Tax evasion declaration backed The Guernsey Press
'Finance ministers from 17 EU countries have backed a declaration calling for global action to counter tax evasion. They signed a joint statement at talks in Brussels warning that only a comprehensive worldwide system of exchanging tax information between national authorities will beat corporate tax dodgers. “Tax evasion is a global problem and we should look for a global solution, otherwise the problem is simply displaced,” said the statement.'

Communiqué from 8th Meeting of the Forum on Tax Administration, 16-17 May 2013, Moscow OECD
Disappointingly, calls for automatic information exchange within existing treaties instead of demanding a multilateral platform.

EU finance ministers talk tough on tax evasion, but agree on little Eurodad

ECOFIN Agrees On Savings Tax Directive Tax-News

Liechtenstein open to bank data exchange talks with EU Reuters
"We have signalled that we are ready for talks although we can't conceal that automatic exchange of information is not our favourite solution," Liechtenstein's new Prime Minister Adrian Hasler told Reuters in an interview in the capital Vaduz.

Luxembourg PM downplays swift tax evasion deal BloombergBusinessweek

Tax Haven Germany TJN Germany Blog

Massive failure by Cypriot banks on ‘dirty money’ Cyprus Mail
Deloitte said that 70 per cent of “the most complex ownership structures” have nominee shareholders and an average of three layers between the customer and beneficial owner.

Inter-American Development Bank: Latin American Tax Reform Needed The Latin Times

UK, U.S. and Australia investigating tax evaders from the 'offshore leaks' scandal TJN Latin America and Caribbean (In Spanish)

The great tax charade: Amazon plays the system while businesses like ours suffer The Independent
UK Independent bookstore owners write about their campaign against Amazon.

After Google, Amazon to be grilled on UK tax presence Reuters

Apple CEO Tim Cook to propose tax overhaul The Washington Post

Stash your cash in Switzerland? US and Europe push to make it harder. Yahoo News
Includes an overview of the Falciani affair.

Vatican Bank To Begin Publishing Annual Financial Reports Economy Watch

U.S.: Senator Rand Paul's Fight for Offshore Tax Havens Citizens for Tax Justice

Resource Governance Index Revenue Watch Institute
80% of countries fail to achieve good governance in their extractive sectors. Note remarks on the way forward.

Bitcoin exchange shut in online money-laundering crackdown Independent

Bermuda moves up to second in offshore deal volume The Royal Gazette

Austerity and growth: how is it going? Treasure Islands

This one has a wow factor. From The Guardian:

"The boss of Lloyds Banking Group pledged to pull out of tax havens where the bank is not conducting genuine business at its annual meeting on Thursday where investors hit out against its "cosy' boardroom and "appallingly high" bonuses.

Chief executive António Horta-Osório said the 39%-taxpayer owned bank had embarked on a systematic review of "so-called tax havens" after a shareholder demanded to know why the bank was the seventh biggest user of such facilities."

The devil will be in the detail, of course, but this is a hugely welcome step. And this bit in bold is also pretty remarkable:

Shareholder Anne Edmonds said: "I want to know when this will be stopped. Tax avoidance is legal and what Lloyds is doing is legal. But to me there is little difference between tax avoidance, which is legal, and tax evasion, which is illegal."

This was "very wrong", she said. "That money should be kept in the UK for the benefit of the UK." Horta-Osório agreed with her comments. "In 2012 alone we have closed 60 of those companies and that is more than 20% of the total. We are going to close all of them unless there are strong business reasons for our customers to keep them there," he said at the meeting in Edinburgh. He later clarified that "business reasons" did not mean "tax reasons".

As we just said: wow.

