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 -

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 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 Kong  World’s Top 10 Secrecy Jurisdictions

Tax Us If You Can Video -

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 enable both of these

A Sense of Scale USD (billions) per year Christian Aid Report – Death and Taxes, May 2008 World Bank Assessment - The Costs of Attaining the Millennium Development Goals Tax Justice Network – The Price of Offshore, March 2005 Christian 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 USD (billions) per year Global Aid Budget Extra for MDGs Tax lost from company profit- shifting Tax lost on individual wealth

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?

Profit shifting by MNCs

Big Bananas, Small Tax  nearly $750 million worth of sales in UK  Paid just $235,000 in UK tax combined

Virgin  Moving its brand to from the UK to Switzerland  Increase “tax efficiency”

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 -

Country-by-Country Reporting Big Corp’s Annual Accounts – now: TurnoverProfit Home Country$50 million$5 million International$100 million$20 million Big Corp’s Annual Accounts – with CBC reporting: TurnoverProfit 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 22 nd – Linden - The Importance of Education  Nov 5 th /19 th – TBC – volunteer?  Dec 3 rd – TBC – volunteer?

Tokyo Yamathon!  Saturday November 19th  Need volunteers to help organise and promote!

Image Credits Flickr users: sektordua - amagill - phillip - salowphotography - dplanet