Those of you who receive Secrecy News eMails from the Federation of American Scientist’s website (www.fas.org) will be aware that there is a lot of interest in the USA government in reining in tax evasion, particularly large corporations. Rich people are being targeted as well. Recently a ‘merger’ in the USA (pharmaceuticals, as I recall) was blocked because it would, in effect, be a reverse takeover. In this manoeuver, a small company ‘becomes’ the head office by ‘taking over’ a large company. Profits are declared in the country of HQ of the small company.
The Americans are trying to shore up tax losses caused by legal, as well as questionable, means. Law changes and regulatory attitude changes should be expected.
So it is no real surprise that the EU is also trying to close corporate tax loopholes. Here you will find a page which includes the new idea of publicizing corporate earnings and taxes, wherever they do business. I will give a small quote, emphasis mine.
For the mining, forestry and the other extractive industries, campaigners say the rules are undermined by companies only having to report on countries where the extraction takes place — meaning the use of offshore financial centres remains concealed. They also say the information required is less detailed than for the banks.
“We need a tool that covers all types of large multinational corporations, and ensures that the public can see whether multinational corporations are really paying taxes in the countries where they do business,” Ms Ryding said.
That sounds like a good idea. However, there may be complications. Leakers of tax deals in Luxembourg are being supported by France (they are French nationals) but are being prosecuted. You can read this here. I will quote a few interesting words from the ending, emphasis mine.
The scandal put pressure on European Commission President Jean-Claude Juncker, who led Luxembourg when many of the tax breaks were implemented.
He has denied wrongdoing and has backed new EU rules to make corporate taxation more transparent.
And don’t think the British are innocent here either; apparently, David Cameron moved to keep ‘trusts’ out of the tax crackdown in 2013. You can read this here. I will give a small quote, emphasis mine.
David Cameron intervened personally to prevent offshore trusts from being dragged into an EU-wide crackdown on tax avoidance, it has emerged.
In a 2013 letter to the then president of the European council, Herman Van Rompuy, the prime minister said that trusts should not automatically be subject to the same transparency requirements as companies.
The EU planned to shine a light on the dealings of offshore bodies by publishing a central register of their ultimate owners but, in a letter unearthed by the Financial Times that remains publicly available on the government’s website, Cameron said: “It is clearly important we recognise the important differences between companies and trusts … This means that the solution for addressing the potential misuse of companies – such as central public registries – may well not be appropriate generally.”
The prime minister’s personal involvement in the EU-wide debate emerged as he continued to face questions about his family’s connections to Blairmore Holdings Inc, the offshore trust set up by his late father, the existence of which was revealed in leaked papers from the database of Panama-based law firm Mossack Fonseca.
So, to recap:
The European Union is putting pressure on tax havens.
This effort is headed by Jean-Claude Juncker.
Jean-Claude Juncker was head of Luxembourg while the tax havens were being set up.
Britain is much interested in putting pressure on tax havens.
David Cameron is heading Britain.
David Cameron shielded offshore trusts from the tax inquisition.
David Cameron’s family apparently owns an offshore trust.
So, for the first dumb question, is the fox guarding the hen-house?
The $ numbers I’ve seen in CRS reports are staggering.
So, for the second dumb question, can we expect a lot of pushback from corporations and their lobbyists?
French citizens are being prosecuted in Luxembourg for whistle blowing about tax evasion schemes.
The last dumb question is this: is it conceivable that some tax haven jurisdictions are, in effect, run for the purpose of being tax havens? Is the government of Luxembourg negatively motivated to help ‘out’ tax evasion?