Law firm’s founders among those to face money laundering charges after leak of 11.5m files in 2016
A criminal trial of 27 employees working for the law firm at the heart of the Panama Papers on money laundering charges has commenced in a Panamanian court.
Eight years ago, leaked financial records from the law firm Mossack Fonseca sparked international outrage at the use of offshore companies by wealthy individuals to commit tax fraud and hide assets.
Continue reading...Exclusive: Westminster looking at compulsory purchase orders to tackle laundering of ‘dirty money’
Homes acquired with “dirty money” in the richest parts of London could be seized and turned into affordable housing under plans to crack down on oligarchs using Belgravia, Knightsbridge and Mayfair “to rinse their money”.
Labour-controlled Westminster city council is examining the use of compulsory purchase orders in extreme cases where it finds properties are not being used for their stated purpose, as part of a push to “combat the capital’s reputation as the European centre for money laundering”.
Continue reading...Hilda Heine calls for investigation into Chinese couple’s alleged efforts to bribe officials to help set up tax haven
A former president of the Marshall Islands has called for an investigation into an alleged plot by a Chinese couple to establish a mini-state inside its borders and set it up as a lucrative tax-break haven.
The pair were charged by US prosecutors with bribery and money-laundering offences over a “multi-year scheme” that included establishing a non-governmental organisation, allegedly bribing five Republic of the Marshall Islands (RMI) officials and attempting to bribe a sixth. One of the five was allegedly given cash to bribe others into supporting the carving out of a Hong Kong-style territory.
Continue reading...Amanda Melling’s visit follows fears UK tax havens may offer loophole for those trying to avoid clampdown
A Foreign Office minister has flown to the British Virgin Islands (BVI) to hold urgent discussions on how sanctions against Russian oligarchs with cash stored in the secretive islands can be implemented, amid fears. UK tax havens may provide a loophole for those trying to escape the international clampdown.
Amanda Milling’s visit follows news that a succession of oligarchs appeared to have hidden their assets in trusts based in the BVI in a bid to put them beyond reach of UK sanctions. British sanctions laws apply in the overseas territories, and enforcement officers are supposed to have full access to registers of beneficial ownerships.
Continue reading...Analysis: against the backdrop of the invasion of Ukraine, Kwasi Kwarteng announces clean-up measures
Britain has long been a haven for people of negotiable integrity to stash their cash, often via property deals made with the help of an army of lawyers, PR advisers and bankers.
Not only are super-mansions in London and the home counties a safe bet from an investment point of view, but the ability to disguise ownership via a labyrinthine network of shell companies offers a degree of anonymity to those who prefer their financial dealings to remain secret.
Continue reading...Territory’s financial sector risks reputational damage and diplomatic sanctions if complex regulations of crypto hub fail
On the southern Mediterranean coast, nestled in the shadow of the Rock’s sheer limestone cliffs and its tangle of wild olive trees, the Gibraltar Stock Exchange (GSX) is quietly preparing for a corporate takeover that could have global consequences for the former naval garrison.
Less than half a mile away, next to the blue waters of Gibraltar’s mid-harbour marina, the peninsula’s regulators are reviewing a proposal that would prompt blockchain firm Valereum to buy the exchange in the new year – meaning the British overseas territory could soon host the world’s first integrated bourse, where conventional bonds can be traded alongside major cryptocurrencies such as bitcoin and dogecoin.
Continue reading...Exclusive: Deal is part of north-east regeneration scheme developed by property tycoons David and Simon Reuben
HM Revenue and Customs has struck a deal to relocate tax officials into a new office complex in Newcastle owned by major Conservative party donors through an offshore company based in a tax haven, the Guardian can reveal.
The department’s planned new home in the north-east of England is part of a regeneration scheme developed by a British Virgin Islands (BVI) entity controlled by the billionaire property tycoons David and Simon Reuben.
Continue reading...Tax havens cost governments at least $245bn a year in lost revenue – and many of these havens are British. In fact, the country is leading the world in hiding legitimate money and laundering dirty cash. So how did we get here, and how has Britain managed to preside over a third of the world's lost taxes?
