The transition to transparency

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These were the slides I used for a talk to tax officials from Norway, Sweden, Finland, Denmark and Greenland this morning:

The Transition to Transparency

Nearly eight years since I spoke to you last: what has happened?

  • A global financial crisis
  • The end of tax havens (Gordon Brown)
  • Tax Information Exchange Agreements
  • Google
  • The rise of the tax campaigner
  • BEPS
  • Country-by-country reporting
  • Multilateral information exchange

Have we been on a transition to transparency?

  • I hate to be a pessimist…..

Appearances are not everything

  • Progress has not been smooth
  • And has been marked by frequent failure
  • Requiring new policy initiatives

The result is

  • I think are there are significant remaining impediments to progress
  • And much still needs to be done

Remember the world in 2008?

We were:

  • Looking over an economic cliff the size of which we could not comprehend
  • Still living in an era where a little voluntary cooperation was seen as the only solution to tax haven abuse
  • And the European Savings Tax Directive was the frontier of innovation


  • People like me were trouble making outsiders who many were all too happy to dismiss

The tax world has changed

I hope we can agree on that.


  • My point though is not to describe what has changed
  • But to suggest a theory of change
  • And to look at what this implies

The theory

  • Change on this issue has always been incremental
  • Each change, so far, has failed
  • But in each change there has been a feedback loop, usually (to date) via the OECD
  • And the combination of failure and feedback has, so far, resulted in a fairly rapid process of further change
  • But so far it has not delivered success
  • And I suggest that this pattern has some way to go as yet
  • And the feedback loop may need to change before we get there

April 2009 - the changes

  • The aim was to blame someone 'elsewhere' for what was happening on politician's home turf
  • Tax havens were easy targets
  • The OECD lists appeared like action
  • But a target of 12 TIEAs was laughable
  • And the truth was that TIEAs could not work, as a matter of fact
  • This was politics, but not tax transparency

April 2009 - the failures

  • TIEAs were mocked
  • The black list was closed in days, and the grey list not long after
  • The peer reviews convinced no one
  • Occupy and UK Uncut made clear that this was not just an issue of evasion, but of avoidance as well
  • The Google story went round the world
  • The UK parliament made Google, Amazon and Starbucks totemic

The 2012 / 13 changes

  • BEPS began in 2012
  • David Cameron put it on top of the G8 agenda in 2013
  • He accepted that this was a development issue
  • Norway's patient funding of that argument paid off
  • Country-by-country reporting topped the demands
  • The Lough Erne Summit was the campaigners hey-day

The 2012 / 13 failures

  • Developing countries largely excluded from the debate
  • And from the data
  • CBCR will exist, behind closed doors
  • ‘Tax transparency, in secret’
  • ‘Trust us, we’re transparent: you just can’t see it’
  • Many other technical solutions are half hearted
  • Arm's length pricing survives
  • Corporation tax remains in its death throes
  • There is no political solution for corporation tax in sight

The FATCA changes

  • The US rocks the boat with FATCA in 2010
  • BUT it is unilateral
  • Most jurisdictions holding out against EU STD development smell the coffee and begin information exchange
  • Even Luxembourg
  • Austria would have been the last to fall
  • The UK and others move to what I called ‘son of FATCA’ deals with its havens
  • The opportunity for the OECD to create proper multilateral information exchange to replace the bilateral era

The FATCA failures

  • The US refuses multilateral exchange
    • And becomes the biggest tax haven in the world
  • The U.K. demands transparency from its tax havens
    • And does not get it
  • There is massive resistance to registers of beneficial ownership which are the pre-requisite of the system working
    • And places like the UK will produce sham registers
  • The likelihood of meaningful data exchange on the tax non-compliant is very low
  • The Panama Papers imply only the fools will be caught

The ongoing crisis

  • There is a tax gap
    • But most countries will not calculate it
  • There is a revenue authority resources crisis
    • But few countries will acknowledge it
  • There is a crisis in company law enforcement
    • And no one even talks about it
  • The accounting profession still produces accounts wholly unsuitable as a basis for tax
    • And get away with it
  • Which means we are still 'just dancing in the dark'
    • Bruce Springsteen

So what is needed?

  • Political will
  • Investment of resources
    • Tax
    • Company law
  • Substantially enhanced domestic information exchange regimes
  • Massively enhanced tax accounting
    • Public CBCR
    • Tax Reporting Standards to identify the tax base
  • Full transparency on all companies and trusts
  • The training to use the data
    • Vitally

Why will we get change?

  • The next financial crisis will make this happen
  • Coming your way soon….
  • It’s overdue