EU nations urge crackdown as Panama Papers claim Spanish minister

Yahoo – AFP, Paul Handley, 15 April 2016

Spain's industry minister Jose Manuel Soria (pictured) resigned over allegations 

he had links to offshore companies (AFP Photo/Eduardo Dieguez)

Washington (AFP) - Europe's top economies called for a crackdown on tax havens and urged G20 countries to rip away the secrecy protecting shell companies, as the Panama Papers scandal claimed Spain's industry minister as the latest political victim.

In the strongest reaction yet to the leaked Panama Papers, the finance ministers of Britain, France, Germany, Italy and Spain proposed a blacklist of havens like Panama if they failed to share corporate registry data.

"Today we deal another hammer blow ‎against those who hide their illegal tax evasion in the dark corners of the financial system," British Finance Minister George Osborne said in a statement.

Spain's industry minister, Jose Manuel Soria, stepped down Friday after being named in the leaked papers, citing "mistakes" in explaining his alleged offshore interests and "the obvious harm that this situation is doing to the Spanish government".

Soria's troubles began on Monday when Spanish online daily El Confidencial, which has had access to the Panama Papers, said he was an administrator of an offshore firm in 1992.

Soria called a news conference to deny any link to the company, but as the week went by, more allegations emerged from other media outlets, revealing further alleged connections to offshore havens.

It is unclear as yet whether any of his alleged actions were illegal.

'Aggressive tax planning'

In their joint statement during a meeting of the World Bank and International Monetary Fund in Washington, the five EU ministers said: "The recent extensive leaks from Panama show the critical importance of the fight against tax evasion, aggressive tax planning and money laundering."

World Bank President Jim Yong Kim said the illicit financial activities enabled by tax havens undermined the fight against poverty.

"When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity," he said.

Graphic showing public figures forced to resign or under pressure following the

Panama papers revelations (AFP Photo/Alain BOMMENEL, Kun TIAN)

The joint European move was a reaction to the leak of thousands of documents on anonymously-owned shell companies from Mossack Fonseca, a Panamanian law firm that specialized in setting up such firms.

The trove showed the use of shell companies by prominent politicians including close associates of Russian President Vladimir Putin, family members of Chinese leaders, British Premier David Cameron, and the leaders of Iceland and Argentina.

The leak placed Panama in the spotlight as one of the leading havens that have not joined an agreement on sharing information on bank accounts and other assets.

The five threatened to create a blacklist of countries which do not cooperate on sharing data. "We want to have lists which make it possible to place sanctions on countries which don't respect the rules," French Finance Minister Michel Sapin said.

Under pressure, Panama said Thursday it was ready to begin working together with the "Common Reporting Standard" (CRS) system on sharing information about assets and accounts.

"Panama's path to financial transparency is irreversible," Vice President Isabel de Saint Malo de Alvarado said in a statement.

But the Oxfam anti-poverty group, which released Thursday a paper showing how top US coproations have socked away $1.4 trillion in profits in tax havens, said the European proposals are still too weak.

"If the proposed registry of beneficial owners of companies and trusts is hidden from the public, how can we know who is hiding their profits and fortunes and trying to avoid paying their fair share?" they said.

A policeman stands guard outside Mossack Fonseca headquarters in Panama City

 (AFP Photo/Ed Grimaldo)

Warnings over slow growth

In the meetings that got underway Thursday, both the IMF and World bank urged countries to do more to support economic growth and prevent the world from backsliding toward recession.

They said the demand for financial support from struggling governments has risen to levels normally seen during crises.

"In the global economy, there are not many bright spots," World Bank President Kim said. "The weakening global economy threatens our progress toward ending extreme poverty by 2030."

"We are on alert, not alarm," IMF chief Christine Lagarde said.

"The current policy responses that we are seeing need to go faster and need to go deeper."

Lagarde also warned that Britain's threatened pullout for the European Union was a "serious concern" for the global economy.

"It's been a long marriage between members of the European Union," she said.

"It's really my personal hope that it doesn't break," she added. "Like all marriages, good talks can actually help and I hope that the dialogue can continue."