Continue reading...Analysts question if Dublin’s reputation as a leading tech hub could be undermined by new 15% tax rate
Ten years ago Dublin was nicknamed Silicon Valley’s “home from home” with tech superstars including Mark Zuckerberg and Elon Musk queueing up to snap up office space, avail themselves of local Irish hospitality and low tax.
But while the decision of Google, Facebook, Yahoo, LinkedIn, eBay, Amazon and more recently TikTok to locate their European headquarters in the Irish capital helped cement its reputation as one of the region’s leading tech hubs, questions are now being asked about whether they will stay.
Earlier this month Ireland signed up to landmark reforms for a global minimum corporate tax rate of 15%, up from the current level of 12.5% set by Dublin, in the biggest shifts for the country’s tax system in almost 20 years.
Some analysts argued the nation’s economic model could be badly undermined, while the Irish finance minister, Paschal Donohoe, said earlier this year that up to €2bn (£1.7bn) a year in tax revenue could be lost by 2025. However, there are hopes the changes might not prove as existential as they first seem.
“In the short to medium term, no, there won’t be an exodus, the change from 12.5% to 15% is not that significant,” said Seamus Coffey, an economist at University College Cork and former chair of the Irish Fiscal Advisory Council.
Ireland had played hardball in global tax talks taking place between 140 countries at the OECD in Paris, following almost a decade of failure among world leaders to agree reforms that would equip the taxation regime for the digital age.
Dublin refused to join an accord earlier this year, and only relented earlier this month at the 11th hour of negotiations after securing a key concession – earlier plans calling for a minimum rate of “at least” 15% were dropped, giving the government more certainty that it would not be ratcheted higher in future.
However, the reality is that many big tech firms never paid the 12.5% headline rate set by Ireland in the first place.
A Bloomberg investigation in 2010 showed how Google had cut its overseas tax rate to just 2.4% using an aggressive avoidance scheme dubbed the “Double Irish, Dutch sandwich” to effectively shuffle revenues made across Europe offshore to places like Bermuda, where the tax rate was zero.
Those schemes were outlawed in 2015, giving companies five years’ notice to comply.
However, while such arrangements undoubtedly helped attract Google and Facebook to Ireland in the noughties, they were merely the latest in a wave of more than 1,500 foreign firms – 800 of them American – lured in by the low-tax ethos of the country’s Industrial Development Agency since its foundation in 1949.
Before them IBM, Intel, Pfizer and Apple were shown the red carpet. For at least a decade Allergan has been making the world’s supply of Botox in Westport, County Mayo, on the country’s windswept Atlantic coast.
“The low tax rate started in the 1960s at zero and then went to 10%,” said Coffey. “The point of it was never to generate corporate tax revenue, but to use relatively low corporate tax to attract the companies to set up in Ireland and let them build big factories and facilities. And then we have employment.”
There are other factors tempting in multinationals. Chinese-owned TikTok set up its Dublin HQ in 2018 long after the writing was on the wall for the tax avoidance loophole.
“Young companies focus on things that will either kill them or help them scale in the near future. Corporate tax isn’t one of them,” said Stephen McIntyre, former head of Twitter in Ireland and a partner in Frontline Ventures, a venture capital firm in Dublin and London set up to help US tech firms expand in Europe.
Joe Biden and the OECD want to promote this idea of competing on grounds other than tax, viewing the reforms as ending the “race to the bottom” between countries.
Western politicians seem complacent about or complicit in the iniquity of hidden wealth
It was a classic TV doorstep. After doing the morning media round, Boris Johnson emerged from a booth and set off with his minders across the main hall of the Conservative party conference in Manchester. What was his reaction to the Pandora papers?
And would the Tories be giving back the money they had taken from certain donors?
Continue reading...Tech titans came to Ireland for its tax lures – but may now stay despite Dublin’s agreement to raise its rates
Ireland has dropped its low-tax policy after months of wrangling over the fine print of an Organisation for Economic Co-operation and Development (OECD) agreement to operate a 15% minimum tax rate in more than 130 countries.
