The Offshore Wrapper: a week in tax justice #54

   0   0 Blog, Regular Features, The Offshore Wrapper
The Offshore Wrapper is written by George Turner, c/o Wrapper Towers

The Offshore Wrapper is written by George Turner, c/o Wrapper Towers

By the rivers of BabyLon-don

The London property market is awash with offshore cash. Studies from estate agents show that 90% of newly built luxury property is bought by overseas buyers, often acting though an offshore vehicle.

Some 36,342 properties in London covering 2.25 sq miles are owned in BVI, Jersey, Isle of Man, Guernsey and other secretive boltholes.

Politicians like London mayor and prime minister hopeful, Boris Johnson, describe this sleazy money as a welcome ‘investment’ in the city. But are they right to do so?

A new report from Transparency International shows that the capital’s property market absorbs global corrupt money flows.

The London money launderette

The London money launderette

It found that since 2004 over £180m worth of property in UK has been under criminal investigation for being suspected proceeds of corruption.

Over 75% of these properties use offshore corporate secrecy. Half of the properties investigated were worth over £1m.

And it seems that this may be only the tip of the iceberg. Estate agents only account for 0.05% of suspicious activity reports to law enforcement agencies, despite working in an area which is clearly exposed to money emanating from corrupt sources.

So why don’t estate agents report more suspicious activity?

Well it appears that they have no legal obligation to check where the money to buy a property comes from. If someone turns up with a few million in cash and wants a contract to be made with an anonymous British Virgin Islands company, then that’s just fine.

 

Sun, sand AND 4% taxes

Are you an ultra High Net Worth individual worried about the pesky government trying to get hold of some of your hard earned cash to give away to worthless scabs who don’t know the meaning of a hard days work?

Are you anxious about some IT consultant stealing details of your secret bank account in Switzerland and giving them to the media?

Are you concerned about the reputational risks of using the same offshore tax structures used by drugs dealers and organised crime?

Do you need an offshore place to avoid taxes you can trust?

If you answer, “Yes” to all of the above, then there is a place for you.

puerto-ricoWelcome, my friend, to Puerto Rico.

Since 1896, this small Caribbean island has been one of the few colonies of the United States. But crucially, Puerto Rico is not a state.

The island’s unique status has created a rather useful loophole. Normally US citizens are taxed on their global income, wherever they reside. (It’s why secret bank accounts are a popular form of tax evasion.)

But in Puerto Rico, the US tax code on foreign earnings doesn’t apply since it is not foreign. At the same time, the island is exempt from federal taxes and allowed to set taxes as they please.

As described by a money manger quoted in Forbes: “The way the U.S. tax code is written, I could be on Mars and be taxed on intergalactic income but not if I’m sitting on this island in the Caribbean. It’s kind of in a twilight zone”.

Since the US government started cracking down on Americans using the more traditional tax havens to hide their wealth, Puerto Rico saw an opportunity.

According to the 20/22 Society, an organisation which has been formed to promote Puerto Rico’s tax haven status, changes to the law enacted in 2012 mean that “organizations and individuals are allowed new and exciting benefits. These new benefits apply to individuals and organizations who relocate to Puerto Rico and may include significant reductions of income taxes on long-term capital gains, dividends, interest, earnings and profit, and property. These benefits are possible because income generated within Puerto Rico is generally not subject to U.S. federal taxation.”

The 20/22 Society also has a publicity campaign called “The Puerto Rico Advantage: Sun, Sea and 4% Taxes” referring to the country’s income tax rate.

Truly, Puerto Rico is the land of the free ride.

 

God joins fight against tax avoidance

A Zambian Methodist minister has called on British Christians to join in the crusade against tax avoidance perpetrated by mining companies in Zambia.

The Zambian authorities estimate that $1bn a year is lost to tax avoidance and the Church of England invests in many of the companies operating in the country.

Dr Suzanne Matale said that they must use their position of influence to effect change.

Trouble is, not even God can gain access to BVI corporate data.

 

Blair’s bewitching cash project

Cashing in

Cashing in

Next week Blair inc. will be published detailing the post-prime ministerial financial activities of Tony Blair.

The former UK prime minister has amassed a property portfolio worth millions and is rumoured to be worth at least £60m.

Financial secrecy plays its role as the complex corporate structure which Mr Blair has set up. So it is extremely difficult to know where this vast wealth comes from and what he is being paid for.

Blair inc cheekily suggests all that cash isn’t for his insight. The book takes a look at some of the speaking engagements Blair has had since leaving office:

“In a 2007 speech at a VIP banquet in the city of Dongguan in China, he declared for his $200,000 fee that: ‘’The reason I am here is because I was told everything happening here was amazing. Dongguan’s future is immeasurable.’”

Such twaddle infuriated Chinese newspapers, which said Blair’s vacuous remarks showed he was interested only in “digging for gold” and “money-sucking”.

You can read a preview of the book here. It is published on 19th March.

 

xClick to investigate the world’s loco bank

Remember how loads of governments have known for years that HSBC was holding all sorts of dodgy money in secret accounts in Switzerland but nothing was done about it?

Now you can take action yourself, and call on the UK’s Serious Fraud Office to open an investigation. Campaigning group, Some of Us has launched a petition which you can sign up to here.

 

 

 

 


Related Posts

UN must defend target to curtail multinational companies’ tax abuse

Photo by Luca Santori, Creative Commons LicenseThe Tax Justice Network, The Independent Commission for the Reform of International Corporate Taxation, and the Global Alliance for Tax Justice call on the UN Secretary General to make sure the commitment to action on tax abuses by multinational companies remains part of the new UN Sustainable Development Goals.

READ MORE →

The BVI: Responsible for worldwide tax losses of $37.5 billion a year

BVI report blogAn extraordinary report by consultants Capital Economics, for BVI Finance, claims that the British Virgin Islands are responsible for $1.5 trillion of assets invested around the world, and that these result in 2.2 million jobs and $15 billion in tax revenue. A better approximation would be that the BVI imposes global tax losses of $37.5 […]

READ MORE →

Event: Making Tax Work for Women in the UK and Globally

Invitation_ Tax and Gender eventOn Wednesday 28th June 2017 at 16.30 our very own Liz Nelson will be speaking at an event in London that aims to bring together gender and tax justice advocates to highlight the need for coherent and gender-responsive fiscal policies to safeguard the rights of women and girls both in the UK and globally. The […]

READ MORE →

Historic event on women, human rights and tax justice in Bogota

BogotaLast week civil society organisations, researchers, labour union activists and policy makers met in Bogota, Colombia to explore how tax justice issues can ensure governments, multinational corporations and others meet their obligations to women in order to secure their full range of human rights. The Women’s Rights and Tax Justice conference opened with a conversation […]

READ MORE →

The Offshore Wrapper: the Panama Papers, one year on

Photos from the Protest outside PwC 1 Embankment Place, part of the Global week of action for tax justiceWelcome to the Offshore Wrapper – your weekly update from TJN.  Happy Paniversary! This week it’s been one year since the Panama Papers were leaked, and a number of organisations around the world have been marking the occasion though the global week of action for tax justice. In London, activists from the TJN and the […]

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top