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Tax justice news

Jun 27

Written by:
27/06/2016 09:57  RssIcon

From the latest issue of Ethical Consumer magazine

The much-touted Anti-Corruption Summit took place last month, which was attended, in the former Prime Minister’s words, by some “fantastically corrupt countries”, including the UK. The summit had been billed as a major event “aimed at stepping up global action to expose, punish and drive out corruption in all walks of life” but turned out to be somewhat of a damp squib.

 

Campaigners from War on Want demonstrate over tax avoidance during the summit.

 

Representatives of tax havens would have found it useful that the summit focused solely on crime and not on the systemic issues that allow corruption to flourish and that undermine global trade and trust. Transparency was discussed but many tax havens said they would only exchange information with tax authorities and law enforcement agencies. This would mean that any claims made by tax havens will continue to be unverifiable by the general public.

On the whole, very little happened.

Certain measures that had already been announced were re-announced, such as the intention to share beneficial ownership data (excluding Guernsey and the British Virgin Islands). Although nothing was said about how the UK would verify the data it received. It was also re-announced that the UK would require declarations of the beneficial ownership of companies owning property in the UK, but again omitted details about how this would be enforced.

Another positive point was that the rules on disclosure will be extended to public sector contractors. This means that the whole process of awarding public sector contracts – from the bidding right through to the building – will be visible to the public for the first time.4 But tax expert and campaigner Richard Murphy believes that limiting this disclosure to contracts over £10 million, as set out in the Government’s paper on beneficial ownership transparency, is too high a bar, as it would only cover the big four (Atos, G4S, Serco and Capita) and major infrastructure projects, and would exclude many smaller public sector contracts.

The summit also shone a spotlight on the role of the US as a secrecy jurisdiction, as leaders from the Isle of Man and the Cayman Islands accused the US of ‘hypocrisy’ for criticising tax havens while maintaining low-regulation states of its own, such as Delaware and Wyoming. Of course, the UK’s position as a prime enabler of corrupt money flows was also centre-stage after the Panama Papers in April revealed that many of the 200,000 shell companies included in the leak were located in British overseas territories and crown dependencies. The British Virgin Islands alone held around 100,000 companies.

“If there is progress then it is not because of what was announced, but the opportunities that the Summit provided to highlight issues”, said Richard Murphy. “What you can be sure of is that this issue is not going away.”

 

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