Quote of the day – the future of tax havens

September 30, 2016   Blog, Corruption, Quotations, Secrecy

stiglitzFrom Joseph Stiglitz, writing in Vanity Fair:

“It will not be long before those nations that opt to continue with old-style secrecy will be labeled pariah states and be cut off from the global financial system.”

New and abusive games will continue to emerge to fill the vacuum left by old-style secrecy — including new forms of opacity — but he’s certainly onto something.


The article is a testament to Panama’s “commitment” to eliminate crime and secrecy from its financial sector.

Hat tip: Links.

Links Sep 30

The Real Scandal Behind the Panama Papers Vanity Fair

Panama has passed a law to implement sanctions vs anyone who calls it a tax haven E&N (In Spanish)

Capital mobility: The good, the bad and the ugly The Economist
‘True FDI is an unalloyed benefit. But the growing practice of using offshore investment to avoid corporate tax might make capital mobility the target of popular anger’

Mauritius rides wave of Asian investment in Africa Financial Times
‘When the Bank of China secured a Mauritian banking license in March … Its arrival was the latest addition to what the finance ministry describes as an “important number” of Asian state-owned enterprises using Mauritius as a launch pad to Africa.’

Secret Alpine Gold Vaults Are the New Swiss Bank Accounts Bloomberg Businessweek

Japan to tighten taxation rules on overseas dummy companies The Japan Times
See also: Tokyo seeks wider scope to target tax avoidance Nikkei Asian Review

New Zealand: Tax audits of large companies plummet NZ Herald

Indonesians line up to beat deadline for tax amnesty’s best terms Reuters

Ireland Doesn’t Want Apple’s Back Taxes, but the Irish Aren’t So Sure The New York Times

Pakistan: ‘Offshore’ has different meaning for Imran’s lawyer The News

Denmark Pays $900,000 for Panama Papers in Hunt for Tax Cheaters Bloomberg

IMF queries lawyers and bankers on hundreds of IFSC boards The Irish Times
‘Special-purpose vehicles home to more than €700 billion of assets’

Overcharged: the high costs of high finance Fools’ Gold – rethinking competition

Some Highlights of the 2016 China-led G20 Summit”.  Just Governance Blog – Heinrich Boell Foundation
On Base Erosion and Profit Shifting (BEPS): ‘While non-G20 member nations are invited to “join on an equal footing”, they were not invited “on an equal footing” to design the rules.’

A summary of the 21st century economic problem in one tweet Tax Research UK

Hot Mess: How Goldman Sachs Lost $1.2 Billion of Libya’s Money Bloomberg Businessweek



OECD threatens Bahamas with blacklisting, Bahamas wilts

The Bahamas approach to transparency

The Bahamas on transparency

The Spanish newspaper El Mundo is running an article in Spanish, whose headline translates as “If Bahamas goes on like this, it will go onto the G20 blacklist” – and the text in quote marks comes from Pascal Saint-Amans, head of tax at the OECD, the club of rich countries.

The Bahamas has been in the news recently: first, we wrote a scathing blog about how the Bahamas was a big hole in global efforts to build transparency, refusing to participate effectively in the OECD’s incoming Common Reporting Standard to share banking information across border. Very soon afterwards, an article appeared in The Economist whose subheading “The Bahamas cocks a snook at the war on tax-dodgers” said it all — and it received a fusillade of angry responses from Bahamas media. Then, a few days later, a series of “BahamasLeaks” international articles appeared in the media, co-ordinated by the International Consortium of Investigative Journalists (ICIJ,) confirming Bahamas’ role as a turntable for dirty money.

Links Sep 28

U.S. Senate’s top tax lawmaker targets corporate offshore profits Reuters

Battling Apple and the Giants naked capitalism

Pakistan Supreme Court clears way for hearing on Panama Papers Gulf News

Europe calls on journalists’ Panama Papers expertise ICIJ
See also: Panama Papers: European parliament opens inquiry The Guardian, and Ambition meets reality in EU tax leaks probe EUObserver

Canadians in Panama Papers shouldn’t expect a tax deal, CRA says CBC News

First Israelis indicted from Panama Papers information Globes

Criminal charges relating to Panama Papers could take years: Australian Taxation Office The Sydney Morning Herald

MTN to become the latest focus of Nigeria’s Loot Recovery Escapade Ventures Africa

The responsible finance standards of multilateral institutions: state of play Eurodad

European Commission Civil Society Capacity and Network Building on Tax Global Alliance for Tax Justice
The European Commission is launching a pilot project that includes trainings for Civil Society Organizations on tax.

France ‘asks Switzerland to hand over 45,000 UBS accounts’ France 24

Canada told to bring law firms under money laundering regime STEP

How secret company ownership is a risk to businesses and investors Global Witness

Germany’s James Bond has been hauled into court for not paying his taxes Quartz

With Kleptocrats Untouchable, America Goes Big on Another Strategy: Taking Their Stuff Instead OCCRP



UN report recommends: go after tax havens, and protect whistleblowers

From the United Nations General Assembly, the fifth report of the Independent Expert on the promotion of a democratic and equitable international order. The summary goes like this:

“The report focuses on impacts of taxation on human rights and explores the challenges posed to the international order by widespread tax avoidance, tax evasion, tax fraud and profit shifting, facilitated by bank secrecy and a web of shell companies registered in tax havens. The Independent Expert calls for resolute action by the international community, including through the creation of a United Nations tax cooperation body, the adoption of a United Nations tax convention, the phasing out of tax havens, the revision of the Guiding Principles on Business and Human Rights to include the obligation of corporations to pay their fair share of taxes and the adoption of a financial transactions tax.”

As you can imagine with an introduction like this, here’s a lot of tax justice stuff in here, and TJN gets a number of mentions. It follows our earlier blog on calls by Rafael Correa, head of the G77 group of developing countries, for an international tax body. Among other things, the UN Independent Expert on the promotion of a democratic and equitable international order discusses the definition of ‘tax havens’ and refers to TJN’s alternative term ‘secrecy jurisdiction’ while providing further details on TJN’s Financial Secrecy Index (FSI) and the top listed jurisdictions on the FSI 2015 here (p9 and in the annex).

We’ll highlight only this section below for now, which is a recommendation for the following:

Ecuador’s president calls for global tax body

President Rafael Correa

President Rafael Correa

Updated with additional information about Correa’s administration and exposés in the Panama Papers scandal; scroll down.

Ecuador’s president Rafael Correa has published a significant statement about international tax governance, and specifically the prospect of creating a global tax organisation. This is particularly important, given that Ecuador has just assumed the presidency of the G77 group of developing countries.

“A rapidly growing global web of tax havens is one of the key drivers of this inequality . . . 

No one country can tackle this complex, secretive global financial conspiracy alone. Coordinated and comprehensive global action is needed. Current moves towards greater transparency about the initial owners of money held in shell companies can be part of the solution, but modest efforts at achieving greater transparency are not enough. We need to scrap tax havens altogether.

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