Last week the Tax Justice Network director Alex Cobham was invited to the United Nations in New York to address the ECOSOC Financing for Development Forum. Here are his remarks, which highlight a major threat to the Sustainable Development Goals target to reduce illicit financial flows. And what’s that threat? A concerted effort to remove multinational tax avoidance from the scope. In fact, there’s been some very active lobbying in order to exempt corporate tax dodging from the ‘illicit financial flows’ definition.
This is life and death stuff.
It’s said that if you’re not at the table, you’re on the menu. Well, the OECD has just made available the list of activated relationships to automatically exchange country-by-country reports between countries. They use big figures like 700 relationships, but don’t get fooled by those numbers – simply look at the image below to see who really has access to CbCR.
Oh, by the way, there’s nothing wrong with your eye-sight. Developing countries are just not there…
Source: Rasmus Christensen (https://twitter.com/phdskat/status/860093952992608256?s=09), by kind permission
The problem is that instead of requiring a fully multilateral approach, the OECD has allowed bilateral relationships to the automatic exchange of CbCR. This makes it harder for more jurisdictions to exchange CbCR, and more costly to arrange – and in practice results in the exclusion of nearly all lower-income countries:
Some jurisdictions also continue to work towards agreeing bilateral competent authority agreements for the automatic exchange of CbC Reports with specific partners under Double Tax Conventions or Tax Information Exchange Agreements
Now, think of a major country that doesn’t appear on the image and is definitely choosing the bilateral approach when it comes to non-OECD countries. Hint 1: its very many multinationals (MNEs) have aggressively pursued profit shifting, so that the misalignment of their global profits away from the locations of their real economic activity has gone from just 5% in the 1990s to more than 25% now. Hint 2: this country won’t be joining the CRS (the global framework for automatic exchange of banking information) either.
European Parliament’s new hearing on Panama Papers: lawyers, accountants and bankers Global Alliance for Tax Justice
Ecuador and NGOs’ plea for a Global Tax Body Global Alliance for Tax Justice
Tax Avoidance, Illicit Financial Flows, and Global Development: A Call for a United Nations Tax Body Global Alliance for Tax Justice
Event in Washington DC on 12 January
Eva Joly’s op-ed on French Country-by=Country Reporting Global Alliance for Tax Justice
The 24 loopholes in the OECD’s Common Reporting Standard
New report by Mark Morris. See also our November 2014 report: “The end of bank secrecy”? Bridging the gap to effective automatic information exchange An Evaluation of OECD’s Common Reporting Standard (CRS) and its alternatives”
Education is a fundamental human right and a global public good. So how do we address the lack of financing for it around the world? TJN has written a study on the role of global tax in financing the Sustainable Development Goals (SDGs) for the United Nations Education Commission (in full, the International Commission on Financing Global Education Opportunity). That study, developed with the support of ActionAid and Oxfam, and written with Prof. Steven Klees, is published by the Commission today.