Talk for Article "UK anti-corruption drive rests on offshore enablers"

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    I think it can be useful to look at the history of hiding wealth and avoiding taxes.

    All of this is very far from new!

    Firstly, concealing wealth and avoiding specific taxes is not always illegal, or immoral.

    For example, hiding something of value from hostile invaders, such as the ancient Romans or the Nazis. Avoiding double-taxation or punitive taxes that only exist to generate some easy money for a government.

    Of course, some of these activities are illegal and blatantly immoral, e.g. completely avoiding tax, hiding bribes, etc.

    But, British tax havens, and secrecy jurisdictions only exist because the UK government intentionally allows this.

    And, they allow it along with money laundering to some extent because they would sooner have that value sitting in British banks, than in some other country’s banks. That means its all British money that is likely to be spent and invested within the British economy, and eventually taxed in some way.

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      Indeed tax evasion and money laundering are not new. Nor is the complicity of governments in the facilitation of money laundering. You are right about governments preferring to have the money in “their” banks which is why the British welcome, for example, the Russian oligarchs.

      But if that money was stolen, as the proceeds of oligarchs bank accounts are, is the British government any less complicit in the suffering caused by the impoverishment of Russians than they are when they support, subsidised and encourage British companies to sell deadly arms to Saudi Arabia to kill people in Yemen?

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    It is not only illegal activity on which British Overseas Territories thrive but legal “laundering” too. With the complicity of successive British governments both illegal and legal financial activity helps to deprive not only the British Exchequer but most countries of billions in tax revenues. The British government is belatedly requiring more transparency to curb illegal activity but is doing nothing to stop multinational corporation avoiding tax, quite legally, by booking transactions through these tax bolt holes.

    “Transfer pricing” is where, for example, a British company has, say, a refrigerator made in China for sale in the UK. The fridge first “sold” to a company in the British Virgin Islands and the company books a profit that is subject to little or no tax. The fudge is then sold by the BVI company into the UK where the holding company books little or no profit so that it is not subject to British taxation.

    A glance at the annual reports of any international trading company will show the subsidiaries registered in British tax havens. Action Aid has campaigned to curb these practices that have been unchallenged for years.

    See https://www.actionaid.org.uk/about-us/policy-and-research/tax-justice

    What Actin Aid does not draw attention to is the lobbying power of companies that are close to government (fund political parties) that are the most rampant users of transfer pricing.

    President Donald Trump’s recent tax changes have made such, legal, tax avoidance by US domicile companies less worthwhile which is why corporations like Apple are repatriating huge sums to the US that they have held offshore to avoid paying US tax. Apple is an astonishing example – it borrowed money inside the US to pay a dividend because it did not want to bring any of its offshore pile of money into the US and pay tax on it.

    My guess is that the illegal activities of oligarchs is probably dwarfed by the legal process of transfer pricing and other activities that legally reduce corporate tax.

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      I think you’re almost certainly right that the money lost to governments through the legal use of tax havens dwarfs that lost through illegal laundering. The rights and wrongs are more open to debate though – someone who leans toward a more free-market ideology might argue that tax systems in the UK and elsewhere are so arbitrary and poorly designed people should have the right to reduce their contribution if they can. The sheer scale is astonishing, as you say, and the EU in particular looks like it is making moves to change things. I’ve reached out to Margerethe Vestager for an interview without luck but would be interested in thoughts on how we can look into this?

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        One has to acknowledge that governments, the British government in particular, are complicit in facilitating tax avoidance. The British government has made no efforts to change the law or limit the tax avoiding opportunities in the many British overseas Territories including the British Virgin Islands, the Cayman Islands, Bermuda, the Channel Islands, the Isle of Man, and Gibraltar.

        One of the reasons for their complicity is of course the lobbying and funding of political parties by the biggest tax avoiders. Oh that I had the resources to research and analyse the annual reports of large corporations determine what subsidiaries they have in tax havens and the level of tax that they pay on their transfer pricing transactions. Action Aid that I mentioned in my first comment have already done a great deal of work that should be expanded.

        It is not only companies that engage in transfer pricing, Boots, a large pharmacy chain has most of its turn over and derives most of its profit from Britain including dispensing prescriptions for the state-owned National Health Service. But Boots is registered in Zug in Switzerland to minimise its UK tax. Many other household names in Britain are also, legally, registered in tax havens making them non-docmicles that therefore not subject to UK tax.

        It is notable that some of the loudest Brexiteers, like Lord Bamford owner of the earthmoving equipment maker JCB,are beneficiaries of laws allowing tax avoidance. JCB is registered in a Bermuda trust. Does James Dyson use British Overseas Territories to engage in transfer pricing to minimise tax as he moves his Hoovers around the world? He is certainly setting up his children to avoid inheritance tax by buying farmland in the UK which is exempt from inheritance tax. He is said to have become the biggest land owner in the country.

        Someone like Jacob Rees-Mogg, the Conservative MP and leading Brexiteer owns a fund management firm. It would be interesting to know the benefits his rich clients will accrue by Britain not becoming subject to increasing EU scrutiny of tax avoidance.

        Margerethe Vestager maybe encouraged to grant an interview if there is a body of evidence demonstrating that a number of those who have most vociferously promoted Brexit are avoiding tax offshore tax havens.

        There is a great reluctance among British newspapers to draw attention to tax avoidance as most of them are owned by foreign, tax avoiding tycoons who pay no UK tax.

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