The fights against tax havens through transfer pricing practices exploitation

Read the analysis of tax havens through transfer pricing practices exploitation in Indonesia online on https://issuu.com/the1uploader/docs/transfer_pricing_in_indonesia?e=27352568/44568378. The link also allows the reader to download it as well for free.


http://www.taxjustice.net/2016/05/31/the-false-promise-of-tax-haven-blacklists/
The false promise of tax haven blacklists
Lotta Staffans, May 31, 2016

From Eurodad:

This week, European Union finance ministers agreed to establish a common EU blacklist of so-called “non-cooperative jurisdictions” – in other words, tax havens. With one tax scandal unfolding after the other, listing and sanctioning tax havens may seem like a good solution. However, as tempting as it may sound, this EU exercise is doomed to fail – and here’s why.

. . . Tax havens are not an external matter to the EU, quite the contrary – some of the world’s most powerful tax havens are to be found in Europe.

For example, a new report from Oxfam uses European Commission (EC) data to analyse the role of the Netherlands as a corporate tax haven. It shows how the Netherlands is making large-scale tax avoidance possible and how Dutch regulations are an integral part of the international tax system that enables multinationals to avoid at least US$100 billion in taxes in developing countries every year. Several other EU Member States – such as Luxembourg, Ireland, Malta and the UK – have also been criticised for helping multinational corporations to avoid taxes. Yet you will not find any of these countries on a blacklist produced by the EU.

And try putting the United States on a blacklist. These are points we’ve made before, and why we’ve argued that lists based on verifiable objective criteria are the way forwards. Take a look, now, at this comparison we’ve done, of our (objectively verifiable) Financial Secrecy, versus the OECD’s heavily politicised Global Forum (GF), looking how each treats the various shenanigans offered by various countries.

As Eurodad put it:

“Only a year ago, in June 2015, the EC made an attempt to publish a list of countries considered to be uncooperative on tax matters. Not only did it exclude all EU countries, it also did not mention any of the EU’s traditional allies, such as Switzerland and the United States (US). This is in spite of the fact that the Financial Secrecy Index last year ranked Switzerland as the most important provider of international financial secrecy.”

See also Andres Knobel’s and Markus Meinzer’s article EU Tax Haven Blacklist – A Misguided Approach?

There’s plenty more from Eurodad: now read on.

Eurodad http://eurodad.org/Entries/view/1546593/2016/05/27/The-false-EU-promise-of-listing-tax-havens
European Union finance ministers agreed to establish a common EU blacklist http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-tax-treaty-abuse/
new report from Oxfam https://www.oxfam.org/en/research/netherlands-tax-haven?utm_source=oxf.am&utm_medium=ZXqj&utm_content=redirect
Financial Secrecy Index http://www.financialsecrecyindex.com/introduction/fsi-2015-results
Andres Knobel’s and Markus Meinzer’s article EU Tax Haven Blacklist – A Misguided Approach? http://www.taxjustice.net/wp-content/uploads/2015/09/EU-tax-haven-blacklist-a-misguided-approach.pdf
read on http://eurodad.org/Entries/view/1546593/2016/05/27/The-false-EU-promise-of-listing-tax-havens


http://eurodad.org/Entries/view/1546593/2016/05/27/The-false-EU-promise-of-listing-tax-havens
The false EU promise of listing tax havens
Lotta Staffans, 27 May 2016

This week, European Union finance ministers agreed to establish a common EU blacklist of so-called “non-cooperative jurisdictions” – in other words, tax havens. With one tax scandal unfolding after the other, listing and sanctioning tax havens may seem like a good solution. However, as tempting as it may sound, this EU exercise is doomed to fail – and here’s why.

The proposal for a common blacklist stems from the European Commission’s external strategy on tax, which was published this January. However, tax havens are not an external matter to the EU, quite the contrary – some of the world’s most powerful tax havens are to be found in Europe.

For example, a new report from Oxfam uses European Commission (EC) data to analyse the role of the Netherlands as a corporate tax haven. It shows how the Netherlands is making large-scale tax avoidance possible and how Dutch regulations are an integral part of the international tax system that enables multinationals to avoid at least US$100 billion in taxes in developing countries every year. Several other EU Member States – such as Luxembourg, Ireland, Malta and the UK – have also been criticised for helping multinational corporations to avoid taxes. Yet you will not find any of these countries on a blacklist produced by the EU.

