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T-EBU IP Course 14: Tax Havens and the Offshore… Mihai-Bogdan Afrsinei, PhD Candidate
Tax Havens and the Offshore Megatrend in the Context of Financial Globalization T-EBU Lecturer Mihai-Bogdan Afrsinei, PhD Candidate (Alexandru Ioan Cuza University of Iasi, Romania) ….Tax…

By: T-EBU IP

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T-EBU IP Course 14: Tax Havens and the Offshore… Mihai-Bogdan Afrsinei, PhD Candidate – Video

Last week Switzerland reached a tax agreement with the United States, effectively ending its status as tax haven country. As a part of the deal, the Swiss government is expected todisclose information about its American clients andcrack down on any Swiss bank that helped wealthy Americans hide money from U.S. tax authorities.

But Switzerland isnt the only popular tax haven that the world’s wealthiest citizens have lost this year.

In March, Cyprus, the former tax haven of choice for wealthy Russians, received a $13 billion bailout from the European Union, but as a part of that deal, it had to make massive cutbacks to its banking sector, effectively ending its role as an international tax shelter.

However, as old tax haven countries shed their financially questionable pasts, other countries are hoping to fill the void left behind.

Latvia, which is due to join the euro zone in 2014, recently implemented new tax laws to encourage investment. These new laws could, however, also turn Latvia into another Cyprus.

Two African locales are also hoping to gain tax haven status — and the revenue that comes with it.

Gambia recently launched a new offshore/onshore business jurisdiction that can be managed online. An email from iCommerce Registry, the organization that will manage its operations, boasts, The registration of corporate structures can be achieved online in less than 30 Seconds.

Nairobi, Kenya, is currently negotiating with the U.K.’s financial services industry to become an independent financial center, or effectively, a tax haven.

Northern Territory, Australia, might also turn into a tax haven. Australian Prime Minister Kevin Rudd recently called for cutting the corporate tax rate in the region to 10% below that of the rest of the country.

China is lowering taxes in just the Shannan Prefecture, Tibet, and it’s likely to attract Chinese investors there in the near future.

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Tax Havens: A Map Of Former, Current And Emerging Tax …

Published May 20. 2014 4:00AM

Top American companies including pharmaceutical giant Pfizer Inc. are saving at least $550 billion in taxes by holding profits in overseas tax havens, according to a report Monday by the advocacy group Citizens for Tax Justice.

The report said 28 U.S. corporations acknowledge paying less than 10 percent in taxes on foreign holdings totaling $409 billion. Pfizer, which the report said has subsidiaries in Bermuda, the Cayman Islands, Ireland, the Isle of Jersey, Luxembourg and Singapore, “does not disclose how much of its $69 billion in offshore profits are stashed in these tax havens.”

“Corporations exploit all manner of loopholes to avoid paying their fair share, and then they get their lobbyists and allies on Capitol Hill to say this tax dodging is justified because the U.S. corporate income tax rate is too high,” Robert McIntyre, director of the advocacy group, said in a statement.

But McIntyre said U.S. corporate tax rates are not much different from those in other developed countries, where these corporations make most of their profits.

In addition to New York-based Pfizer, the report looks into a variety of multinational corporations from all 50 states.

In Connecticut, General Electric, United Technologies, Praxair, Xerox, Priceline.com, Terex, Pitney Bowes and W.R. Berkley are among the companies placing money in foreign accounts to save on taxes.

The report said U.S.-based Fortune 500 corporations are holding profits of nearly $2 trillion in offshore accounts.

“While congressional hearings over the past few years have focused attention on the tax avoidance strategies of technology corporations like Apple and Microsoft … a diverse array of companies (is) using offshore tax havens,” the report said.

Among these are U.S. Steel, pharmaceutical marketer Eli Lilly, apparel maker Nike, financial powerhouse American Express, gaming empire Wynn Resorts and banking giant Bank of America.

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Pfizer, other companies accused of dodging taxes

A new report from the advocacy group Citizens for Tax Justice finds that 301 Fortune 500 companies hold a combined $2 trillion offshore, collectively avoiding $550 billion in U.S. corporate income taxes, while a contrasting report from the Tax Foundation found that U.S. multinational corporations reported paying more than $128 billion in corporate taxes to foreign countries on $470 billion of taxable income in 2010an effective rate of 27.2 percent before also paying U.S. taxes.

