This week the Organization for Economic Cooperation and Development released the full version of its new standard for automatic tax information exchange. Under the standard, governments would collect data from financial institutions on investment income, financial assets, and account balances paid to non-resident accountholders. On an annual basis, participating governments would exchange that information automatically with other jurisdictions.
In a statement, OECD Secretary-General Angel Gurria said the launch “moves us closer to a world in which tax cheats have nowhere left to hide.”
This impetus for this new standard came from a mandate by G20 nations and the OECD will formally present the plan to the next meeting of the world’s leaders in September. The standard also follows from a great deal of bilateral and multilateral progress made by the United States and European Union on automatic tax information exchange.
For any of these efforts to have a real impact on economic development and reductions in poverty, it must translate to action in the developing world. That’s because tax revenues are, and will continue to be, the world’s most sustainable source of development funds. Yet if these systems and agreements exist only between developed nations and tax havens—and until developing countries participate in a similar system or agreements of their own—the progress we’ve made will have little effect on economic development and acute poverty.
The Tax Justice Network an FTC member, just released the July installment of TaxCast, a podcast featuring a detailed look at the previous month’s tax news.
In the Tax Justice Network’s latest podcast:
What really happened at the Google shareholder meeting vote on a proposal for ethical tax principles? Plus: we discuss what the new tax haven-friendly EU Commission President might do (or not do), anti-democratic moves in Hong Kong from the big four accountancy firms, and: forget the OECD’s global tax reform – developing countries can and are doing it for themselves. But will the new BRICS Development Bank do any better? And much more…
Illicit financial flows affect countries all over the world. Unfortunately, developing countries seem to suffer the greatest due to illicit outflows. Sub-Saharan Africa, for example, loses roughly 5.7% of its overall Gross Domestic Product every year to illicit flows, according to research from FTC member Global Financial Integrity.
Along with advocating for strong policy changes, it’s important that a robust and informed press investigates cases of tax evasion, corruption, and harmful tax practices that rob governments of much needed revenue.
On Monday, the Organization for Economic Cooperation and Development (OECD) released detailed guidelines on the common reporting standard for automatic exchange of financial information (AEOI). The plan inches closer to implementation of a global standard but continues to keep developing countries looking in from the outside.
Rather than offer a period of non-reciprocity, where developing countries could simply receive financial data, the only mention of non-reciprocity agreements is catered to tax havens.
In its list of Most Influential People this year, TIME magazine called Pope Francis a “moral leader in word and deed.” In the commentary on this accolade, President Obama said this of the pope: “His Holiness has moved us with his message of inclusion, especially for the poor, the marginalized and the outcast. But it […]
Are you an ambitious journalist in Africa with an interest in probing illicit finance, money laundering, and tax related abuses? Or, perhaps, you represent an outstanding, independent media organization based in Africa with a desire and reputation for exposing financial crime and corruption?
Either way, the Thomson Reuters Foundation is launching a new three-year program assisting African media on the reporting of illicit finance and tax abuse, and they are hoping that you will apply.
Last week, the International Consortium of Investigative Journalists (ICIJ) announced that it had received troves of data on a number of wealthy UK individuals that held money in an offshore bank in the Channel Isles, a British crown dependency and well known tax haven.
The ICIJ, along with The Guardian newspaper, dissected the documents, and released a number of stories outlining some of their findings. One of the more interesting tax arrangements uncovered seems to be that of the owners of Nando’s, the worldwide restaurant chain famous for its chicken dishes.
Late last year, David Cameron announced that the UK would put the names of the people who own and control British companies into the public domain – something that we at Global Witness have long been campaigning for, alongside other NGOs such as ONE and Christian Aid. Such transparency is important because it’s well known that people who want to hide dirty money use the anonymity provided by companies to do so. There are plenty of examples of British companies being abused in this way.
Bitcoin can be sent from anywhere to anywhere at a very low cost, while simultaneously keeping a user’s identity hidden. This all sounds convenient for online payments, but without proper regulations, the use of crypto-currency could easily lead to tax evasion.
Bitcoin was launched in 2009, as the world’s first crypto-currency. Satoshi Nakamoto, a pseudonym for the unknown person or group of people responsible, created the revolutionary currency. One key feature of Bitcoin is its decentralized nature, which doesn’t require regulators or bankers, resulting in low transaction costs. However, this also poses severe challenges for revenue authorities trying to trace and tax the digital currency.
In late June, we met with members of the Tax Justice Network Africa (TJN-A) and the Africa International Trade Union Confederation (Africa ITUC) for a training and strategy session in Naivasha, a town northwest of Nairobi. The goal of the event was to bring people together to discuss and analyze the problem of illicit financial flows and the lack of transparency, particularly within the extractive sector.
It wasn’t long after we left the city limits of Nairobi that the landscape changed dramatically, quickly shifting from shopping malls and apartment complexes to dirt roads and shacks. The drive, which should only take about an hour, took twice as long because the roads aren’t build to sufficiently accommodate the regular traffic from tourists, vacationers, and large trucks.
For about five years now, nations around the world have called on Switzerland to change its secret ways. Over these years Switzerland’s banks, which hold nearly one-third of the estimated $7 trillion in global wealth kept offshore, have borne much of the brunt of the U.S. Department of Justice’s campaign against banks facilitating tax evasion by American citizens. Other nations, such as India, have also followed suit. And although Switzerland has attempted to cultivate an image of international cooperation – the reality of Swiss banking secrecy has been more of the same.
For the purposes of outward appearances, at least, Switzerland has caved to some of the international pressure. After much debate in 2009, Switzerland surprised the world when, at the last moment, it decided not to step in and forbid banking giant UBS from handing over the names of tax-evading Americans to the Internal Revenue Service. In 2012 Switzerland began making overtures toward cooperation when it agreed to make anonymous advance payments to German tax authorities for undeclared money. In 2013 Switzerland joined the OECD’s Multilateral Convention on Mutual Administrative Assistance on Tax Matters. Under this agreement, participants must aid each other in tax collection efforts, and the agreement also includes some provisions on automatic exchange of financial information.
While these public agreements and appearances represent, in many ways, a new voice for this nation, for all practical purposes they do not represent a shift from the status quo.
The International Consortium of Investigative Journalists (ICIJ) and The Guardian have received troves of documents exposing the offshore banking activities of thousands of wealthy individuals. The information, which was leaked to the ICIJ, highlights the activities of a major private bank in the Channel Islands, a British crown dependency.
According to ICIJ, the list of clients includes “donors to the British government, which has been outspoken against tax havens, and some of the most prominent people in British life.”