THE OFFSHORE WRAPPER

Dear subscriber,

Welcome to this latest edition of the Offshore Wrapper, featuring highlights from the world of tax justice, the latest from the TJN blog and a comprehensive list of links to news stories on tax and illicit finance.

As always do send though any tips or suggestions to george@taxjustice.net

Poland takes on the tax avoiders

Poland has just mounted an impressive demonstration of what can be done to turn around government budgets when governments take on tax avoiders.

The eastern European country has slashed its forecast for its budget deficit by 90% and cancelled plans to issue new debt after government finances dramatically turned around.

Ministry of Finance officials are putting that turnaround down to efforts to clamp down on tax avoidance and evasion by foreign companies operating in Poland.

Last year researchers claimed that companies were using over 600 'legal structures' to shift profits out of Poland and discovered some foreign companies paying much less in taxes than domestic ones.

Research carried out by Finance Uncovered and published earlier this year also found that Poland had one of the lowest corporation tax takes in the region, despite having a similar tax rate to neighbouring countries.

BVIs are not a tax haven according to new PR report commissioned by the BVIs

The British Virgin Islands have embarked on a PR drive to tell the world that the country is not a tax haven.

The country has commissioned a consultancy called Capital Economics to write a report detailing the economic contribution made by the $1.5 trillion in assets parked in the small island nation.

Capital Economics, who have written similar reports in the past defending other small island nations (also definitely not tax havens) such as Jersey, talk about the hundreds of thousands of jobs around the world supported by capital parked in the Virgin Islands.

The claims are of course nonsense. The assets in the BVIs are not factories or machines, things that really do contribute to employment, but financial assets.

That money doesn't come from the hard earned pensions of Virgin Islands workers but from everywhere else in the world. It collects there because in the BVI those assets will pay no taxes and investors will be able to hide who they are. We at the TJN put together a rough estimate that rather than support economic activity throughout the globe, the BVIs cost governments $37.5bn in taxes a year.

Regardless, Capital Economics and their clients in the BVI government try their best to put their best case forward. Lorna Smith, interim executive director of BVI Finance, said:

“The BVI has never been a secrecy jurisdiction. We adhere to privacy for clients."

Clients who want to avoid taxes, no doubt.

Fears of UN backsliding in the fight against corporate tax avoidance

The Tax Justice Network, ICRICT and the Global Alliance for Tax Justice have written to the new UN Secretary General António Guterres urging him to make sure that the commitment to tackle multinational tax abuse is not eliminated from the UN Sustainable Development Goals (SDGs).

The SDGs, which replaced the Millennium Development Goals, for the first time committed countries around the world to take action on illicit financial flows (IFFs). The definition of an illicit financial flow has always included tax avoidance by multinational corporations.

However, campaigners have become increasingly concerned about resistance to tackling the issue from some quarters of the UN system. In particular, there is concern that the UN Office on Drugs and Crime (UNODC), a body with neither expertise nor interest in tax issues, has had itself designated the lead organisation for the SDG target on IFFs.

Copies of the letters are available on the TJN website.

Pakistan needs to improve tax collection to boost development

If the UN is planning on giving up on fighting tax avoidance someone better tell the UN Development Programme in Pakistan.

This week UN Assistant Secretary-General and Regional Director of UNDP for Asia and the Pacific Haoliang Xu criticised the country for its low tax take, and encouraged the country to improve tax collection in order to boost the resources available to fund education, healthcare and infrastructure.

In recent years the tax to GDP ratio has dropped from 14% to 10% in Pakistan, whilst in Bangladesh the government is targeting 18%.

The latest Taxcast

The June 2017 Taxcast is out now!

Has the UK just had its first tax justice general election? Are we seeing a popular shift towards tax justice in the UK and in the US? Is this the beginning of the end to our long austerity winter? How much do people REALLY care about taxes, who pays them and who doesn’t?

Featuring: Vanessa Williamson, Governance Studies Fellow at the Brookings Institution and author of Read My Lips: Why Americans Are Proud to Pay Taxes, John Christensen of the Tax Justice Network, Will Snell of Tax Justice UK and with brief appearances by President Donald Trump and Hillary Clinton. Produced and presented by the the Tax Justice Network's Naomi Fowler.

The latest from the TJN Blog

UN must defend target to curtail multinational companies’ tax abuse

The Tax Justice Network, The Independent Commission for the Reform of International Corporate Taxation, and the Global Alliance for Tax Justice call on the UN Secretary General to make sure the commitment to action on tax abuses by multinational companies remains part of the new UN Sustainable Development Goals. The Tax Justice Network, ICRICT and […] The post UN must defend target to curtail multinational companies’ tax abuse appeared first on Tax Justice Network.

2017-06-23

The BVI: Responsible for worldwide tax losses of $37.5 billion a year

An extraordinary report by consultants Capital Economics, for BVI Finance, claims that the British Virgin Islands are responsible for $1.5 trillion of assets invested around the world, and that these result in 2.2 million jobs and $15 billion in tax revenue. A better approximation would be that the BVI imposes global tax losses of $37.5 […] The post The BVI: Responsible for worldwide tax losses of $37.5 billion a year appeared first on Tax Justice Network.

2017-06-21

European Commission targets tax avoidance ‘enablers’

The European Commission has just published its proposals for rules for tax advisers and related intermediaries which will require advance disclosure to national tax authorities and cross-border automatic information exchange of any tax scheme that might be deemed potentially aggressive. This is a welcome step, albeit one that still leaves the public in the dark […] The post European Commission targets tax avoidance ‘enablers’ appeared first on Tax Justice Network.

2017-06-21