Why was Ireland key to a deal on taxing multinationals?
Continue reading...Low-tax policy of past 18 years had attracted multinationals such as Google and Facebook to Dublin
Ireland has dropped its cornerstone low-tax policy of the past 18 years, which helped persuade some of the world’s biggest companies, including Google and Facebook, to site their European headquarters in Dublin.
The decision comes after months of wrangling over the fine print of an Organisation for Economic Co-operation and Development (OECD) agreement to operate a 15% minimum tax rate in more than 130 countries.
Continue reading...Almost 140 countries understood to be in final OECD talks on measures to stop firms moving profits to tax havens
Almost 140 countries are edging closer to a global deal on the taxation of multinationals, with agreement on a minimum 15% rate of corporation tax set to be announced as part of a landmark statement at the OECD in Paris on Friday.
Governments representing more than 90% of the world economy are understood to be in the final stages of talks on a global minimum rate and other measures designed to stop multinationals shifting profits into tax havens.
Continue reading...Barclays and HSBC among banks booking money equivalent to 14% of annual profits in offshore entities
Leading European banks are booking around €20bn (£17bn) a year – equivalent to 14% of their total profits – in tax havens, with Barclays, HSBC and NatWest Group among those enjoying the lowest tax rates, according to a new report.
The figures emerge from an analysis, conducted by the EU Tax Observatory, of 36 big banks required to publicly report country-by-country data on their activities.
Continue reading...Finance chiefs endorse landmark move to prevent profits being shifted to low-tax countries
Finance chiefs of the G20 economies have endorsed a landmark move to stop multinationals shifting profits to tax havens and will also warn that Covid variants threaten the global economic recovery.
At talks on Saturday, they also acknowledged the need to ensure fair access to vaccines in poorer countries. But a draft communique to be rubber-stamped at the meeting in Venice did not contain specific proposals on how to achieve that.
Continue reading...EU directive on Joe Biden’s proposal for 15% tax rate on multinationals would require unanimous support
Cyprus could veto the EU’s adoption of Joe Biden’s proposal of a global minimum corporate tax rate, the country’s finance minister has suggested.
A White House proposal of a 15% tax rate for multinationals applied to profits in all jurisdictions is expected to be endorsed in principle by finance ministers of the world’s seven largest economies, the G7, at an upcoming meeting in Cornwall.
Continue reading...Microsoft Round Island One is ‘tax resident’ in Bermuda, with no employees except directors
An Irish subsidiary of Microsoft made a profit of $315bn (£222bn) last year but paid no corporation tax, as it is “resident” for tax purposes in Bermuda.
The profit generated by the company, Microsoft Round Island One, is equal to nearly three-quarters of Ireland’s entire gross domestic product (GDP) – even though it has zero employees.
Continue reading...Meetings of finance ministers follow change in US stance, with consensus growing on tackling tax avoidance
G20 finance ministers are exploring a global minimum tax on corporate profits, amid growing international consensus on tackling avoidance after the pandemic.
The virtual meetings between the group of 20 major industrial nations come after the US made the case for an international base rate this week, in a move by the Biden administration to end US resistance to international tax reforms.
Continue reading...UK overseas territories such as Cayman Islands also may lose protection once afforded by UK’s EU membership
The European parliament is pushing for UK overseas territories including the British Virgin Islands, Guernsey and Jersey to be added to an EU tax havens blacklist after the conclusion of the Brexit deal.
Sending a signal that tougher action on tax avoidance was required in response to the coronavirus pandemic, MEPs voted overwhelmingly in favour of adding more nations and territories to the list of non-cooperative jurisdictions.
Continue reading...Announcement follows years of tax evasion scandals involving BVI shell companies
The government of the British Virgin Islands has finally committed to introducing public registers of beneficial ownership for companies incorporated in the tax haven.
The announcement, made in the islands parliament, comes in the wake of years of tax evasion and money laundering scandals, in which shell companies incorporated in the territory regularly played a central role.
Continue reading...