Report: Corruption, mismanagement plagues energy-rich nations The Hill
Reporting on Revenue Watch Institute’s  “Resource Governance Index”

How we can help African nations to extract fair value Financial Times
The west has a duty to ensure the region benefits from its resources, writes Paul Collier

Africa Progress Panel lauds Kenya’s decision to introduce mining taxes Business Daily

Tanzania: Govt Wants More Cash From Mining Firms AllAfrica

Argentine tax amnesty plan: A lifeline for a shaky peso or a magnet for organized crime Washington Post

BVI tax haven picks Hong Kong for drive into Asia South China Morning Post
British Virgin Islands gets city's help in opening Asia-Pacific HQ to deal with central banks and regulators from Singapore to Japan

Offshore tax havens like Hong Kong contribute to poverty, says ActionAid South China Morning Post

Havens that are not going away Página 12 (In Spanish)
Hat tip: Jorge Gaggero

Havens Retain Allure For Firms Seeking Flexibility Offshore The Moscow Times
Some very interesting observations, including a quote from an E&Y partner: "You cannot simply take a Cyprus company and replace it like a piece of Lego in Luxembourg. You would need to use several jurisdictions, with several layers of holding companies in order to achieve a cascading system of tax distributions."

Austria and Luxembourg hold out against tougher tax rules European VoiceSven Giegold, a German Green MEP, called the outcome “shameless obstructionism” by Luxembourg and Austria.

Australia: Big banks enjoying hefty offshore deductions Sydney Morning Herald

U.S.: What the IRS should be scrutinizing Reuters
Why, for example, has the IRS been so indulgent of big, flagrantly partisan tax-exempt groups that have spent hundreds of millions of tax-exempt dollars to influence the last two elections, in clear violation of IRS rules?

Who Hides Money Outside The Country? NPR

Apple target of Senate hearing on offshore taxes Politico

'I think you do evil': MPs confront Google over 'devious', 'calculated' attempt to avoid UK tax - the day after Amazon's own revelations The Independent
Internet giants on back foot after shopping giant admitted it receives more in government grants than it pays in UK corporate tax

Fresh questions for Amazon over pittance it pays in tax The Guardian

Starbucks’ cheque for £20 million is not in the post Tax Research UK

UK Uncut legal case exposes political embarrassment behind Goldman’s tax deal UK Uncut

The UK Gold – a new film on tax avoidance – premiere on 25 June Tax Research UK
See also the write-up in The Telegraph

Transnational Organized Crime - Analyses of a Global Challenge to DemocracyTransnational organized crime interferes with the everyday lives of more and more people - and represents a serious threat to democracy. By now, organized crime has become an inherent feature of economic globalization, and the fine line between the legal and illegal operation of business networks is blurred. Additionally, few experts could claim to have comprehensive knowledge and understanding of the laws and regulations governing the international flow of trade, and hence of the borderline towards criminal transactions.This book offers contributions from 12 countries around the world authored by 25 experts from a wide range of academic disciplines, representatives from civil society organizations and private industry, journalists, as well as activists. Recognizing the complexity of the issue, this publication provides a cross cultural and multi-disciplinary analysis of transnational organized crime including a historical approach from different regional and cultural contexts.
Heinrich-Böll-Stiftung and Regine Schönenberg (eds.)Transnational Organized Crime
Analyses of a Global Challenge to Democracy transcript Verlag, Bielefeld 2013, 308 pages, € 24.80ISBN 978-3-8376-2495-3
Ordering address: Heinrich-Böll-Stiftung, Schumannstr. 8, 10117 Berlin, Tel. 030-285340, Fax: 030-28534109, E-mail: buchversand@boell.deInternet: www.boell.de

Switzerland has been fighting hard to attack and undermine long-running transparency efforts in Europe, and in recent days it's been playing a particularly pernicious role. (Christian Aid's new report Swisspoliation adds more: and that's just the charge sheet of the last few days. The case against Switzerland is long, extremely ugly, and goes back decades. Despite some moderate improvements in recent years, the country remains justifiably at the top of TJN's Financial Secrecy Index.

We thought we would now publish a letter circulated to us, originally from Ana Gomes, a Member of the European Parliament. Directed to Herman Van Rompuy, President of the European Council, it speaks for itself, and relates to this Change.Org Petition, which we mentioned before and is entitled The citizens demand actions against corruption and the secrets hidden by Switzerland. The letter is from Monday:

Dear President Van Rompuy,

One of the main problems affecting the EU and several EU Member States in particular is the lack of sufficient financial and fiscal resources to invest in the economies and job creation and to deliver to citizens even the most basic services and infrastructure they expect and deserve. Sadly, tax evasion, tax avoidance and corruption are a reality and they have been protected by Switzerland, Liechtenstein and other tax havens and money laundering financial centres (including EU Member States), undermining governance in the EU by covering up criminal activities.

