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Tackling unfair tax treaties between developing countries and the UK, in UK Parliament today

Today the British Parliament will debate a Bill that tries to tackle unfair tax treaties between the UK and developing countries, some of which go back to the 1940s, sometimes when countries were still British colonies. It’s an initiative we very much welcome and we hand over to our friends at Action Aid UK to tell you more about it:

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.

Guest blog: involve developing countries more in international tax co-operation

HaldenwangAfter Panama: developing countries need to be involved more closely in international co-operation on tax issues

A guest blog by Christian von Haldenwang, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

Bonn, July 4, 2016 – Two major mechanisms squeeze the tax base in developing and emerging countries. Rich individuals evade their tax obligations by moving money abroad and submitting false statements regarding income and assets. Large multinational companies exploit international loopholes in laws and regulations and shift profits artificially to states with particularly low rates of taxation.

More unfair tax treaties may be renegotiated

ugandaThis time it’s Uganda. From Martin Hearson:

“The government announced in its latest budget that it has finished formulating its new tax treaty policy, and will be renegotiating treaties that don’t comply. Seatini and ActionAid Uganda will no doubt chalk this up as a success.”

In Uganda, these two local NGOs have argued, apparently with good reason, that the country’s tax treaty network ‘is one of the mechanisms used by companies to avoid paying taxes, leading to illicit financial flows and tax losses for Uganda.’

Hearson also has a new working paper, co-authored with Jalia Kangave, entitled A Review of Uganda’s Tax Treaties and Recommendations for Action, whose summary states:

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