example a PAYE taxpayer, from the age of 17 until say 36, pays the correct PAYE / NIC contributions, then is moved to the US by their firm for 4 years and pays the appropriate US taxes and then is moved back to the UK at 40 and then pays the correct PAYE / NIC amounts….
…..how is that getting something for nothing?
Read what I have written
That’s wholly acceptable
“I am saying I would have to decide… But I would, of course, pay no more than that of the higher state”
Your reasoning is flawed, or at best over-simplified, and your ‘of course’ is wrong.
A US citizen living in the UK takes out a mortgage, buys a house, and eventually repays the mortgage. They are liable to US tax on a phantom US dollar “gain” for redeeming a non-USD mortgage. They may also be on the hook for US capital gains tax on the home sale purely because of a falling USD exchange rate. In fact, they could sell the house at a real LOSS in GBP yet face US tax on the phantom USD gain. This person clearly faces a higher tax bill than a US citizen who buys and sells in the US, or a UK citizen who buys and sells in the UK.
There are countries that rely on sales taxes rather than income taxes. There is no credit for local sales taxes against US income taxes, so a US citizen living in one of these countries will pay the higher rate of BOTH countries, with no offset.
The US will not recognize non-US retirement savings plans. Pension saving for US citizens living outside the US is at best a minefield, at worst simply impossible.
Tax credits usually offset some of the worst double-tax problems, especially on income. But they are imperfect, and in many cases fail entirely to prevent double-tax. Why do you find this so hard to accept?
Can I be clear in my proposed passport tax this would not happen?
If a person lived in a ‘white state’ (e.g. The UK for the USA or France for the UK) then paying the tax in the white state would cancel home tax
I think we’d both agree that makes more sense than some aspects of the US system
While I appreciate you would want a system which would avoid the perverse effects which seem to accompany the current US system (ie you think their law should be changed?), it all sounds extremely complicated. And to what end? What is actually wrong with a straightforward residence-based system? A person genuinely resident in a country pays all due taxes in that country (and can, for example, participate in whatever tax-efficient – ISA-like – schemes are on offer there). What does nationality have to do with it?
What justifies the collection of tax from non-resident nationals, who are not using the services of that country (other than perhaps the use in emergency of consular services, for which maybe a set charge could be applied).
Moreover, the option to renounce one’s nationality of origin is not available to everyone – assuming becoming stateless is not an option!
Beating tax havens in 3 words
“Beating tax havens in 3 words”
Even if it means massive collateral damage to millions of law abiding citizens? Because the two current real world examples of citizenship based tax, the US and Eritrea, do not work. The same or worse problems will quickly appear in your own imaginary ‘passport tax’ scheme. You have not thought this through very well.
It wouldn’t – read what I wrote for the TUC http://www.tuc.org.uk/extras/taxresidence.pdf
The difficulty would be defining tax havens. There are times when the rate of tax a local pays on a modest income is quite significantly more than it might be in another country, but where that country is perceived as a tax haven for other reasons, perhaps because that country has no or very low capital gains rates. The rules would need to be quite complex to work out when a country was a tax haven for a particular individual.
Of course the US system also creates particular difficulties for married couples where one of them isn’t a US citizen. Imagine the difficulties that would arise if more countries started to introduce this sort of system and families had to work within 3 different tax systems with differing views. For example Sweden might view the USA itself as a tax haven because the rates of tax are so much lower.
Tax havens have been more than adequately defined by my theory and the TKN’s financial secrecy index
Please don’t try sophistry
Sorry Richard. I still don’t get it.
Don’t get me wrong. I’m a firm supporter of your work and am all for beating tax havens, including through the fullest possible automatic information exchange based on residence. But I still don’t see where nationality comes into it. I thought by far the main business of tax havens in regard to individuals concerned accounts held by non-residents wishing to evade tax in their country of residence. Such activity would be caught by a residence-based FATCA. So far so good.
But I’m still trying to get my head around the nationality aspect. Are you suggesting that a significant number of wealthy individuals choose to live permanently outside their country of nationality purely for tax reasons? Not being one of the wealthy, I found that hard to believe. But I could be wrong – if you can afford to zap around at will between countries that may well be a practical option, especially if the tax haven is as close to the ‘home’ country as say Jersey is to the UK. But then, I thought most tax havens were not low tax for their residents (who have to pay the price of living in a tax haven). So how would that work?
It still seems to me, admittedly uneducated in tax matters, a case of using a sledgehammer to crack a nut. I was hoping you’d be able to explain why, in your opinion, that is not the case. And thus why the resultant crack-down on tax havens from a passport(as opposed to residence) based FATCA would be sufficient to justify the collateral damage (such as being reported by Americans living abroad) and additional administrative hassle (including having to complete multiple annual tax returns?) to the many ordinary people living outside their country of nationality for perfectly valid reasons which have nothing to do with tax or tax havens.
If people do manage to pay less tax by moving to live in another country and paying the taxes due there (the right amount at the right time and in the right place?), is that not something we just have to accept? They are after all no longer able to profit from the services offered by their ‘home’ country. Of course, they have to be genuinely resident there – there are already rules to determine residency for tax purposes and maybe they need to be tightened up to avoid abuse. I suspect also that you can be deemed to be resident in more than one country – which could catch the more dodgy cases. But once you’ve been declared officially ‘non-resident’ in a given country, I believe you should be entitled to be left in peace by the tax authorities of that country, regardless of your nationality.
That said, I don’t understand why Americans living abroad who have dual nationality should have problems opening accounts where they live. If I want to open an account in France, the bank has no reason to know I am British. For them I am simply French. Indeed, forms always ask for ‘nationality’ and provide no means to indicate more than one. I have always understood that when in France I’m first and foremost French (it is made clear for example that the UK would not protect me from any problems I might have with the French state, and vice-versa) and that when in UK I’m British.
Try http://www.tuc.org.uk/extras/taxresidence.pdf
Richard,
I’m not really expecting you to reply to my longer-than-intended questionning. I know you have bigger fish to fry at present! I guess I just needed to get that off my chest.
I’m still not sure exactly what you are proposing. I guess if it really would significantly help to ‘beat tax havens’, it might be something those unfairly caught up in adverse side-effects (whether financial or simply through burdensome additional administrative hassle) would have to either accept or face the psychologically difficult choice of renouncing their nationality of birth.
On the other hand, if people gain a tax advantage — whether intentionally or not – by physically moving to another country where they pay their due taxes (the right amount, at the right time and in the right place?), maybe that is just something we have to accept. After all, in doing so they no longer have the use of the services paid for by taxes in the country of origin.
Clearly, not being up to scratch with the devious mechanisms used to subvert the system, I must be missing something important. But it just feels intrinsically unfair that those who move for valid reasons which have nothing whatsoever to do with tax should be made to suffer because there are scoundrels out there who abuse the system.
Good luck at the G8!
Please see the blog I have just published
I think the TUC proposal makes clear what i mean
Most people (excepting Mitt & his ilk) are very willing to pay to be US citizens.
To most peoples its an honour !
Regrettably the UK has its “non-domiciled” law that means there isn’t a similar equation.
People like Mr Megroob (as featured in a recent tax case), may say
“I want to stay in London as a safe haven, but I’m damned if I’ll make a penny’s contribution to the UK while I’m here”
& people in the City of London & its satellites will ensure he doesn’t have to.