UN expert set out demands to tackle offshore tax abuses

7 Oct 16

United Nations human rights experts have urged governments to eliminate tax secrecy and offshore tax evasion after a fresh tax leak named the directors of several secretive firms in the Bahamas.

web_bahamas_shutterstock_241290667.jpg

The International Monetary Fund has praised the Bahamas for the successful implementation of a new value added tax (VAT), which has brought more than $500m for the government in the last fiscal year.

The Bahamas: a recent leak from the country's corporate registry named the directors of thousands of secret companies registered in the jurisdiction, sparking more calls for greater tax transparency.

 

The UN’s independent expert on foreign debt and human rights, Juan Pablo Bohoslavsky, and two members of the body’s Human Rights Council Advisory Committee, Obiora Okafor and Jean Ziegler, also called for the establishment of a UN body to eliminate tax haven secrecy and offshore tax avoidance and evasion.

They highlighted that an estimated $7tn and $25tn of individuals’ wealth is stashed offshore, and that the tax income lost by many countries could total hundreds of billions of dollars each year – money that “could and should” be devoted to public services.

“States must prove they take seriously the interests of billions of people all around the world who suffer from the erosion of public services owning to massive financial misconduct,” the exports stated.

“Worldwide tax justice and the successful fight against money laundering will not be possible unless states cooperate to monitor and regulate the fiscal activities of offshore companies.”

They called on the UN to take efficient measures to prevent offshore companies undertaking illegal activities in tax havens, and for better transparency and accountability for offshore financial activity.

During a meeting yesterday, G20 finance ministers and central bank governors met to discuss ways to better share information on the true owners of secretive companies.

While this has become high on the public agenda following the publication of the Panama Papers, which revealed how the rich and powerful use secretive offshore firms to avoid tax and led to an international scandal, little concrete action has been taken to increase transparency.

A subsequent leak, naming those involved with anonymous companies registered in the Bahamas, has added to the pressure.

The UN experts said states and financial institutions should be required to automatically share information with foreign authorities to aid the detection of offshore taxable income.

“In this way, the secrecy and anonymity that enshrouds illicit offshore activity can be lifted, and money intended to promote shared prosperity can be returned to its rightful owners: the public.”

They also said the public disclosure of beneficial ownership information should be made legally binding in all countries, and the financial transparency of all banking jurisdictions should be publicly ranked by independent experts appointed by the UN.

Finally, they called for a uniform minimum taxation floor, to prevent individuals and business entities from shopping around for the lowest taxes. This would also help to deter what has been dubbed a “race to the bottom” between nation states, who aggressively undermine others’ tax floors to attract business, with, commentators note, the only real winner being the multinational firm. 

Related articles

Have your say

Newsletter

CIPFA latest

Most popular

Related jobs

PF jobs

Most commented

Events & webinars