To put an end to this long running conspiracy to defraud all EU Member States, that undermine all EU economies - with the excuse of financial secrecy - more than 24 thousand EU citizens, including me, have already signed the petition #TruthCH (#VeriteCH-#VerdadCH-#WahrheitCH-#VerdadeCH) demanding to the EU institutions the creation of an Independent Truth and Justice Commission on Switzerland to investigate its role in political corruption and tax evasion.

I hope that you agree that, at this time in European history, it does not matter how many thousands of citizens have signed this urgent demand for action. It is our obligation as representatives of all 500 million Europeans to act, without further  delay,  to stop this unacceptable behaviour, investigate the truth and prosecute all criminally responsible as they are not only undermining our economies with their secret cross border financial services but are also eroding our democracy by hiding corrupt and illegal assets. This has been the case for too many decades.

The ECOFIN meeting taking place tomorrow, 14th of May 2013, under the presidency of Mr Michael Noonan, Minister for Finance of Ireland, will decide on very important EU instruments to tackle tax evasion. I urge you, thus, to bring up the creation of an Independent Truth and Justice Commission on Switzerland in the discussion.

We cannot remain indifferent. I look forward to working with you to build a social and transparent Europe that will fight together against all forms of corruption, tax evasion and avoidance.

You may find the complete text of the petition, along with the weblink, below,

Thank you.

Sincerely,

Ana Gomes
Member of the European Parliament

From Christian Aid, a new report entitled Who pays the price? Hunger: the hidden cost of tax injustice. An email from Christian Aid this morning said the report:

"makes the link between tax dodging, financial secrecy and hunger. It includes three country case studies from Ghana, India and El Salvador, where we identify measures that could be adopted by governments in these countries to increase tax revenues, reduce inequality and tackle hunger.

The report also contains two new pieces of research showing how developing countries lose more than the US50bn the FAO considers are required every year up to 2025 to tackle hunger.

• The first, which I already shared some time ago, focuses on an Orbis-based research conducted on more than 1,500 MNCs operating in India and finds that MNCs with links to tax havens paid over 30 percent less in taxes than MNCs with no such links. See also Christian Aid's Occasional Paper, ‘Multinational corporations and the profit-shifting lure of tax havens,’ by Petr Jansky and Alex Prats.
• The second reveals that developing countries could have lost over 2007-2010 as much as US578bn (that’s our upper estimate) of capital when trading with Switzerland, the country that sits at the top of TJN's 2011 Financial Secrecy Index. See Christian Aid's Occasional Paper ‘Swissploitation? The Swiss role in commodity trade’ by Alex Cobham with Petr Jansky and Alex Prats.

(TJN would add: those who are seriously interested in Switzerland's pernicious role in the global commodities trade are also advised to read the excellent report Switzerland's Most Dangerous Business, by The Berne Declaration of Switzerland. A significant sample of the book is available here.)

You can access a three-page report summarising the main new Christian Aid publication here. It contains startling facts such as this one:

"Had Zambia received for its copper exports in 2010 the same price Switzerland obtained when the copper was resold to other countries by Switzerland-based traders, it could have doubled its GDP."

The Christian Aid report contains this, in the introduction:

"Tax revenues are predictable and sustainable sources of income.They are fundamental to allowing developing-country governments to foster human development. But most poorer countries lack the staff, expertise and access to corporate information to counter activities such as transfer mispricing, in which some MNCs manipulate the profits they make and often hide them offshore.

In this report, Christian Aid provides new evidence of how an end to such practices, coupled with appropriate development policies, could make major progress towards eradicating world hunger. We realise that not all the revenues raised would automatically be channelled to priority areas such as health and nutrition.There are other priorities such as education and infrastructure. There also remain the challenges of corruption and government profligacy; challenges to which Christian Aid and our partners are rising. But without doubt, fairer tax systems and greater tax revenues could lead to increased practical measures to reduce food insecurity."

Now read on . . .

