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Guest Post – Snowstorm – tax havens and organised crime today

Capone

Al Capone and friends

Organised crime has had a long association with tax havens.  As our own Nicholas Shaxson wrote in an article The truth about tax havens, the Bahamas was set up as a secrecy jurisdiction by Meyer Lansky, none other than Al Capone’s lawyer. When Lansky was thrown out he moved to nearby Caymans. It is easy to see the attraction, loose laws and financial secrecy make the laundering of the proceeds of crime much easier.

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:

Quote of the day – tax crimes and traffic offences

michael-west

Michael West

From Michael West, an Australian tax journalist:

“In Australia, Part 4a of the Tax Act deems that the principal purpose of a transaction should be commercial (rather than tax driven). In light of the proliferation of tax haven activities by Australian companies this law, Part 4a, must be the most highly disregarded and disobeyed law in the nation, perhaps only topped by traffic offences.”

It’s an interesting story, not least because it has unearthed a hard-to-get number that we haven’t, from memory, seen before:

“The IPO documents for Intertrust estimate in 2014 the “total value of the global trust and corporate services market … was estimated at approximately €5.6 billion in revenue.”

Will the British government target tax dodging enablers at last?

Margaret Hodge

Margaret Hodge

There has been much talk in Britain of new government proposals that tax advisors giving advice on tax avoidance could face large fines of up to 100% of the tax lost if their schemes are defeated in courts.  We warmly welcome the principle of the thing: these players have been getting away with impunity when they market tax-cheat schemes to multinational corporations and wealthy individuals. In the case of the so-called Luxleaks scandal, where PwC was caught out marketing an astonishing array of socially abusive tax schemes to the world’s multinationals, the only two people to face any sanction were the whistleblowers who exposed the scheme. In 2013 UK Public Accounts Committee (PAC) heard that from one Big Four accounting firm officials that their company would flog schemes even if they thought there was only a 25 percent chance of surviving a court challenge.

In the words of Margaret Hodge, the PAC’s chair:

“What really depresses me is you could contribute so much to society and the public good and you all choose to focus on working in an area which reduces the available resources for us to build schools, hospitals, infrastructure.”

Why the Swiss case against whistleblower Elmer may hurt the bankers

SonntagszeitungRudolf Elmer, the Cayman-based Swiss whistleblower who went to prison after spilling secrets relating to the Swiss bank Julius Baer, has long been victimised not only by the Swiss banking establishment, and Switzerland’s courts (which as we’ve extensively documented, seem to have played fast and loose with the law in order to nail him) – but also by much if not most of the Swiss media. In Switzerland he’s been demonised as a traitor and a criminal, and jailed too.

Such is the fate of the offshore whistleblower.

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