18 February 2015

British Labour Party threatens viability of financial sector of UK Dependencies


Miliband tells tax havens: open your books in six months

 - or face being blacklisted


Ed Miliband tonight warns the tax havens costing British families and businesses billions of pounds that they will have just six months to put their house in order and open their books - or face being placed on an international blacklist. 

He will highlight figures showing that despite David Cameron boasting more than 18 months ago that he had forced tax havens to open up, not one of the tax havens linked to Britain as Overseas Territories or Crown Dependencies have yet delivered on Cameron’s promise that they would publish a register showing who owns the companies registered there – and some have explicitly refused to do so.

The lack of leadership shown by the UK government has frustrated and slowed the pace of reform on tax avoidance across the world.

In a letter to heads of government, he will serve notice on them that that under the next Labour government they will have six months to publish publicly accessible central registers of beneficial ownership.

If they fail to meet this deadline, the next Labour government will withdraw the protection they get from international scrutiny and ask the Organisation for Economic Co-operation and Development to place them on its tax haven blacklist.

In an interview with the Guardian newspaper, Ed Miliband said:

“More than 18 months have passed since David Cameron promised to shine a light on the tax havens in UK overseas territories and Crown Dependencies – and their affairs are still shrouded in darkness. That may be good enough for him, but it will not satisfy me, or the incoming Labour government

“There is nothing pro-business about defending tax avoidance. The United Kingdom has a responsibility to open up the Overseas Territories and Crown Dependencies which are held responsible for so much tax secrecy and avoidance.

“And it is costing everyone who relies on our schools, our hospitals, our roads and our railways. It is costing everyone who pays their fair share of taxes, including millions of British businesses.

“Billions of pounds is being siphoned off into tax havens where our authorities cannot discover even the true ownership of firms registered there, let alone the scale of wealth hidden away. 

“Today, I am putting these tax havens on notice that they will have just six months to open up their books or face international sanction.”

(Ends)

Policy detail:

1. A publicly accessible central register of beneficial ownership is a register you can go to which tells you who is the actual owner of a company – in the sense of who benefits financially when that company makes money. Such a registry is already being set up in mainland UK.

2. Registers in Overseas Territories and Crown Dependencies would help stop or stem tax avoidance by showing the tax authorities who is diverting money into companies in these havens and where the money of UK taxpayers is going. At the moment, they can’t even check whether someone has set up a company in the tax havens, let alone whether any money is being diverted into that company.

3. The OECD is the guardian body for international tax rules. It has a list of uncooperative tax haven which low tax jurisdictions can be placed on depending on the transparency of their tax affair. Rather than protecting UK Overseas Territories and Crown Dependencies as we do now, we would act as whistle blowers, making a formal request to the OECD that they should be added to the blacklist.

4. The UK tax gap - the difference between what HMRC thinks it should collect and what it gets - has risen under David Cameron to £34bn

5. Overseas Territories and Crown Dependencies are under the jurisdiction and sovereignty of the UK, but are largely autonomous. The G20 has produced a list of potential measures that could be taken against black-listed countries which could include reviewing tax treaties with them, increasing disclosure, and even withholding taxes on finance flowing there.

Labour has already promised the following action on tax avoidance, set out in the paperDelivering Long-term Prosperity – Reform of the Business Taxation published by Ed Balls MP and Shabana Mahmood MP:

· Take the lead on tax transparency. A multilateral agreement on enhanced corporate reporting of tax liabilities in different jurisdictions would enhance transparency and reduce the risk of companies intent on avoiding tax relocating to territories with less exacting disclosure requirements. Nevertheless, even if international agreement is not forthcoming, we will work with business to create a disclosure regime that will increase transparency about what taxes are being paid and where, and bolster public confidence that companies are contributing their fair share. Furthermore, we will force UK Overseas Territories and Crown Dependencies to deliver on their promise to make the names of e beneficial owners of companies based in their jurisdictions publicly available, and extend this to trusts.

· End Exploitation of the Quoted Eurobond Exemption. A Labour Government will make it harder for companies to shift profits off-shore by addressing tax loopholes such as the Quoted Eurobond Exemption. HMRC themselves have identified the problem, but have failed to act. Those businesses legitimately using the exemption to obtain finance from international bond markets would be able to continue to do so. But those who use it as a loophole to move profits to connected companies in tax havens will be prevented from doing so.

· Tackle dormant companies. It has been estimated that 30% of all UK companies are not asked to submit tax returns. One explanation given is that these companies are either dormant or not liable to tax in the UK as they are exclusively trading overseas. Once companies have declared themselves to be dormant, there is an exemption from filing a Corporation Tax return for five years. For some companies, this five year window could be an opportunity to trade with tax impunity. Labour will require the annual confirmation of dormancy and explore the possibility of banks automatically informing HMRC when there is activity in supposedly-dormant accounts.

· Encourage stronger independent scrutiny of the tax system and the government’s efforts to tackle tax avoidance. Labour will affirm and strengthen the powers of the National Audit Office to scrutinise tax reliefs and, in particular, where they are abused to avoid tax. The Chancellor and the Chief Executive of HMRC should also be expected to give evidence to the Treasury Select Committee each year on the Government’s efforts to tackle tax avoidance and evasion and the progress made on reducing the tax gap.