French Finance Minister Michel Sapin speaks next to German Finance Minister

 Wolfgang Schauble (L) and Spanish Minister of Economy Luis De Guindos (R),

during a press conference on April 14, 2016 in Washington, DC (AFP Photo/Molly Riley)

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Hundreds of large firms paying no tax in Australia

Yahoo – AFP, December 17, 2015

Some 600 of the biggest firms operating in Australia, including Qantas and
Glencore, paid no income tax in the 2013-14 financial year, data shows
(AFP Photo/William West)

Sydney (AFP) - Some 600 of the biggest firms operating in Australia, including Qantas and Glencore, paid no income tax in the 2013-14 financial year, data showed Thursday as the government vowed to keep targeting loopholes.

There has been a global push, including in Australia, for large local and multinational companies to stop using sophisticated structures to avoid or lower their tax payments, which has seen governments lose billions in revenue.

The tax details of around 1,500 large corporations were released by the Australian Taxation Office as a "step forward in improving corporate tax transparency", its Commissioner Chris Jordan said in a statement.

While Jordan said companies that did not incur a tax bill were not necessarily avoiding payments, he warned multinational firms -- some of which fronted a parliamentary inquiry this year on tax minimisation -- that their "aggressive arrangements" would be scrutinised.

"Some of these foreign-owned companies are overly aggressive in the way they structure their operations," he said.

"We will continue to challenge the more aggressive arrangements to show that we are resolute about ensuring companies are not unreasonably playing on the edge. If they do, they can expect to be challenged."

Britain in March introduced a so-called "Google tax" on firms that divert profits overseas, while Australia recently passed a law to lift transparency requirements that would also see disclosures required for private companies with turnover of Aus$200 million (US$144 million).

The data showed that Apple raked in Aus$6.2 billion in total income in Australia for the 2013-14 year, but only had a taxable income of Aus$247.4 million and a tax bill of Aus$74.1 million.

Swiss commodity giant Glencore booked combined revenue of some Aus$17.4 billion for the same period for three reporting entities, but paid no tax for any of them.

Likewise, Australian carrier Qantas and oil and gas company ExxonMobil Australia were among other household names that made billions in total income but paid no tax for 2013-14.

Assistant Treasurer Kelly O'Dwyer said Australia had worked with the G20 and Organisation for Economic Cooperation and Development to close the tax loopholes of multinationals, and had strengthened the powers of the ATO.

"It is critically important that multinational... companies are paying their fair share of tax and that's why the government has been very quick to lead this debate through the G20," she told reporters Thursday.

Opposition Labor senator Sam Dastyari, who chaired the tax inquiry, said the data supported the need for "tougher laws to crack down on this type of behaviour".

Commentary: OECD tax agreement - a little more justice

For tax evaders, the risk of being uncovered has escalated. An agreement governing the international exchange of data will bring a little more justice, says DW's business editor Henrik Böhme.

Deutsche Welle, 30 Oct 2014

It was one of the first books I was given 25 years ago after the fall of the wall. Its title: "1000 ganz legale Steuertricks" or in English, 1,000 completely legal tax tricks. It was important to know where you stood in the battle against the merciless tax office. At the time, creating a tax return was something of a pleasure, knowing that in the end, thanks to all possible personal reliefs, you'd be refunded a decent sum of money.

The book still exists, but times have changed. The taxation of well-earned money has already reached a painful level and ways of reducing the tax burden have become much smaller. The state - that expensive old being - needs every euro it can get. That goes without mentioning the fact that since the financial crisis rocked the world, countries that had to support their banks with billions have accumulated gigantic mountains of debt.

This has led to tax hunters around the world taking the opportunity to look more intensely than ever before where their compatriots, who have more money in their account than the average Joe, are stashing away their money - or better said, where its hidden from the tax authorities. Of course, for rich Germans, there were possibilities just around the corner in Luxembourg or Switzerland, where tax-saving investment was part of the government-tolerated business model. But it became a risky business: After CDs holding entire lists of names of tax evaders emerged, there were some spectacular arrests, including that of Deutsche Post boss, Klaus Zumwinkel. The number of voluntary self-denunciations soared because for many tax evaders it was becoming just too hot to handle.