Only a year ago, in June 2015, the EC made an attempt to publish a list of countries considered to be uncooperative on tax matters. Not only did it exclude all EU countries, it also did not mention any of the EU’s traditional allies, such as Switzerland and the United States (US). This is in spite of the fact that the Financial Secrecy Index last year ranked Switzerland as the most important provider of international financial secrecy.

In May this year, the Greens/European Free Alliance (EFA) group in the European Parliament published a report showing how the US is becoming the biggest tax haven in the world, with legislation providing several loopholes when it comes to knowing who owns and controls companies. Furthermore, the US has not fully committed to automatic exchange of tax information with other countries, including EU countries.

Shifting the blame

Transparency and automatic exchange of information for tax purposes, in accordance with Organisation for Economic Co-operation and Development (OECD) standards, are some of the criteria mentioned by the EU finance ministers for determining what countries should be listed as uncooperative. Although this is unlikely to concern the US, it may be a problem for many developing countries that do not necessarily have the technical capacity to sign up to automatic exchange of information. The Commission’s list from 2015 included countries such as Liberia – one of the poorest countries in the world – which was at the time struggling to cope with an Ebola crisis.

Developing countries may also find themselves faced with the choice of being blacklisted by the EU (and sanctioned accordingly) or having to sign up to a set of agreements made by the OECD in its so-called “Base Erosion and Profit Shifting” project – or BEPS. Linking the blacklisting exercise with OECD BEPS is very worrying as it means developing countries would be pressured to agree to standards that have not been designed in their interest.

Secret negotiations

In addition to these controversies, the EU finance ministers are suggesting the tax haven blacklist should be drawn up by the so-called Code of Conduct Group on business taxation. This top secret discussion forum was set up by EU Member States in 1990 to “abolish existing tax measures that constitute harmful tax competition”. The group has become controversial due to its high level of secrecy and opacity, which makes it impossible for citizens to know what is being agreed on, if anything.

While very little is known about the workings of the group, it is clear that the system of closed-door negotiations and peer pressure has failed to deal with the widespread problem of corporate tax avoidance in the EU and elsewhere. The meetings include representatives of EU Member States as well as the EC. Leaked documents from the group have shown that meetings in the past have been extremely political. Some of the Member States that make use of harmful tax practices have been very successful in blocking proposals to remove these practices and protect their own special interests.

Instead of being based on neutral and objective criteria, the putting together of a common EU blacklist of tax havens is thus bound to be a highly political exercise, where rich and powerful countries such as the US and Switzerland are protected from blacklisting. There also already seems to be broad agreement in the EU that no EU Member State can be blacklisted. As tempting as it may be to put the blame of corporate tax avoidance on some tax haven islands far away, the EU needs to start by cleaning up its own backyard.

The core essence of the tax haven problem is that financial assets can be moved from one end of the world to the other with the click of a mouse. Therefore, a blacklist that includes a few smaller tax havens, but excludes some of the world’s biggest, will not solve the problem. It will simply move the problem from one country to the other. Although a fair, transparent, global blacklist of tax havens could be a good idea in theory, the EU’s next list of tax havens is unlikely to become anything else than another example of European double standards.

European Union finance ministers agreed to establish a common EU blacklist http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-tax-treaty-abuse/
external strategy on tax http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1454056581340&uri=COM:2016:24:FIN
new report from Oxfam https://www.oxfam.org/en/research/netherlands-tax-haven?utm_source=oxf.am&utm_medium=ZXqj&utm_content=redirect
Financial Secrecy Index http://www.financialsecrecyindex.com/introduction/fsi-2015-results
Greens/European Free Alliance (EFA) group in the European Parliament published a report http://www.greens-efa.eu/fileadmin/dam/Documents/TAXE_committee/The_US_as_a_tax_haven_Implications_for_Europe_11_May_FINAL.pdf
BEPS http://www.oecd.org/ctp/beps-2015-final-reports.htm
standards that have not been designed in their interest http://www.eurodad.org/BEPSfacts
top secret discussion forum http://www.eurodad.org/Entries/view/1546519/2016/01/14/The-secret-EU-Tax-Code-that-needs-to-be-cracked-open
Leaked documents http://www.spiegel.de/international/europe/eu-documents-reveal-how-benalux-blocked-tax-haven-laws-a-1061526.html


http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-tax-treaty-abuse/
Council conclusions on an external taxation strategy and measures against tax treaty abuse
European Council – Council of the European Union
25/05/2016 16:00 Press release 281/16 Economy & finance

The Council:

