The offshore finance sector used to laugh at the tax justice movement when we claimed there were trillions of undeclared assets offshore in tax havens.
And government officials tended to share the view that there was little to find.
But now Reuters has reported:
Tax authorities in nearly 100 countries saw 10 trillion euros ($11.2 trillion) in offshore assets come to light last year due to the automatic exchange of details for 84 million bank accounts, the OECD said on Tuesday.
That marked a sharp increase from 2018 when tax authorities began sharing on an annual basis information like balances and transactions on offshore accounts, uncovering 5 trillion euros in assets previously hidden in 47 million accounts.
So there was twice as much, at last, as had been declared. Reuters added:
“The discovery of previously hidden accounts thanks to automatic exchange of information has and will lead to billions in additional tax revenues,” OECD Secretary General Angel Gurria said in a statement.
The 2018 launch of the automatic exchange of account details was the culmination of a two-decade international clampdown on tax evasion that has all but ended bank secrecy in many erstwhile offshore financial centres.
I would suggest that none of that would have happened without tax justice campaigners. We were necessary to keep the pressure on the process - and for a very long time to provide the data on the scale of the issue when no one else would look at it.
In 2005 John Christensen and I were amongst the very first in this campaign, suggesting there was maybe $11.5 trillion offshore. We always thought that an underestimate - and remember all that is being found now is cash: the real total is much more than that. We were ridiculed for such estimates, but we were right.
Another campaign win, this time to the tune of €5 trillion now subject to tax.
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That is good news.
Perhaps you DO have something in common with Donald Trump……
….. are you “tired of winning”??
No!
Well, congratulations to you all – well done.
Yes, excellent news, really well done Richard.
Well done. Sometimes people’s hard work gets over-shadowed so it’s right that you stand up and be recognised for your continued campaigning.
It is quite remarkable, really. 10 years ago, I doubt anyone would have expected this to happen quite so quickly. But I think FATCA was the game-changer – the US unilaterally imposing this on everyone else as a result of Swiss secrecy scandals, and then everyone realising that it could actually be done. But the US is still not participating in the common reporting standard.
Here is the OECD press release on which the Reuters report is based. http://www.oecd.org/tax/transparency/documents/international-community-continues-making-progress-against-offshore-tax-evasion.htm
So, 11 trillion (€/$/£) in 84 million accounts is around 130,000 (€/$/£) per account, which sounds quite impressive. But “offshore” does not necessarily mean “hidden” if it is in many of the 97 reporting jurisdictions. You would not “hide” money in France or Germany, for example.
Do we know how many of these 84 million accounts are held by UK taxpayers, how much is in them, and how many were not previously disclosed? Is HMRC expecting to receive a cataract of tax from previously untaxed offshore funds, or is this just confirming that the information they already hold is correct?
Entirely agreed that this is nit offshore
But it may be ‘Unknown’ nonetheless
It would be nice to know more about that – and as yet we don’t
But the OECD seems pretty sure more tax is going to be paid
Oh dear Richard, Andrew certainly “pissed on your bonfire”.. put a bit of perspective into all the self congratulatory backslapping
The OECD agree with me by the way – and that the figure they note excludes US data and so may well be €14trn
Aren’t you supposed to urinate on the compost heap, not a bonfire?
But in any event, I was not trying to water anyone’s garden, merely asking the question: how much of this was actually “hidden” in any meaningful sense, and how much additional tax has been paid?
The answer appears to be “we don’t know” but I suspect it is substantially less than the headline figures of €5 trillion or €10 trillion might suggest. Perhaps it is enough to say that transparency is a good thing anyway, and perhaps it doesn’t really matter whether it is €5 trillion or $1 billion or £10, but much of the offshore assets reported under the CRS is likely be entirely innocuous: does it really matter very much if a UK resident invests in a German investment fund, or has a cash deposit in a US bank account?
Is this – https://www.taxjustice.net/cms/upload/pdf/Price_of_Offshore.pdf – the estimate from 2005? What did you mean by “offshore” then? Held anywhere outside the UK? Held through a tax haven? You gave a rough estimate of “annual tax loss of approximately $255 billion resulting from wealthy individuals holding their assets offshore”, seemingly on the basis that none of the estimated income from the estimated $12 trillion of offshore assets was reported and taxed, and the OECD’s press release says “Voluntary disclosure programmes, offshore tax investigations and related measures before the start of automatic exchange in 2017 and since then, have already led to the identification of more than 100 billion euros of additional tax revenues worldwide.” A billion here, a billion there, and soon we are talking real money: but over three or four years, that is a small fraction, perhaps 10% of the annual estimate . It would be nice to see that broken down a bit, so we can see which countries have increased tax revenues due to the CRS. Has HMRC published some numbers?
(The increase from €1 trillion in 2017, to €5 trillion in 2018, to €10 trillion in 2019, reflects, I think, largely an increase in the number of countries exchanging information; in 2018 to 2019, not so much an increase in the overall number of countries participating – 96 to 97 – but more so the number of bilateral exchange relationships between them – 4,500 to 6,100.)