DW's Henrik Böhme

Because the business with the CDs had a somewhat nasty aftertaste - after all, the data was obtained by criminal means and then offered for sale to the tax authorities, which is nothing more than receiving stolen goods - it seemed like the better idea to implement what the international community had already decided upon at the 2009 G20 summit in London: drain tax havens and declare war on tax evasion.

Now a huge step has been made in the shape of a newly signed agreement. "Banking secrecy has become obsolete," says the German Finance Minister Wolfgang Schäuble with pride. Tax evaders are now skating on even thinner ice.

But the question remains: are the tax offices in the position to cope with the flood of data due to arrive from 2017 on? Will all countries really pull together? Will all those participating be working on a level playing field? And what will be done to tackle new loopholes, which are bound to appear? One thing that remains important is to implement the agreement quickly and without undue delay.

This momentum must now be used to also curb creative tax policies of internationally operating companies. It may all be legal, but it simply cannot be that profits are pushed back until the tax burden is zero. What applies to private assets must also apply to corporate assets: taxes must be paid where the net product comes from. It's a chance now, at least, for a little more justice.

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G20 countries agree to exchange tax information to stamp out evasion

Meeting of G20 finance ministers in Australia endorses plan to automatically exchange information on a reciprocal basis by end of 2018

theguardian.com, Bridie Jabour, Sunday 21 September 2014

International Monetary Fund (IMF) managing director Christine Lagarde and
 Australia’s treasurer Joe Hockey before the main meeting of the G20 finance
ministers. Photograph: Reuters

G20 countries have agreed to start automatically exchanging tax information in an effort to erode global tax evasion.

The communique from the finance ministers’ meeting in Australia at the weekend endorsed a plan to automatically exchange the information on a reciprocal basis by the end of 2018.

The ministers called on all financial centres to make the commitment by the time of the global forum meeting in Berlin at the end of October and to support efforts to monitor global implementation of the new standard.

“We support further coordination and collaboration by our tax authorities on their compliance activities on entities and individuals involved in cross-border tax arrangements,” the communique said.

The meeting in Cairns also discussed the potential impact on the global economy of the Ebola outbreak in west Africa. The Australian treasurer, Joe Hockey, confirmed the economic risks of the outbreak had been discussed.

The International Monetary Fund has estimated measures put in place by the group will expand the global economy by 1.8%, just shy of the target of 2%.

“Of course there are events that could derail [the growth targets],” Hockey told reporters on Sunday. “We need to be ambitious, we need to give people hope that tomorrow and the years beyond are going to be better than today. We have to.

“As global finance ministers it is easy to be caught in the slipstream of negativity, to be caught in the slipstream of looking at a glass as being half full, or rather half empty. The views vary but the bottomline is we can’t be pessimistic about the future.”

The agreement on measures to lift growth was 90% complete but by the time the G20 leaders met in Brisbane in November there would be ‘concrete outcomes’, he said.

Hockey said the president of the World Bank, Jim Yong-kim, made “significant” contributions to the discussion about Ebola.

“There was a discussion about a number of other geopolitical risks as well. Having said that, we believe that the fundamentals of the world economy are good and we are trying to use the levers that we have to make them better,” Hockey said.

If the 1.8% growth rate is achieved it would add $2 trillion to the world’s economy within four years.

The managing director of the IMF, Christine Lagarde, said the two areas key to reaching a 2% target were the labour market and infrastructure. She said the 1.8% was taking the G20 “very close” to its objective.

“Is that to say mission accomplished? No. Clearly because there will be more needed – from 1.8 to 2% is a bit of a journey,” she said.

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G20 finance chiefs aim to 'change destiny of global economy'

Delegates prepare to hear the opening remarks at the G20 Finance Ministers

 and Central Bank Governors Meeting in Cairns on September 20, 2014

(AFP Photo/William West)

OECD proposes curbs to corporate tax avoidance

The Organization for Economic Cooperation and Development has proposed draft laws to stop companies from avoiding billions of dollars in taxes. All OECD members and G20 members have already expressed their support.

Deutsche Welle, 16 Sep 2014

International efforts to curb corporate tax avoidance got a boost Tuesday as the OECD proposed changes to global tax laws that would block companies from shifting profits into tax havens.

The draft proposals have been agreed upon by all members of the OECD and G20, so most industrialized countries are on board, but they have yet to be ratified into law.