The UK's investigative and satirical magazine Private Eye has produced a major new investigation into corporate crime, handled via the United Kingdom. The subtitle of the piece 'how UK ghost companies made Britain the capital of corporate crime" is quite apt, notwithstanding the best efforts of jurisdictions like New Zealand to outdo the UK.

The article is not online, unfortunately, so if you're in the UK you'll have to go out and buy a copy on the newsstands - it's available now. There's far too much in here to give it full justice, but a couple of paragraphs should give a sense of what's going on here:

“Limited liability partnerships”, of which Vector Aerospace LLP was one, joined the lexi- con of British corporate law only in 2000 as a result of heavy lobbying from Britain’s big accountancy partnerships, which wanted to limit their liability for carrying out dodgy audits without becoming limited companies and so incurring extra taxes. [See Treasure Islands, and the Ratchet chapter, for the extraordinary story of how the accountancy firms got Britain to enact its LLP laws.] The new corporate vehicle allowed them to have it both ways by stipulating that an LLP would have limited liability but would not be a taxable entity itself (see Partnerships in crime).

The new hybrid had great appeal: not just to respectable accountants, but also to those who were up to no good. For if an LLP’s members can also claim that they are not taxable in the UK, there is nothing to trouble the taxman and no inconvenient questions will be asked by the authorities about what the LLP is up to.

This is pure tax haven activity, and Britain is rapidly heading down this road. One last TJN-related section from the story:

"In 2009/10, a study by campaigning accountant [and a TJN Senior Adviser] Richard Murphy found that of the 2.6m companies on the UK companies register, just 69 percent were even asked for a tax return by the authorities and only 45 percent actually submitted one. While it is impossible to measure precisely how many of Britain’s ghost companies are part of interna- tional criminal networks, it is in these helpfully crowded and murky waters that some of the world’s most serious organised crooks swim undetected."

. . . . and much, much more: this is just a taster. You can see the authors, Andrew Bousfeld and Richard Brooks, in a short video clip here. Among other things they watch a postman stuff large quantities of letters through a letterbox, and they're clearly visible through the glass door.

"All these letters have landed face down," Brooks says ruefully: "that's what you call tough sh*t."

The text piece finishes like this:

"Epic levels of money laundering, illicit arms dealing, frauds, counterfeiting and government corruption are the result, all thriving on emasculated British company law and political and official indifference. A clean-up is indeed badly needed. Right here and right now."

Never a truer word written.

For those not from the United Kingdom, Bill Oddie is a former comedian who now appears regularly on British television screens, most often as a keen birdwatcher.

Now, in collaboration with our friends at Global Witness, he's produced a really good new video, which is fun - but has an important message too. Enjoy.

Luxembourg and Austria go out of their way to help tax crime Tax Research UK. What has happened is potentially very serious. The one silver lining is that the parallel and different "Fatca" process is making good running, and that things remain very fluid and unpredictable. Many journalists have misread these European developments in glass-half-full fashion, with headlines such as "EU moves to close tax loopholes." No, this particular glass, and it's a big one, looks rather empty right now. Also see, for instance, EU keeps tax-hunt momentum, even as resistance firms France 24/AFP
Australia to lead G20 corporate tax evasion clampdown Reuters

Extra $68m for Australian Tax Office to tackle trust abuse The Australian

Singapore to Agree With U.S. on Sharing Bank Account Data Bloomberg

Hong Kong in line for surge in illicit fund inflows South China Morning Post
Singapore, EU moves to boost transparency may boost city's allure for global tax cheats

Tax havens yield to pressure for greater transparency la nacion (In Spanish)
Hat tip: Jorge Gaggero

Africa's "lift-off" held back by illicit finance drain: AfDB Reuters

Tax evasion remains a risk, says South African Revenue Service Business Report

Tax evasion in Pakistan: A critical analysis Business Recorder

Latin America tax revenue cut by evasion, write-offs: IADB MSN

Insight: Bank documents portray Cyprus as Russia's favorite haven Reuters

Cayman key target in UK tax evasion investigation Compass Cayman
On the story of Australian, British, and U.S. tax authorities cooperating on investigating a large cache of information on complex offshore structures used to conceal assets.