The CTJ report examines companies 2013 Securities and Exchange Commission filings. The report identified 28 corporations, including Apple, Bank of America, Wells Fargo, Microsoft, Nike and others, that disclosed the U.S. corporate income tax rate they would pay if they repatriated their profits.

The report also found 243 companies that disclosed permanently reinvested income but do not report how much corporate income tax they would pay if they repatriated their profits. Twenty-eight of the companies admitted using tax havens, according to the group, and the companies 2013 financial filings reveal hundreds more likely do the same.

Its time to have a conversation about the corporate income tax that goes beyond calls to lower the U.S. corporate income tax rate, said CTJ director Robert McIntyre in a statement.

Multinational corporations have been abusing the U.S. tax system at the expense of ordinary taxpayers, and they should not be rewarded for their bad behavior.

In addition to Apple and Microsoft , a diverse array of companies are using offshore tax havens, including U.S. Steel, the pharmaceutical giant Eli Lilly, the clothing manufacturer Nike, the supermarket chain Safeway, the financial firm American Express, and banking giants Bank of America and Wells Fargo, according to CTJ.

A total of 301 companies reported holding nearly $2 trillion offshore. Most corporations do not report what they would pay in U.S. taxes if their profits were officially brought to the United States, but if corporations that do disclose are representative, then the Fortune 500 as a group is saving $550 billion by holding profits offshore, according to the report. The report recommends that Congress should pass a law to end deferral, the rule allowing American corporations to indefinitely avoid paying U.S. income tax on profits officially earned offshore until these profits are repatriated. Ending deferral would mean that all profits of U.S. corporations, whether generated in the United States or abroad, would be taxed by the U.S. in the year they are earned.

On Tuesday, a group of Democrats in the House and Senate introduced legislation to end the practice of corporate inversions that allow U.S.-based companies to avoid U.S. taxes by combining with a smaller foreign business and moving their tax domicile overseas. (see Congress Introduces Bill to Restrict Corporate Tax Inversions). CTJ noted that use of tax havens is an important issue right now because some companies with the most reported offshore profits, such as Pfizer, are currently pursuing inversions that would effectively make the companies residents of other countries for tax purposes and would make it easier for these companies to never pay U.S. taxes on the $2 trillion they officially hold offshore.

Tax Foundation Report In contrast, a report from the Tax Foundation, a tax policy research organization found that U.S. multinationals are paying an effective tax rate of 27.2 percent before also paying U.S. taxes.

The Tax Foundation report noted that the U.S.s worldwide system of corporate taxation requires multinational corporations to pay taxes twice, first to the foreign country in which they do business and then to the IRS after they repatriate their profits. Multinational corporations reported paying $128 billion in corporate taxes to foreign countries on $470 billion of taxable income in 2010, according to the most recent IRS data.

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Reports Present Opposing Views on Corporate Tax Avoidance

Bank of America tops the list of Charlotte-based companies avoiding big tax bills by keeping profits offshore, according to a new report by a nonprofit tax research and advocacy group.

Citizens for Tax Justice found that 301 U.S. Fortune 500 companies disclosed holding nearly $2 trillion in profits offshore. By holding this income overseas, those companies are saving nearly $550 billion in estimated taxes, according to the report.

The group said the findings show that a wide variety of companies are using offshore tax havens, not just a select few companies such as Apple that have faced congressional scrutiny in recent years.

The study is based on the disclosures companies make in annual securities filings, but some disclose more than others.

Among Charlotte companies, Bank of America and Duke Energy were among only 58 companies that disclosed how much they would have to pay in taxes if their income was repatriated and brought back to the U.S.

Bank of America said it would owe $4.3 billion in taxes on $17 billion of income, while Duke said it would owe $288 million on $1.7 billion of income, according to the report. The companies with the largest estimated tax bills if they brought profits home were Apple ($36.4 billion) and Microsoft ($24.4 billion).

Bank of America spokesman Jerry Dubrowski noted that the Charlotte bank has paid more than $25 billion in federal income taxes over the last 10 years.

There are a variety of reasons and factors involved in the decision to create a subsidiary in a specific geographic locale including legal, regulatory and accounting requirements, as well as the need to serve the business needs of a particular client or customer, he said.