1. CONFIRMS the importance of continuing and intensifying action to tackle tax fraud, tax evasion and aggressive tax planning at national, EU and global level, as requested by the European Council in May 2013 and recalled by Ministers at the informal ECOFIN on 22 April 2016;

2. RECALLS the importance of taking effective steps to fight tax evasion, tax fraud and tax avoidance as well as money laundering, in particular in times of budgetary constraints;

3. therefore WELCOMES the Commission Communication on an External Strategy for Effective Taxation and NOTES the Commission Recommendation on the implementation of measures against tax treaty abuse;

4. RECALLS that from the discussions during an informal meeting of ECOFIN ministers in Amsterdam support emerged for the establishment of an EU-list of non-cooperative jurisdictions and coordinated defensive measures, both to be defined by the Council;

Regarding the Communication on an External Strategy, the Council:

5. CALLS FOR a swift and comprehensive implementation of the internationally agreed standards on transparency and exchange of information developed by the OECD and ENCOURAGES all jurisdictions to commit to implement international standards as soon as possible and URGES jurisdictions that are not yet participants in the OECD’s inclusive framework to join without delay;

6. AGREES on the establishment by the Council of an EU list of third country non-cooperative jurisdictions and to explore coordinated defensive measures at EU level without prejudice to Member State competence;

7. STRESSES the need to work closely and in parallel with the OECD to draw the international criteria in this area and to take into account the work of the Global Forum when developing the EU list of non-cooperative jurisdictions;

8. DECIDES that the criteria on transparency for establishing a list of non-cooperative jurisdictions have to be compliant with internationally agreed standards on transparency and exchange of information for tax purposes, in particular standards developed by the OECD, both on exchange of information on request and automatic exchange of information (Common Reporting Standard);

9. INVITES the Code of Conduct Group to consider an additional criterion for listing non-cooperative jurisdictions based on the non-existence of harmful tax regimes as defined by the criteria of the Code of Conduct on Business Taxation, and possible additional criteria, which could be inspired in particular by the OECD BEPS actions;

10. INVITES the Code of Conduct Group to start work on an EU list of non-cooperative jurisdictions by September 2016, and to determine, on the basis of a first screening by the Commission, third Countries with which dialogues should start, with a view to establishing an EU list of non-cooperative jurisdictions and exploring defensive measures at EU level to be endorsed by the Council in 2017. Those defensive measures could be considered to be implemented in the tax as well as in the non-tax area;

11. WELCOMES the pilot project for the automatic exchange of information on ultimate beneficial owners endorsed by all Member States with the aim of developing a common standard;

12. INVITES the Commission to consider legislative initiatives on Mandatory Disclosure Rules inspired by Action 12 of the OECD BEPS project with a view to introducing more effective disincentives for intermediaries who assist in tax evasion or avoidance schemes;

13. SUPPORTS the need to update the principles of tax good governance to be used as the new standard provision in future negotiations with third countries and INVITES the Code of Conduct Group to examine key elements which should be contained in a clause to be inserted in agreements between the EU and those countries;

14. CONCURS with the importance of tax good governance for developing countries to increase their domestic revenue mobilisation and UNDERLINES the importance of assisting them in meeting tax good governance;

15. STRESSES the importance of the Addis Tax Initiative (ATI), with its core commitment to doubling or substantially increasing support for technical cooperation on taxation and domestic resource mobilisation, already signed up to by twelve Member States, and CALLS FOR all remaining Member States to join the ATI;

16. IS READY to examine the proposal to include EU’s updated tax good governance standards into the EU Financial Regulation in relation to third countries once a new proposal has been put forward by the Commission;

Regarding the Recommendation on the implementation of measures against tax treaty abuse, the Council:

17. NOTES the recommendation from the Commission to ensure that the implementation of OECD BEPS recommendations on Actions 6 and 7 is compliant with EU law;

18. REITERATES the importance of taking concrete and coherent action against double non-taxation through tax evasion or avoidance via the operation of double tax conventions, in line with the competence of Member States in negotiating double tax conventions bilaterally and the principle of subsidiarity;

19. WELCOMES the proposed provisions with regard to a principal purpose test and permanent establishments to be included in bilateral tax treaties agreed by a Member State, while ACKNOWLEDGING that bilateral tax treaties remain the competence of the Member States and that other measures elaborated in the context of OECD BEPS Action 6 may be helpful, such as limitation on benefits (lob) clauses.