· Ensure developing countries are fully involved in international efforts to tackle tax avoidance such as the OECD’s Base Erosion and Profit Shifting project. Too often, the developing countries that are directly harmed by tax avoidance – such as stripping profits out of countries where natural resources are extracted – do not have a seat at the table when decisions are made on global reforms.

· Combat disguised employment in the construction industry. We will finalise the proposals which we were developing in government to deem construction workers as employed for tax purposes if they meet criteria which most people would regard as obvious signs of employment.

· Ensure HMRC has the expertise it needs to work effectively. It is crucial that HMRC’s specialist investigation, enforcement, compliance and anti-avoidance units have the expertise they need if we are to reduce the tax gap. We will make sure that resources in HMRC are deployed more efficiently: for example, by liberating resources currently tied up in administering the Government’s “shares for rights” scheme.

· Bring in tough penalties for those who are caught by the General Anti-Abuse Rule (GAAR). At the moment those who are caught using abusive avoidance schemes under the GAAR only have to pay back the tax which they should have paid anyway. This is because the government failed to back up the GAAR with proper penalties. The GAAR introduced by this government is too weak to properly deter tax avoidance because there is no disincentive for those trying to game the system. Labour would introduce fines of up to 100 per cent of the value of the tax which was avoided through abusive schemes. This will ensure a genuine deterrent to aggressive tax avoidance with fines which can make those who use abusive avoidance schemes pay back twice the sum they avoided.

__________________________________________________



Turks and Caicos Premier blasts British Opposition leader on ‘tax haven’ statements


Mon, Feb 16, 2015

PREMIER Rufus Ewing has called out United Kingdom Opposition Leader, Edward Miliband for published statements he recently made regarding the TCI being a tax haven.

Miliband is reported in the UK press as stating that the UK overseas territories (OT) are not complying with UK directives on beneficial ownership of companies and public central registries of such.

In a statement to the press on Tuesday (February 10), Ewing stated that as Premier of the Turks and Caicos Islands, he is yet to receive or have sight of any correspondence from the UK Labour leader in respect of this subject at hand or any other subject.

The release continued: "However, I note the letter of Chief Minister Picardo of Gibraltar to Mr Miliband and wish to align, in most parts, the Turks and Caicos Islands’ position with that of Gibraltar’s Chief Minister, and that of the overseas territories that stand in solidarity on this issue.”

Ewing stated that the TCI Government takes exception to the statement made by Miliband, in referring to the jurisdiction as a "tax haven”.

He added that the TCI is a well regulated and compliant financial services jurisdiction that has complied with the FATF Standards, Global Forum Standards and have signed numerous Tax Information Exchange Agreements (TIEAs), including the US-FATCA, UK-FATCA and multilateral agreement on automatic exchange of information in Berlin on 29 October 2014, among numerous others agreements.

He further noted that the Islands, represented by the Deputy Premier in June 2014 along with other UK OT leaders, supported prime minister David Cameron during his presidency of the G8 as the United Kingdom made commitments to improve transparency of information to combat tax evasion, money laundering and financing of terrorism.

"Prime Minister Cameron acted on his commitment and is progressing the establishment of a publicly available central registry of beneficial ownership of companies in the UK and is encouraging all of the UK OTs, which, Cameron emphatically stated are not tax havens, to follow suite,” Ewing said.

He added that the TCI has since devised an action plan and conducted a public consultation on the issues of maintenance of legal and beneficial ownership information and the establishment of a central or public register of beneficial ownership information.

This consultation was recently concluded and Cabinet has reviewed the results, the Premier said.

He stated that it is the position of the TCI that it will continue to comply with all of the global standards as issued by FATF, Global Forum, AML Directives, G20 Principles and will continue to improve systems, in ways that support sound business growth locally and globally.

However, he added, until such time as there is global agreement on appropriate exemptions and safeguards, and a public central registry becomes the internationally practiced standard, the TCI will continue to follow its current regime.

He said: "Perhaps it would have been more helpful to these Turks and Caicos Islands and other overseas territories for the Labour leader to have sought an audience with the leaders of the overseas territories during our many visits to the UK.

"The most recent being for the purpose of the Joint Ministerial Conference meeting during which meeting, the issue of beneficial ownership was of key debate.”

Ewing said that such an engagement would have allowed Miliband to familiarise himself with OT’s jurisdictions, and perhaps he might have discovered that the OTs are not tax havens as he accuses, but, in fact, well and better regulated financial services jurisdictions than many larger jurisdictions.

Miliband would have then been in a better position to more appropriately inform his party’s manifesto in support of assisting the TCI and other OTs economies, as one would expect of responsible leadership, rather than utilising out-dated and damaging descriptions that undermine the strident efforts made by OTs to date to meet and in some cases surpass internally accepted standards.

The Premier added that the TCI is committed to support and implement any global transparency initiatives and directives that will combat tax evasion, money laundering and financing of terrorism.

He added that discussions are welcomed with the UK as a part of the solidarity partnership among OTs on the eventual maintenance of a central registry, but this will be done cautiously and with sober thought to the appropriate level that the information should be made public.

"We must ensure that we are supporting law enforcement agencies and thwarting criminals, all while ensuring the sustainable growth and development of the Turks and Caicos Islands and the protection of the fundamental constitutional rights and privacy of the law abiding citizens and clients we serve.”


No comments: