Tax evasion and banking secrecy, hot topics and top targets because of the financial crises and austerity, could be the focus of strong statements at the G8 meeting this week.
The British government, organising the meeting in Northern Ireland, has promised big developments on the basis of substantial progress recently in clamping down on evasion and bursting bank secrecy.
But many observers from civic bodies are pessimistic and say that the summit, today and tomorrow, will amount to a lost opportunity despite the public outrage over recent brazen cases at a time of tax rises and budget cuts.
The tightening up of tax systems across borders, and opening up information on how businesses do their accounting across borders, are two of the burning issues for Britain which is currently chairing the G8 (Group of Eight) leading countries.
The G8 comprises the United States, Japan, Germany, France, Canada, Britain, Italy and Russia.
British Prime Minister David Cameron has prepared the way for the summit of heads and state and government by stating the “ambition” that the meeting at Lough Erne will “knock down the walls of banking secrecy” with “concrete measures”.
French President Francois Hollande, badly bruised by a recent scandal involving an admission by his budget minister Jerome Cahuzac, also responsible for fighting tax evasion, that he had hidden money abroad, has said: “Tax havens must be eradicated in Europe and throughout the world.”
The climate has turned strongly in favour of tough action: pressure on these two fronts, which seemed to have eased after progress in 2009, is again at a high pitch.
First, a new law in the United States, called Fatca, obliges all banks to provide US authorities with all information they hold concerning all assets owned by US taxpayers.
Meanwhile, revelations by journalists, known as ‘Offshore Leaks’, have further strengthened the perception that no bank account can be considered secret and that hidden funds are liable to exposure.
The consequence of this is that the gates of some strongholds of banking secrecy, such as Switzerland, are beginning to give way.
The European Union, in which some countries have arrangements considered favourable to those seeking to dissimulate funds, seems to be overcoming internal divisions and trying to catch up with the United States, even though Austria and Luxembourg still show some reticence.
The G8 leaders are expected to make strong statements calling for a “truly global system of multinational information exchange”.
Cameron has opened a second front to combat strategies by multinational companies to avoid paying tax via transfer pricing and other techniques to generate costs in high-tax countries and profits in low-tax countries or tax havens.
Public opinion in several countries, already inflamed by stories of tax evasion and tax avoidance at a time of austerity, has been roused further by revelations in the United States and Europe that international brands such as Starbucks, Google, Amazon and Apple, pay little tax in countries where they have high-volume business.
In Northern Ireland, the G8 leaders, all of whom are facing national budget pressures, will support an action plan to be put forward soon by the Paris-based Organisation for Economic Cooperation and Development.
But even under this programme, hard-hitting measures will have to wait, mainly because of diverging interests.
Sources in Paris which are close to the talks said that “France is most interested in digital issues” while “American negotiators are not particularly enthusiastic.”
One of the most sensitive matters concerns trusts and other structures which can be used as legal shields to conceal the identities of people with offshore activities and assets.
Britain has put transparency in this field on the agenda, saying that change is needed also to help fight the laundering of illicit funds.
Cameron, to show goodwill, has also urged British crown dependencies and territories such as the Cayman Islands and British Virgin Islands, flourishing tax havens, to join in and ramp up their co-operation against evasion.
However, the outcome of this appeal is unclear since some of them, such as Bermuda, are reluctant to sign an agreement put forward by Cameron. This could be a blow to the position taken by the G8.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Hike in Saudi visa fees could impact business ties
Milaha posts 9-month profit of QR759mn on QR1.99bn revenues
Bond markets stir across Mideast after Saudi sale
QCB sells QR1.5bn bonds
Qatar may see rising corporate funding costs as Fed rate hike looms
‘Qatar draws Abu Dhabi, China backers for Deutsche Bank’
Gulf growth forecasts cut further despite oil rebound
GCC banks’ operating environment to generally improve in 2017, says BMI
Saudi Electricity posts best quarterly profit in over a decade