Release of Offshore Records Draws Worldwide Response ICIJ

Canadian money in tax havens at all-time high NUPGE

Greek Crackdown on Tax Evasion Yields Little Revenue The New York Times

As FATCA spreads globally, ACFCS poll shows compliance duties are all over the map Association of Certified Financial Crime Specialists.

NZ To Address FATCA Compliance Cost Concerns Tax-News

Swiss Neue Privat Bank Cooperating With U.S. Justice Department Probe Bloomberg

The City of London and the Offshore sector - The Enemy Within Rowans-blog

Guernsey publishes tax transparency chart Channel TV
Guernsey's government has unveiled a ten point plan to try and prove it's not a tax haven.

Visualizing The World's Tax Havens zero hedge

Tax Havens and the Return of the Pirates The Washington Spectator

Tax haven tsunami Islands Business
"What may kill offshore banking is the realisation that it does very little to benefit host nations."

A memo to the world’s dictators - Subject: Asset protection and regime change. From: Mirkwood Capital To: High-net-worth rulers The Economist

U.S.: Tax Rates Down, Havens Thriving: Corporations Win, Workers Pay Common Dreams

Top Economists and Financial Experts Say We Must Break Up the Giant Banks The Big Picture

Who pays the price? Hunger: the hidden cost of tax injustice New report by Christian Aid

FTSE 100's use of tax havens – get the full list The Guardian
See also: UK's top companies condemned for prolific use of tax havens. ActionAid's new research finds that the UK's 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens.

Economic malpractice: time for a moral crusade against tax scams The Guardian

Tax havens are entrenching poverty in developing countries The Guardian

Tax Havens Cost Africa $38 Billion a Year Voice of America

How we can help African nations to extract fair value Financial Times (Subscription)

Interview with Swiss Whisteleblower Ruedi Elmer Association Liberté-info
Update, and comment on recent events.

Before anyone sings Osborne’s praises on information exchange let’s remember he is the only person to sign a Rubik deal with Switzerland Tax Research UK

Singapore steps up international cooperation on tax evasion Reuters

Singapore to eclipse Switzerland as tax haven by 2020 CNN

Luxembourg Abandons 'Unrealistic' Withholding Tax Model Tax-News

Liechtenstein Set For Talks On Automatic Information Exchange Tax-News

Faymann says Austria will agree to EU tax deal Austria

EU Savings Tax Directive amendments: coming soon Available via the-best-of-both-worlds.com

No desks. No staff. No tax. Ireland’s shadow banks The Irish Times

Conference: The Future of taxation of international companies - for a fairer tax policy TJN Germany Blog
Announcing a joint event of DGB, Friedrich Ebert Foundation, the Tax Justice Network and the World Economy, Ecology & Development - WEED on 19 June.

International Finance Corporation and Deutsche Bank bankrolling Vietnamese land grabs in Cambodia and Laos Global Witness

UK naturalist and comedian Bill Oddie evicted from HSBC HQ while protesting against bank’s role in Malaysian rainforest destruction Global Witness
See the video, a light-hearted look at a deadly serious issue.

The latest edition of Tax Justice Focus explores and explodes some of the most persistent and powerful myths in contemporary economics.

Earlier this year we teamed up with the New Economics Foundation in London to produce a series of essays - Mythbusters - which are currently being published weekly in the Guardian newspaper, and can be found here on the nef website.  In this newsletter we explore how some of these myths survive and are propagated.

In the opening article Daniel Stedman Jones explores how the ideas of Adam Smith have been selectively interpreted by neo-liberals to shape a particular view of the free market which had little or nothing to do with Smith's own interpretation.

Aeron Davis considers why the media are so uncritical in their coverage of the activities of the City of London, promoting the myth that the City's role is too important to be challenged.

William Davies examines the reality behind the much-vaunted enterprise economy, so beloved of neo-liberals, and argues that much of what is termed entrepreneurial activity boils down to little more than rent-seeking.

And finally, Robin Ramsay asks why myths persist for so long in the political discourse. Does it boil down in the end to the awkward fact that most politicians are economically illiterate?

In addition, Krishen Mehta reviews Aaron Schneider's new book on State Building and Tax Regimes in Central America, and we have a round-up of the major tax justice news stories from recent weeks.

