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Switzerland seen backing down on supporting tax haven USA

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A curious love-hate financial relationship

In July we wrote a blog entitled Luxembourg backing down on supporting tax haven USA. Now it’s Switzerland’s turn.

This concerns the OECD’s Common Reporting Standard (CRS,) a global scheme to share banking information. The United States isn’t a participating jurisdiction: it has its own FATCA project, which as we’ve remarked before, is good at ferreting out US taxpayers overseas, but provides relative little information in the other direction to help other countries enforce their own tax laws. Making the United States a giant tax and secrecy haven.

Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional ‘competition’

September 5, 2016   Blog, Tax Havens & Financial Crisis
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Prof. Thomas Rixen

Prof. Thomas Rixen, who has written a lot about tax ‘competition’ (aka tax wars) in the past, has a new article looking at similar dynamics in the area of financial regulation. Entitled Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional competition, it points out that the shadow banking sector, many of whose players were implicated in the global financial crisis that erupted almost a decade ago, is heavily entwined with offshore financial centres.  Typically, this involved banks sponsoring off-balance sheet vehicles, located in places like Cayman or Luxembourg: these supposedly took risk off the banks’ books, but then returned to haunt the banks when they blew up, causing widespread economic disaster.

Finance Curse in The Atlantic: how to mount an offshore coup

August 1, 2016   Blog, Finance Curse
Brooke Harrington

Brooke Harrington

We recently hosted Brooke Harrington, an Associate Professor at the Copenhagen Business School, on our Taxcast, talking about her remarkable research on tax havens.  She wrote an article in The Atlantic last October, entitled Inside the Secretive World of Tax-Avoidance Experts – which we’d urge you to read if you haven’t already – and now she’s followed it up with another equally powerful article, also in The Atlantic, entitled Why Tax Havens are Political and Economic Disasters. This article draws directly and explicitly from TJN’s work on The Finance Curse, spearheaded by TJN’s John Christensen and Nicholas Shaxson. In short, if your country is overdependent on financial services, it will suffer many of the same problems that are faced by countries overdependent on exporting minerals like oil, and for mostly similar reasons.

New questions over Juncker’s role in Amazon Luxembourg affair

EC President Jean-Claude Juncker Holds Press ConferenceJean-Claude, Juncker, the President of the European Commission, has long tried to distance himself from his role as one of the key architects of Luxembourg’s crime-fueled tax haven factory. An excellent new investigation by Newsweek now reminds us of his efforts to display whiter-than-white credentials:

“It’s the tax authorities that develop the specific rules that are applied,” [Juncker] said last September during a hearing of the European Parliament. “I haven’t taken a position on individual tax dossiers because that also isn’t my role. The Luxembourg tax authorities are very allergic to the idea of ministerial interference.”

Luxembourg backing down on supporting tax haven USA

Luxembourg; not so pretty beneath the surface

Luxembourg: not so pretty under the surface

A month ago we wrote an article entitled Now Luxembourg, Switzerland are working to bolster Tax Haven USA. This concerns a global scheme to share banking information, the OECD-led Common Reporting Standard, (CRS, which starts up next year and complements separate schemes and campaigns to see public disclosure of the beneficial owners of entities and arrangements like trusts and companies.)

In a nutshell, under the CRS you are supposed to ‘look through’ certain investment entities to their beneficial owners, if that entity is not in a ‘participating jurisdiction’ – that is, participating in the CRS.   The United States isn’t a participating jurisdiction: it has its own FATCA programme which is loosely and very imperfectly hooked up to the CRS: for more details see our Loophole USA blog.

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