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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.

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:

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.

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:

DFID’s work on international tax avoidance: in whose interest?

A new report by its own watchdog provides damning criticism of the UK government’s approach to tax as a development issue. At best, the government has ignored both international expertise and the views of the lower-income countries it claims to be helping. At worst, UK policy can be seen as pushing lower-income countries into supporting international tax rules that exacerbate poverty and inequality – and from which the UK government has itself has sought to benefit.

Such is the evidence presented that the government opens itself up to the possibility of a legal challenge over its failure to use aid for development aims, as required by legislation.

ICAI report

The Independent Commission for Aid Impact has released a report on the effectiveness of the UK government’s Department for International Development’s (DFID) efforts to tackle tax avoidance and tax evasion.

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