The OECD said the measures would mostly affect leading technology companies such as Amazon and Google, which have been scrutinized for taking advantage of tax treaties that allow them to protect some profits from being taxed at all.

Both companies maintain that they abide by tax law and pay all the taxes they owe.

Corporate tax avoidance has received increased attention since the financial crisis and governments across the world have sought to close legal tax loopholes for businesses.

Traditionally, the OECD's work on international tax regulations has focused on ensuring that companies are not taxed twice. Now it's focus has shifted.

"We are putting an end to double non-taxation," said the OECD's head of tax, Pascal Saint-Amans.

There is, however, criticism from some quarters. Anti-poverty charity ActionAid, for instance, criticized the plans saying some of the measures agreed upon would be too costly for developing countries to implement.

cjc/sri (Reuters, AFP)

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Campaign to be launched by George Osborne warns of fines double to amount of tax evaded and possible prison sentences

theguardian.com, Rowena Mason, political correspondent, Sunday 23 February 2014

The chancellor said the net was closing on those who thought they did
not have to play by the rules. Photograph: Bobby Yip/AFP/Getty Images

George Osborne is to launch a new campaign warning people who hide their money offshore that they risk going to prison.

The new advertisements feature a pair of eyes peering through a torn map of the world, saying: "We are closing in on you."

It comes after the chancellor attended the G20 finance ministers' meeting, where countries agreed new standards on exchanging information about offshore bank accounts.

The government said most people had nothing to fear, but those hiding money from the tax man would have to pay penalties of up to twice as much as the amount evaded and could end up in jail.

"By taking global action to reform the system alongside a tough approach to enforcing the law at home, we will close the net on those who think they do not have to play by the rules," Osborne said.

Jennie Granger, HMRC's director for enforcement and compliance, said: "If you have assets offshore you need to get in touch with us urgently, because we will catch up with you. That can mean a fine of 200% of the tax that you owe, and the possibility of criminal prosecution and a prison sentence.

"The days of hiding money in another country to cheat the UK are coming to an end."

The G20 is also trying to stop multinational companies shifting their profits around different jurisdictions to avoid paying tax, signing a pledge to deliver ''effective, practical and sustainable measures'' before the leaders' meeting in Brisbane in November.

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GCHQ intercepted foreign politicians' communications at G20 summits

Exclusive: phones were monitored and fake internet cafes set up to gather information from allies in London in 2009

The Guardian, Sunday 16 June 2013

Documents uncovered by the NSA whistleblower, Edward Snowden, reveal
surveillance of G20 delegates' emails and BlackBerrys. Photograph: Guardian

Foreign politicians and officials who took part in two G20 summit meetings in London in 2009 had their computers monitored and their phone calls intercepted on the instructions of their British government hosts, according to documents seen by the Guardian. Some delegates were tricked into using internet cafes which had been set up by British intelligence agencies to read their email traffic.

The revelation comes as Britain prepares to host another summit on Monday – for the G8 nations, all of whom attended the 2009 meetings which were the object of the systematic spying. It is likely to lead to some tension among visiting delegates who will want the prime minister to explain whether they were targets in 2009 and whether the exercise is to be repeated this week.

The disclosure raises new questions about the boundaries of surveillance by GCHQ and its American sister organisation, the National Security Agency, whose access to phone records and internet data has been defended as necessary in the fight against terrorism and serious crime. The G20 spying appears to have been organised for the more mundane purpose of securing an advantage in meetings. Named targets include long-standing allies such as South Africa and Turkey.

There have often been rumours of this kind of espionage at international conferences, but it is highly unusual for hard evidence to confirm it and spell out the detail. The evidence is contained in documents – classified as top secret – which were seen by the Guardian. They reveal that during G20 meetings in April and September 2009 GCHQ used what one document calls "ground-breaking intelligence capabilities" to intercept the communications of visiting delegations.

This included:

• Setting up internet cafes where they used an email interception programme and key-logging software to spy on delegates' use of computers;

• Penetrating the security on delegates' BlackBerrys to monitor their email messages and phone calls;

• Supplying 45 analysts with a live round-the-clock summary of who was phoning who at the summit;

• Targeting the Turkish finance minister and possibly 15 others in his party;

• Receiving reports from an NSA attempt to eavesdrop on the Russian leader, Dmitry Medvedev, as his phone calls passed through satellite links to Moscow.