Duke spokesman Tom Williams said 10 to 15 percent of the companys earnings are generated overseas. The company has advocated that the federal government find a tax-efficient way for companies like Duke to bring profits back to the U.S., he said.

Three other Charlotte-area companies disclosed unrepatriated income but not their estimated tax bill. Industrial conglomerate SPX said it had $1.6 billion in profits overseas, followed by steel maker Nucor with $222 million and home improvement retailer Lowes with $51 million. Representatives of Lowes and SPX declined comment, and Nucor did not immediately respond to a request for comment.

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Report: Bank of America among US companies saving on taxes by keeping profits offshore

Inoffshore literature, tax haven definitions reflect different points ofview ontax havens. Above, the first definition oftax haven gives the primary position ofinstitutions such asthe Organisation ofEconomic Co-operation and Development (OECD), the Financial Action Task Force (FATF), the U.S. Government Accountability Office and Tax Justice Network. The OECDis anorganisation based inParis and has been actively involved inEuropean concerns such asregional, social, political and economic integration within Europe. Increasing Europe”s wealth and political stability, while countering the effects oftax havens and international tax competition onthe EU”s economy have always formed amajor part ofthe OECD”s international ventures.

Likewise, the FATF isactively engaged incombating money laundering and terrorist financing throughout the world. The FATF”s attention has been focused onoffshore financial centres and tax havens which are identified asone ofthe main channels for the movement offunds derived from activities such asillegal substance trafficking, terrorism, organised crime and contraband trade. The Financial Stability Forum (FSF), which was convened in1999 collaborates both with the OECD and FATF inpromoting international financial stability, information exchange and international co-operation inmatters involving financial surveillance and supervision such asdue diligence, risk management, internal controls, disclosure practices, auditing standards and securities inconjunction with the International Organisation ofSecurities Commissions (IOSCO).

Meanwhile, the U.S. Accountability Office isthe investigative body responsible for auditing and evaluating the United States Congress. Infulfilling its functions, the Accountability Office has paid attention totax havens and the offshore activities ofU.S residents and companies. Like theEU, the U.S. authorities view tax havens asmotivators oftax evasion and channels for criminal finance. One ofthe most recent organizations formed inthe fight against tax havens isthe Tax Justice Network, which was registered inNovember 2006 and consists ofseveral organizations and agencies from countries including Germany, Ghana, Mozambique, Switzerland and the United States.

Tax havens include countries such asAndorra, Antigua and Barbuda, the Bahamas, Cayman Islands, British Virgin Islands, Monaco, Isle ofMan, Guernsey, Samoa, Bermuda, Cyprus, Gibraltar, Dominica, Belize, Panama and Vanuatu. Other offshore centers such asBarbados are considered low tax jurisdictions and not tax havens due tothe taxes that are levied onthe profits ofoffshore companies registered inBarbados, although legislative provisions for corporate discretion and privacy are established and regular offshore financial operations are conducted.

Many authors ontax havens frequently tend toclassify tax havens asformer British colonies that promote unfair tax practices inorder todevelop their economies through the provision ofoffshore companies and bank accounts. Inthis regard, since the main income from offshore activities isgenerated through annual fees that offshore entities pay tothe local governments oftax havens, harmful tax competition isundertaken byoffshore tax havens asameans offinancial assistance. Arecent report published bythe Tax Justice Network, “How tax havens cause poverty and undermine welfare states”, explains that “their (tax havens) role became politically visible for the first time with concerns over terrorist finance after September 11th, which led tothe founding ofaFinancial Action Task Force within the IMF. Additionally their role isregarded asbeing central incorruption, drug trafficking and illegal capital flight”.

This statement gives the TJN”s position ontax havens. Italso complements the OECD”s tax haven perspective; but underlines the reasons presented indefense ofcountries and territories that were labeled astax havens and against which sanctions were placed bythe FATF subsequent tothe OECD”s Report onharmful tax competition. However, the TJN tries tosympathize with tax havens. Anexample ofthis issummarized inastatement bythe TJN, inwhich itrecognises the heavy dependence ofsmall islands onhosting harmful tax practices and the possibility oflosing investment and economic growth form efforts totackle the abuses. The TJN also indicates that the biggest culprits are financial centres such asBritain, Switzerland and the United States.

