Tax Havens causing poverty in developing countries like India

From Tax Justice Network:

Swiss Banking Secrecy: The End is Nigh - Get Over it!

The Swiss government continues to maintain its out-dated position on banking secrecy, but international tax lawyer Philippe Kenel, who also happens to head the Swiss Chamber of Commerce in Belgium and Luxembourg argues that this dogged unwillingness to recognise changing political realities will undermine the Swiss negotiating position. Interviewed in the Tribune de Gèneve, Kenel says:

"Switzerland's only chance lies with negotiating the end of banking secrecy while it still has some value. Judging by the speed with which banking secrecy is being eroded, acting once we have our backs up against the wall, would be tantamount to waiting to be shot down. By that stage there would be nothing we could receive in return."

Kepel also argues that the Swiss authorities should "immediately begin negotiations to move towards automatic information exchange (with the EU), pushing for a long-transition period in order to maximise the potential benefits." He goes on to suggest 2018 as a possible implementation date, arguing that a long lead-in time would allow Swiss banks and their customers ample opportunity to adapt to the changed situation. Call us impetuous, but we think that eight years is way, way too generous to both the banks and their customers: what is being proposed does not require a massive technological or administrative leap, and there is no justification for such a long delay.

Elsewhere, in SwissInfo, TJN's Markus Meinzer counters claims that automatic information exchange infringes on personal privacy: "Already with the [current system of] exchanging information on demand, information can only be transferred to public authorities that are involved in tax administration and tax justice. A citizen cannot obtain the data."

By adopting automatic information exchange as the model for its relations with the EU, Markus argues,Switzerland would contribute to combating harmful global tax competition and also strengthen the legitimacy of its criticism of the secrecy space provided by trusts and shell companies in other jurisdictions. This is an important point: the current Swiss pleadings ring hollow, suggesting to the detached observer that the Swiss have no real interest in improving the framework for international cooperation, instead pointing fingers at others to stall progress. This is unlikely to strengthen Switzerland's negotiating hand with the EU, and it sure as heck won't improve Switzerland's already tarnished international reputation.

By now even the most backwards of the cantons should have recognised that the end of banking secrecy is nigh. The only honourable way forward is to negotiate a speedy transition to fully automatic information exchange, and to join forces with governments and civil society organisations that are campaigning to put an end to other forms of secrecy, including trusts and treuhand.

TRUTH SHALL ALWAYS PREVAIL

Milap Choraria Editor: Suchna Ka Adhikar / RTI TIMES

National Convenor : Movement for Accountability to Public (MAP)

http://milapchoraria.tripod.com/msp

'India gets leg into Bermuda tax havens'

Q&A: Jeffrey Owens, Head (taxation), OECD

Rohit Bansal of Business Standard

For Jeffrey Owens, head of taxation at Paris-based Organisation for Economic Cooperation and Development (OECD), India concluding its first-ever tax information exchange agreement (TIEA) with Bermuda is a major victory in the battle against tax evasion. The agreement, which was concluded during the visit of Bermuda premier Ewart Brown, enables India to conform to the OECD standards on sharing tax information. The Cambridge-educated economist had played a key role in getting the G-20 to move on this front at the London Summit last year. Owens, who was in New Delhi recently for a meeting of the Steering Group of the Global Forum on Transparency and Exchange of Information for Tax Purposes, spoke to Rohit Bansal of India Strategy Group. Excerpts:

What has been India’s role in the counter-attack against tax havens?

India, which is both a member of the Global Forum’s Steering Group and a vice-chair of its Peer Review Group, has played an active role to ensure that high standards of transparency and exchange of information are in place throughout the world to prevent tax evasion from depriving governments of resources for development.

What came out of the New Delhi meeting?

The Steering Group, which guides the work of the Global Forum, considered the core documents required to launch the peer review process. It also examined the progress of the Global Forum on the mandate given to it by the G-20 in November 2009. Besides OECD, the meeting, chaired by Australia, was attended by the US, Japan, China, the UK, Germany, France, South Africa, Brazil, South Africa, Singapore. Bermuda and the Cayman Islands.

What is the state of play in India regarding TIEAs?

India has been at the centre of the Global Forum’s work to build the peer review process. Your finance minister, in his welcome message to the Steering Group, committed to the Global Forum’s work and our ability to capture the needs of the developing countries. Indeed, as he said, tax plays a crucial role in helping developing countries mobilise their domestic resources and enforcing high standards of transparency. Exchange of information will be an important part of this strategy.

How far has India progressed on TIEAs?

I was informed that India has concluded its first TIEA complying with OECD standards. We understand that the announcement of this first agreement with Bermuda is now just a matter of days. We have been told that one more TIEA is to follow soon.

Bermuda accounts for a significant part of foreign direct investment into India. Some banking investments there have been cited as controversial.

A tax information exchange agreement will give OECD-mandated exchange to Indian tax authorities and their requests in cases of special inquiries will be better equipped to tackle tax evasion.

Critics argue that one agreement at a time allows evaders all the time in the world to move their money.

Three hundred such agreements have been signed in the last one year. That’s a huge movement from where we were. OECD believes that the era of banking secrecy has begun to end. India, too, will benefit when a web of such treaties is available.

What about results?

Expect the first results by the year-end.

But the Swiss decision to walk off on the treaty with France...

We refuse to be discouraged by this.

How important is the role of non-OECD countries?

It is encouraging to see large developing economies like China, India, South Africa, and Argentina making progress. Developing countries will play a lead role in this exciting development that potentially unleashes the incentive for honest people to pay taxes.

But the “upper club” can simply move its money around.

Yes, the “upper club” has many options to move around, but as more and more jurisdictions enter into these agreements, very few out are choosing to remain ostracised.

How can India maximize benefits from TIEAs?

We are impressed by the investments being made by India in upgrading its revenue staffing and resourcing to reap the benefits of the OECD gold standards. We also expect that India will use the provisions to upgrade its double taxation avoidance agreements, specially those where a review otherwise is potentially difficult.

What next?

The next priorities are speeding up the negotiation process, enhancing the engagement of developing countries and implementation of the agreements. These will start happening when the peer review process starts.