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Tax evasion and banking secrecy to top G8 agenda.

Summary: Belfast: Tax evasion and banking secrecy, hot topics and
top targets because of the financial …

Belfast: Tax evasion and banking secrecy, hot topics and top
targets because of the financial crises and austerity, could be the
focus of strong statements at the G8 meeting this week. The British
government, organising the meeting in Northern Ireland, has promised big
developments on the basis of substantial progress recently in clamping
down on evasion and bursting bank secrecy. But many observers from civic
bodies are pessimistic and say that the summit today and tomorrow will
amount to a lost opportunity despite the public outrage over recent
brazen cases at a time of tax rises and budget cuts. The tightening up
of tax systems across borders, and opening up information on how
businesses do their accounting across borders, are two of the burning
issues for Britain which is currently chairing the G8 (Group of Eight)
countries. The G8 comprises the United States, Japan, Germany, France,
Canada, Britain, Italy and Russia. British Prime Minister David Cameron
has prepared the way for the summit of heads and state and government by
stating the ‘ambition’ that the meeting at Lough Erne will
‘knock down the walls of banking secrecy’ with ‘concrete
measures’. French President Francois Hollande, badly bruised by a
recent scandal involving an admission by his budget minister Jerome
Cahuzac, also responsible for fighting tax evasion, that he had hidden
money abroad, has said: “Tax havens must be eradicated in Europe
and throughout the world.” The climate has turned strongly in
favour of tough action: pressure on these two fronts, which seemed to
have eased after progress in 2009, is again at a high pitch. First, a
new law in the United States, called Fatca, obliges all banks to provide
US authorities with all information they hold concerning all assets
owned by US taxpayers. Swiss banks Meanwhile, revelations by
journalists, known as ‘Offshore Leaks’, have further
strengthened the perception that no bank account can be considered
secret and that hidden funds are liable to exposure. The consequence of
this is that the gates of some strongholds of banking secrecy, such as
Switzerland, are beginning to give way. The European Union, in which
some countries have arrangements considered favourable to those seeking
to dissimulate funds, seems to be overcoming internal divisions and
trying to catch up with the United States, even though Austria and
Luxembourg still show some reticence. The G8 leaders are expected to
make strong statements calling for a “truly global system of
multinational information exchange”, according to a draft final
statement. But concrete measures appear unlikely. Cameron has opened a
second front to combat strategies by multinational companies to avoid
paying tax via transfer pricing and other techniques to generate costs
in high-tax countries and profits in low-tax countries or tax havens.
Public opinion in several countries, already inflamed by stories of tax
evasion and tax avoidance at a time of austerity, has been roused
further by revelations in the United States and Europe that
international brands such as Starbucks, Google, Amazon and Apple, pay
little tax in countries where they have high-volume business. In
Northern Ireland, the G8 leaders, all of whom are facing national budget
pressures, will support an action plan to be put forward soon by the
Paris-based Organisation for Economic Cooperation and Development. But
even under this programme, hard-hitting measures will have to wait,
mainly because of diverging interests. Sources in Paris which are close
to the talks said that “France is most interested in digital
issues” while “American negotiators are not particularly
enthusiastic.” One of the most sensitive matters concerns trusts
and other structures which can be used as legal shields to conceal the
identities of people with offshore activities and assets. Britain has
put transparency in this field on the agenda, saying that change is
needed also to help fight the laundering of illicit funds. Cameron, to
show goodwill, has also urged British crown dependencies and territories
such as the Cayman Islands and British Virgin Islands, reputed to be
flourishing tax havens, to join in and ramp up their cooperation against
evasion. However, the outcome of this appeal is unclear since some of
them, such as Bermuda, are reluctant to sign an agreement put forward by
Cameron. This could be a blow to the position taken by the G8.
Non-governmental organisations are calling for “public registers of
the owners and real beneficiaries of companies and other legal entities
offshore,” in the words of Mathilde Dupre, the coordinator of a
body called the tax and judicial haven platform. “This is a long
way away,” she said, noting that the draft final statement so far
referred only to vague “national action plans.” At the NGO
called One, founded by rock star Bono, Guillaume Grosso commented that
“in the field of registers, Cameron has been unable to turn
intentions into acts.” He held that the United States and Russia
had countered what would have been “the big step forward by the
G8.” Judging that this was “a missed opportunity”, he
said that “these issues could just be forgotten.”

Muscat Press and Publishing House SAOC 2013

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