Over the years, tax haven definitions emerged toexplain and describe the principle roles and characteristics of “tax havens”. However, ascatchy, upbeat and attractive the expression “tax haven” may sound, many proponents ofthe tax haven industry tend tofavor the term “offshore jurisdiction”, which isneutral interms ofreferring tothe “offshore” nature ofservices (offshore financial services) provided byacountry, rather than “tax haven”, which makes direct reference to “tax” and hence can bepejorative with regards toharmful international tax competition and the underground economy. Moreover, although the terms “tax haven” and “offshore jurisdiction” are often synonymously used inthe marketing and promotion ofoffshore financial centres, the grounds onwhich tax haven definitions were originally formulated bythe OECD inreferring primarily toharmful international tax competition and tax evasion caused several countries topromote themselves as “low tax jurisdictions” rather than tax havens.

Despite all ofthis, however, asfinancial services become more advanced and diverse asaresult oftrade liberalisation and technology, the concept oftax haven shifted from the traditional emphasis oftax avoidance and has expanded toencompass abroad spectrum offinancial services, transactions and judicial entities such asoffshore companies, offshore foundations, offshore LLC’s, offshore banks and investment practices (mutual funds, securities trading, holdings, hedge funds, etc).

This also includes tailored and specialized financial and legal services such asrisk management, asset management, asset protection, tax planning, succession and estate planning, insurance and establishing investment and trade platforms through offshore banks and agencies. The role oftax havens thus extends far beyond just taxes.

Tax havens allow for doing business discreetly, undertaking new ventures and achieving privacy and confidentiality when handling family and business matters. The modern tax haven allows for the simplest and most complex ofpeople and businesses toprotect their wealth, plan their future and save for rainy days.

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Tax Haven Countries – Offshore Tax Havens of the World …



offshore credit cards,tax havens,bearer share company, bearer share companies,anonymous bank account
anonymous singapore banking, singapore banking, offshore singapore, inernational business company, offshore credit cards,tax havens,bearer share company, bea…

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offshore credit cards,tax havens,bearer share company, bearer share companies,anonymous bank account – Video

The secrecy surrounding thousands of subsidiaries created in tax havens by leading UK companies has created a black hole at the heart of the FTSE100, a new Christian Aid report warns this week.

FTSEcrecy reveals an information void which threatens investors, customers and government regulators, because it leaves them without the facts they need to make good decisions about FTSE100 companies.

For instance, it may be impossible for governments to tell if they are paying the right amount of tax and for investors to tell the true worth of a company.

Christian Aids new research found that FTSE100 companies have created 29,891 subsidiaries. But details of the subsidiaries turnover, assets, shareholder funds and number of employees are freely available in relation to only one-quarter (26 per cent) of them.

Such information is impossible to obtain, even for payment, in relation to a further 21 per cent of the subsidiaries (6,396 companies).

Data on the remaining 53 per cent of FTSE100 companies subsidiaries (more than 15,000) is available – but only on payment of a fee. These vary from the 1 that UK Companies House charges for annual reports and annual returns to more than US$10 per document permitted in some other jurisdictions.

Where information was not available from public authorities, Christian Aid found that it was sometimes available from fee-charging private databases of company information.

“We were shocked by how little information is freely available about most companies subsidiaries,” said Katharine Teague, co-author of the report, which reveals previously unpublished data about FTSE100 companies.What our findings show is that secrecy is not the exception but the norm, even among the largest 100 companies whose shares are traded on the London Stock Exchange.

“These are household-name firms in which millions of people invest, through their pension funds and savings. But the secrecy is so deep and widespread that it is like a blindfold on everyone who has financial dealings with these companies.”

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Christian Aid research reveals black hole at heart of London's FTSE100

A weekly column that puts the fun into learning

Lets admit it. Most of us get a little thrill out of finding new ways to save taxes. This is exactly what corporate biggies such as Google, IBM and Amazon have been doing too. Theyve been cleverly routing their global profits through subsidiaries set up in destinations called tax havens. This has been going on for long. But, having been denied their fair share of taxes, governments are now cracking the whip.

What is it?

Tax havens are countries that have low or near-zero tax rates, especially for some kinds of transactions. Switzerland, Singapore, Hong Kong and Mauritius are the popular ones. But the list includes others such as Luxembourg, British Virgin Islands, Cayman Islands, the Netherlands and Bermuda too.