The documents suggest that the operation was sanctioned in principle at a senior level in the government of the then prime minister, Gordon Brown, and that intelligence, including briefings for visiting delegates, was passed to British ministers.

A briefing paper dated 20 January 2009 records advice given by GCHQ officials to their director, Sir Iain Lobban, who was planning to meet the then foreign secretary, David Miliband. The officials summarised Brown's aims for the meeting of G20 heads of state due to begin on 2 April, which was attempting to deal with the economic aftermath of the 2008 banking crisis. The briefing paper added: "The GCHQ intent is to ensure that intelligence relevant to HMG's desired outcomes for its presidency of the G20 reaches customers at the right time and in a form which allows them to make full use of it." Two documents explicitly refer to the intelligence product being passed to "ministers".

According to the material seen by the Guardian, GCHQ generated this product by attacking both the computers and the telephones of delegates.

One document refers to a tactic which was "used a lot in recent UK conference, eg G20". The tactic, which is identified by an internal codeword which the Guardian is not revealing, is defined in an internal glossary as "active collection against an email account that acquires mail messages without removing them from the remote server". A PowerPoint slide explains that this means "reading people's email before/as they do".

The same document also refers to GCHQ, MI6 and others setting up internet cafes which "were able to extract key logging info, providing creds for delegates, meaning we have sustained intelligence options against them even after conference has finished". This appears to be a reference to acquiring delegates' online login details.

Another document summarises a sustained campaign to penetrate South African computers, recording that they gained access to the network of their foreign ministry, "investigated phone lines used by High Commission in London" and "retrieved documents including briefings for South African delegates to G20 and G8 meetings". (South Africa is a member of the G20 group and has observer status at G8 meetings.)

A detailed report records the efforts of the NSA's intercept specialists at Menwith Hill in North Yorkshire to target and decode encrypted phone calls from London to Moscow which were made by the Russian president, Dmitry Medvedev, and other Russian delegates.

Other documents record apparently successful efforts to penetrate the security of BlackBerry smartphones: "New converged events capabilities against BlackBerry provided advance copies of G20 briefings to ministers … Diplomatic targets from all nations have an MO of using smartphones. Exploited this use at the G20 meetings last year."

The operation appears to have run for at least six months. One document records that in March 2009 – the month before the heads of state meeting – GCHQ was working on an official requirement to "deliver a live dynamically updating graph of telephony call records for target G20 delegates … and continuing until G20 (2 April)."

Another document records that when G20 finance ministers met in London in September, GCHQ again took advantage of the occasion to spy on delegates, identifying the Turkish finance minister, Mehmet Simsek, as a target and listing 15 other junior ministers and officials in his delegation as "possible targets". As with the other G20 spying, there is no suggestion that Simsek and his party were involved in any kind of criminal offence. The document explicitly records a political objective – "to establish Turkey's position on agreements from the April London summit" and their "willingness (or not) to co-operate with the rest of the G20 nations".

The September meeting of finance ministers was also the subject of a new technique to provide a live report on any telephone call made by delegates and to display all of the activity on a graphic which was projected on to the 15-sq-metre video wall of GCHQ's operations centre as well as on to the screens of 45 specialist analysts who were monitoring the delegates.

"For the first time, analysts had a live picture of who was talking to who that updated constantly and automatically," according to an internal review.

A second review implies that the analysts' findings were being relayed rapidly to British representatives in the G20 meetings, a negotiating advantage of which their allies and opposite numbers may not have been aware: "In a live situation such as this, intelligence received may be used to influence events on the ground taking place just minutes or hours later. This means that it is not sufficient to mine call records afterwards – real-time tip-off is essential."

In the week after the September meeting, a group of analysts sent an internal message to the GCHQ section which had organised this live monitoring: "Thank you very much for getting the application ready for the G20 finance meeting last weekend … The call records activity pilot was very successful and was well received as a current indicator of delegate activity …

"It proved useful to note which nation delegation was active during the moments before, during and after the summit. All in all, a very successful weekend with the delegation telephony plot."