The OECD seem quite convinced that much of this is not innocuous: time will tell
They also seem quite sure that because the figures exclude US data the real totals are somewhat higher than they reported
And they seem sure there is considerable tax to pay
Which does not surprise me. Evidence, admittedly largely from the US show that when a source of income is known not to be declared by a third party to the Rac authority the chance it will be in a tax return falls to around 60% compacted to 90% or more when third party reporting takes place.
So will there be substantially more tax? I think so
Excellent confirmation. I am interested how Scotland can get a proportion of these salted away funds returned to work for the Nation. We must look at the setting up of such as Free Trade Zones (FTZ) combining this idle cash with international and local entrepreneurial skills. This will involve long-term National Economic and Infrastructure planning which I contend would be an exciting vote-catcher giving us an idea what Independence will actually be like. But there seems to be a reluctance to plan beyond parliamentary 5 year terms, which, sorry, is plain daft!
The last thing Scotland will ever need is Free Trade Zones – which are abusive in themselves and always undermine domestic business and fair competition
There will be lot more on this on the blog soon because I am drafting a submission on reports to the government consultation on the issue
I respectfully disagree. My experience is limited but I have been involved professionally with the impressive (you may agree) development of such as Singapore, Hong Kong, Indonesia and South Korea, where they have set up variations of FTZs, (Industrial Parks, if you don’t like the FTZ nomenclature) essentially where local skills were employed at all levels in their hundreds of thousands, markets developed, and after a period of time (max 30 years), each enterprise would revert to coming off tax benefits – all in quick order.
Out there is the 25 to 40 million (the latter, Alex Salmond’s figure) Scottish Diaspora, which I would tap: the Global Scot idea barely, in my view, addresses this concept, but it is the way to go. We, and an independent Scotland will soon realise, that we live in a truly Global World; it is going to be very difficult if it believes it can meet the desires of its population within its own resources, within a time-frame acceptable to our people.
There is literally no evidence that special enterprise zones (SEZs) or freeports work
The basic failing in them is a simple one: if they correct regulatory failings then they should be corrected nationwide, and not just locally
If they do not represent the correction of regulatory failing then they create opportunity for regulatory abuse instead
And there is evidence that they are conduits for crime, money laundering and economic abuse : almost every regulatory agency says so.
The last thing Scotland should want to be is a centre for abuse
What is more, it has no need to be. It has every chance to be successful without such abuses on its soil
There is literally no evidence that special enterprise zones (SEZs) or freeports work
Sissons/Brown 2011 is evidence that they do work.
So you’re mistaken on two counts:
1. There is not literally no evidence that they work
2. The reasons they work are different to the reasons you’d think
Go read the abstract.
A claim
And a mass of evidence to the contrary
Richard
I note that a certain lawyer has disputed your claim, analysis and understanding on twitter. I am aware that you have already traded arguments with this guy on another subject. Based on that previous exchange, its clear that its not a valuable use of your time. So just saying don’t bother responding to his latest tweets.
Suffice to say its not worth engaging with such people. Its obvious that they have an agenda and will peddle their garbage regardless of the facts and evidence. They have a particular skill in deliberately choosing to obfiscate and misinterpret.
You will notice Alex Cobham has also taken him to task
Big corporate lawyer does not like tax justice? It’s not news is it?
You’d think he’d have the sense to shut up
Risking another peremptory response, may I say that corruption, collusion and nepotism (or whatever) is everywhere and in every country, and an independent Scotland need only to be aware of the fact, and like in many other societies, when it comes to foreign investment, take precautions; which being smart, I am confident we would do.
I am not sure where you got the idea that there was “literally no evidence that these special investment zones don’t work” or that there was any suggestion that their purpose was to “correct regulatory failings”. I need only ask you to take a look at Singapore, with a population the size of Scotland, and where it put all its efforts into attracting foreign direct investment (FDIs). Their purpose is primarily to generate an activity quickly to kick-start (in many cases) a Nation’s economy, creating a window of opportunity (where little existed) for the employment of both the Nation’s skilled and unskilled work force. Such a strategy in Scotland through these vast industrial parks (for there would be a number) will be all contained within a National Master Plan for Scotland which we don’t have, but need now. I only entered this discussion to suggest that whilst industrial companies are leaving Scotland and investing in plants overseas, we really must reverse the trend, do business with the the rest of the world, and attract some of the hidden funds you talk about back to this country through such as FDIs with advantageous loans, tax incentives and exemptions, pro-business legislation, whilst offering political and financial stability. [My politics require the Scottish people through its Development Bank take a substantial percentage share on all such ventures thus advantaged]. I would suggest that all these terms be offered too to local enterprises as appropriate.
That the funds you talk about are presently ‘black’, turning these ‘white’ in an honest and transparent manner seems to me at least to be quite doable and eminently sensible and businesslike, and leave not a slur on our integrity and reputation.
You mention that Scotland will have no need of such concessionary dealings with “every chance of success” relying presumably on its substantial natural and human resources. I too share your patriotism, but not your thinking.
You do realise that for all practical purposes Singapore is a totalitarian, authoritarian, socialist state, don’t you?
Just checking