You can download Tax Justice Focus - the Mythbuster edition here, and please feel free to circulate to your friends and colleagues.

Copied from the Treasure Islands blog:

Britain's governing coalition has made great song and dance about how it plans a crackdown on abusive tax avoidance by large multinational corporations. I gave a talk at the festival in the southern English town of Brighton yesterday, where I examined these claims and described them as "a disaster" and "a con."

I am not alone. The latest article by Bloomberg's Jesse Drucker is, as usual, excellent, and it makes a similar point. As he says:

"As politicians in Europe and the U.S. talk tough on corporate tax dodging, several of their governments are helping multinationals lower tax bills. They have been cutting corporate rates, introducing laws that encourage tax avoidance, and rejecting proposals to close loopholes. Even amid growing public outrage in Europe against austerity policies, the gulf between rhetoric and reality on taxation means individuals rather than businesses are often bearing the brunt of higher taxes."

I will return to Drucker's article, but first some quotes from others who have examined what's going on in detail. First, Richard Brooks, a former UK corporate tax inspector and author, writing in The Guardian:

"You think the government is fighting tax avoidance? Think again
. . .
[UK Chancellor George] Osborne has taken the deception to a new level. . .
George Osborne has pulled off a stunning confidence trick: he has bamboozled people into thinking he is fighting tax dodgers. Osborne's bamboozled audience will never notice the abject surrender to tax havens."

Or you might try Ben Chu in The Independent, a little earlier, in an article entitled The Chancellor's corporation tax con:

"These are all moves which, in effect, turn the uk into a giant tax haven"

As I explained in Brighton yesterday, this is the outcome of politicians responding to two opposing forces:

a) Offshore Leaks, austerity and government scrambles for revenue, anxiety about inequality leading to a search for more of a contribution from the wealthiest in society; a rapid growth in knowledge about tax havens: notably that they are bigger and more important and more dangerous than anyone had hitherto imagined. This has led, in the UK as in several other countries, to serious pressure from the street, with protests and pub conversations and widespread discussion in the media.
b) the forces of conservatism and resistance: the City of London and its many supporters who make a living out of tax havens and facilitating abusive tax arrangements, alongside "competition" between financial centres to attract the hot money by offering the next best tax loophole, in a generalised race to the bottom.

When politicians are faced with two opposing forces like this, they have a choice:

a) do the right thing
b) do the wrong thing, but be seen to do the right thing.

And in this case, the UK government has firmly opted for b). We know this from the examples that Chu, Brooks and Drucker give. But we also know it from a statement from Osborne on May 11th at the meeting of G7 Finance Ministers and Central Bank Governors:

"For Britain, I am committed to a competitive tax system that promotes growth, but I’m also determined that tax that is owed must be paid."

That is an especially devious statement. First, we know that the word 'competitive' is the world's worst weasel word when used in this context. (See why here.) Second, here is what Osborne is saying - and doing: 'We don't want multinationals to break the law. So we will eviscerate the laws - and then they won't have to break them!' (This is one of the messages that emerges loud and clear from Brooks' new book, The Great Tax Robbery.)
Back to Drucker's article, with more specifics, in the context of promises to crack down:

"Less than a month later, Chancellor of the Exchequer George Osborne said he would lower the U.K.’s corporate tax rate to 21 percent, below Germany and France, from 28 percent in 2010. A month after that, the U.K. cut the rate further, to less than 6 percent, on profit attributed to offshore arms that make loans to other units. These subsidiaries can help U.K.-based multinationals shift income to mailboxes in tax havens.
“Here is a blatant incentive inside the U.K. tax system to move profits previously in London into a tax haven,” said Richard Murphy, director of Tax Research LLP in Norfolk, England. “It is just absurd. At the same time, we have people like Osborne saying ’I’m going to crack down on tax avoidance."

And Drucker quotes David Rosenbloom, a top U.S. tax experts whom I interviewed for Treasure Islands:

The Europeans say one thing and do another. . . The EU can’t do anything as long as it’s got Luxembourg and the Netherlands and Ireland” within the union.

And Britain, we should add. And it's time the BBC and other mainstream media in these places started to notice properly, and give these politicians' comments the scrutiny they deserve.