Awareness Workshop

Tax Havens and Global Poverty

Why is tax good?

What does tax allow developing countries to do?

The 4 R’s:

Revenue (pay for schools, hospitals, roads)

Redistribute (get the rich to help the poor)

Re-price (make bad things expensive – e.g. tobacco)

Representation (citizens demand accountability when they pay taxes)

Tax Justice Network - http://taxjustice.blogspot.com/2007/07/four-rs.html

What is a tax haven?

3 defining characteristics:

Secrecy

Low tax or no tax

Allow foreign people/companies to get around the rules, laws and regulations of other countries

Treasure Islands, Nicholas Shaxton, Introduction – Welcome to offshore

Financial Secrecy Index 2009

1. State of Delaware (USA)

2. Luxembourg

3. Switzerland

4. Cayman Islands

5. City of London (United Kingdom)

6. Ireland

7. Bermuda

8. Singapore

9. Belgium

10. Hong Konghttp://www.financialsecrecyindex.com/2009results.html

World’s Top 10 Secrecy Jurisdictions

Tax Us If You Can

Video - http://www.youtube.com/watch?v=fuyMFWf2pfI

Two Major Issues

Corrupt individuals sending wealth offshore to tax havens

Profit shifting by multi-national corporations (MNCs) – a.k.a. transfer mispricing & re-invoicing

Tax havens enableboth of these

A Sense of Scale

0

50

100

150

200

250

USD(billions)per year

Christian Aid Report – Death and Taxes, May 2008World Bank Assessment - The Costs of Attaining the Millennium Development GoalsTax Justice Network – The Price of Offshore, March 2005Christian Aid Report – Death and Taxes, May 2008

• Global Aid Budget• Extra aid needed to achieve the MDGs• Tax lost on individual wealth held in tax havens• Tax lost due to profit-shifting by companies

103.750255160

USD(billions)per year

GlobalAid

BudgetExtra

for MDGs

Tax lostfrom

companyprofit-

shifting

Tax loston

individualwealth

Tax Haven Speed Dating!

Individuals – You want: your plans to be a success! to find the best deal! to not get caught!

Tax Havens – You want: to attract the individual’s money as much money as possible!

Terminology

Tax evasion – a crime

Tax avoidance – legal

Tax minimisation, asset protection, tax efficiency, tax mitigation, tax planning

– weasel words for tax avoidance

U2 – Going Dutch

Ireland used to have 0% tax for artist royalties

Law changed so U2 would have to pay 15%

Moved their base to the Netherlands where the rate is lower

U2 and Bono

Debt

Tax???

Aid

Profit shifting by MNCs

What percentage of all world trade happens between separate companies?

40%

60%

Within MNCs

Betweenseparatecompanies

Profit shifting by MNCs

Big Bananas, Small Tax

2006 - nearly $750 million worth of sales in UK Paid just $235,000 in UK tax combined

Sales

Tax

http://www.guardian.co.uk/business/2007/nov/06/19

Virgin

Moving its brand to from the UK to Switzerland

Increase “tax efficiency”

http://www.telegraph.co.uk/news/politics/8664446/Virgins-Swiss-move-is-blow-to-George-Osborne.html

What can we DO about it?

Put pressure on politicians to increase financial transparency

Put pressure on companies to pay their tax and act responsibly

Tell your friends about this issue!

What can we DO about it?

Campaign to End Tax Haven Secrecy

Christian Aid – Trace the Tax

Video - http://www.youtube.com/watch?v=_RerUK1735A

Country-by-Country Reporting

Big Corp’s Annual Accounts – now:

Turnover Profit

Home Country $50 million $5 million

International $100 million $20 million

Big Corp’s Annual Accounts – with CBC reporting:

Turnover Profit

Home Country $50 million $5 million

Mozambique $15 million -$1 million

India $45 million $0.5 million

Brazil $40 million $1 million

Cayman Islands $100,000 $19.5 million

Treasure Islands, Nicholas Shaxton, The Fall of America

The Big Four

KMPG Deloitte PricewaterhouseCoopers Ernst & Young

They determine accounting standards for the world’s companies

Next Workshops

Hopefully one in September

Oct 22nd – Linden - The Importance of Education

Nov 5th/19th – TBC – volunteer?

Dec 3rd – TBC – volunteer?

Tokyo Yamathon!

Saturday November 19th Need volunteers to help organise

and promote!

Image Credits

Flickr users:sektordua - http://www.flickr.com/photos/sektordua/201605420/ amagill - http://www.flickr.com/photos/amagill/3366720659/sizes/z/in/photostream/ phillip - http://www.flickr.com/photos/phillip/345829246/

salowphotography - http://www.flickr.com/photos/salowphotography/5641137120/

dplanet - http://www.flickr.com/photos/dplanet/94441582/

http://www.flickr.com/photos/u2005/538710392/

http://www.flickr.com/photos/worldeconomicforum/2215686523/

http://www.flickr.com/photos/worldeconomicforum/2218836696/in/photostream/

http://www.flickr.com/photos/daly3d/4603352127/