Press contacts
François Head
Press officer
+32 22816083
+32 475953807

Download as pdf http://www.consilium.europa.eu/press-releases-pdf/2016/5/47244641250_en.pdf


https://www.oxfam.org/en/research/netherlands-tax-haven?utm_source=oxf.am&utm_medium=ZXqj&utm_content=redirect
The Netherlands: a tax haven
The undisputed European champion in facilitating corporate tax avoidance
24 May 2016

The Netherlands is a top EU tax haven for corporations, an Oxfam analysis of European Commission data shows. Of 33 harmful tax practices listed by the EU executive, 17 were identified in the country currently holding the EU presidency.

With its tax policy, the Netherlands perpetuates poverty and extreme inequality in the world – a world in which the richest 62 people now own as much as the poorest half of the global population. It is also thanks to Dutch regulation that multinationals are able to avoid at least USD 100 billion in taxes in developing countries every year.

This English translation is a summary of an Oxfam Novib report in Dutch. Read the full report in Dutch.

Permalink: http://oxf.am/ZXqj

The Netherlands: a tax haven https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/netherlands-taxhaven.pdf
Read the full report in Dutch. http://www.oxfamnovib.nl/Nederland-Europees-kampioen-in-faciliteren-belastingontwijking.html


http://www.greens-efa.eu/en/article/news/the-role-of-the-united-states-as-a-tax-haven/
The role of the United States as a tax haven
Catherine Olier, Brussels, 11.05.2016

New Greens/EFA research looks at implications for Europe

On the same week of the publication of the Panama Papers’ database by the International Consortium of Investigative Journalists, providing a useful resource to track shell companies often created with the objective to evade taxes or launder dirty money, the Greens launch a new report on why the United States are becoming the biggest tax haven on the planet.

Greens/EFA report: The role of the US as a tax haven and the implications for Europe

At the heart of the Panama Papers scandal was how Mossack Fonseca, a law firm based in Panama, helped its clients create shell companies in more than 20 tax havens in order for them to hide from the authorities behind a smoke screen. Many countries in the world are very lax when it comes to checking who the real physical persons behind a company or a trust are – an essential feature though to ensure that these entities have a legitimate purpose and are not just meant to hide the proceeds of illegal activities. But tax havens are not as exotic as one could imagine.

Actually, according to our research, the U.S. is becoming one of the biggest tax havens, precisely because its legislation has loopholes when it comes to knowing who owns and control companies. The U.S. is a major financial centre but the transparency of its legal framework is not consistent with the responsibility involved in being a major financial hub. Indeed, an investigation in 2012 found that creating an anonymous shell company is easier in the U.S. than in the rest of the world and states like Wyoming, Delaware and Nevada are among the most likely to supply untraceable shell companies to foreign clients. New measures announced by President Obama last week to increase financial transparency are not ambitious enough (and will – for some – require Congress’ approval) to close the current gaps in US laws, which allow bad actors to deliberately use U.S. companies to hide money laundering, tax evasion and other illicit financial activities.

In addition to these loopholes, the U.S. hasn’t fully committed to automatic exchange of tax information with other countries, according to the new international standards developed by the Organisation for Economic Cooperation and Development (OECD). Instead, the U.S. decided to sign a series of bilateral agreements with namely European countries but the exchange of tax information is not done through an equal partnership. Our research found that EU countries have to provide more tax information to the U.S. than this country is sending to Member States. This can create a strong incentive for those trying to hide from tax authorities to move their assets to the U.S., with less chance to be reported to EU authorities.

On this basis the paper makes a series of recommendations, including calling on all countries to create public registries of beneficial owners. This is a topical request, just ahead of the London Summit on anti-corruption organised tomorrow by the UK. One of the key demands indeed for this Summit is to ensure that the UK will pressure its overseas territories to commit to implement public registries for companies.

Another recommendation is the request for the European Union to carefully screen the U.S. when they will elaborate their common European blacklist of tax havens (expected for the Summer). Determining who is a tax haven or not should not be a political exercise but a thorough analysis based on objective criteria. Should the U.S. not meet basic standard of transparency and cooperation, the EU should seriously consider including the U.S. on its upcoming blacklist of tax havens.

From May 17 to May 19, a European Parliament delegation from the Special Committee on Tax Rulings (TAXE2) will visit the U.S. to exchange with stakeholders on U.S. tax legislation and on-going reforms. We will make sure to relay our new findings to U.S. authorities and call for the United States to start applying decent tax transparency standards, given the role the country plays in the global economy.

Catherine Olier, Brussels, 11.05.2016
Tax Justice Campaigner
Phone Brussels
+32 2 284 4008


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