Multinationals set up their holding companies in these locations which then invest in operations located at other high-tax locations. So, even as the company carries out its real business in a high-tax regime such as the US or India, its able to dodge the taxman by showing a large share of profits as emanating from a tax haven.

But its not just companies; tax havens have something on offer for rich individuals too, promising complete confidentiality. Now youre wondering if everything about tax havens is so clandestine, why havent they been banned at the outset? Well, this is not how things were meant to be. When tax havens first sprang up, they came up in small countries endowed with limited natural resources or other competitive advantages. Such nations saw near-zero tax rates as a good way to attract reluctant foreign capital. But with corporations and affluent individuals taking advantage of the secrecy to save taxes, the whole thing went awry.

Why is it important?

Irked by tax revenue losses, governments have now begun to come down heavily on the menace of tax havens, threatening to revoke tax treaties and demanding more disclosures from them. In India, the phenomenon of routing black money to tax havens has given birth to what is called round-tripping. Foreign direct inflows from Mauritius, Indias second biggest source, totalled $4.5 billion during April-Feb of the last fiscal. But is the tiny island nation really such as industrial powerhouse? Not really. Cynics suspect a large part of the investment flowing in from Mauritius is actually Indian money sent abroad and routed back to avoid taxes. If its Mauritius for us, its British Virgin Islands for UK and Luxembourg for Russia.

The worry is that the anonymity that tax havens offer allows other kinds of illegal activity to flourish too. The world over billions made through illegal routes such as drug trafficking and arms smuggling are said to be laundered through tax havens.

Why should I care?

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All you wanted to know about tax havens

Former CVC Limited chairman Vanda Gould. Photo: Paul Jones

A decision to drop tax and money laundering charges against three high-profile Sydney businessmen is ”another humiliating defeat for the Project Wickenby Keystone Cops”, according to a lawyer close to the trio.

Charges attracting jail of up to 25 years, laid against former CVC Limited chairman Vanda Gould, former Sunland chairman John Leaver and Swiss resident Peter Borgas, were withdrawn by the Commonwealth Director of Public Prosecutions in Sydney Local Court on Tuesday morning.

The men asked the court to order the Crown to pay their costs in defending the charges and a mention date was set for June 10.

Former Sunland chairman John Leaver. Photo: Robert Rough

They were arrested in October after an investigation by Project Wickenby, the joint Taxation Office-Federal Police taskforce that attacks the use of tax havens by rich Australians.

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It was alleged they used a complex network of companies in tax havens including Vanuatu, the Bahamas and Singapore, to avoid millions in Australian tax.

Barrister John Hyde Page, who represented the companies in a related Federal Court civil case, said the amount of public money spent on Wickenby was a ”scandal”.

Said the amount of money spent on Wickenby was a “scandal”: Barrister John Hyde Page. Photo: Supplied

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Barrister calls for full inquiry into ATO's 'Keystone cops'

There is a “black hole” in the City because leading companies use subsidiaries based in secretive tax havens, a charity has warned.

Christian Aid said blue chip firms in the FTSE 100 had set up nearly 30,000 subsidiaries, with 14% of them based in “highly secretive” jurisdictions.

The charity’s report warns that the location of the subsidiaries means it may be impossible for governments to establish if firms are paying the right amount of tax or for investors to establish the true worth of a company.

Christian Aid’s research found that FTSE 100 companies have created 29,891 subsidiaries but details of turnover, assets, shareholder funds and number of employees are freely available in relation to only 26% of them.

Information was impossible to obtain, even for payment, in relation to a further 21% – some 6,396 companies.

The report’s co-author Katharine Teague said: “We were shocked by how little information is freely available about most companies’ subsidiaries.

“What our findings show is that secrecy is not the exception but the norm, even among the largest 100 companies traded on the London Stock Exchange.

“These are household-name firms in which millions of people invest, through their pension funds and savings. But the secrecy is so deep and widespread that it is like a blindfold on everyone who has financial dealings with these companies.”

The research, using the Orbis database and the Financial Secrecy Index (FSI), found that FTSE 100 investment and finance firms had 37% of their subsidiaries in locations rated as “highly secretive” on the FSI, banks had 28%, mining companies 19% and real estate 18%.

Almost half (46%) of FTSE 100 mining firms’ subsidiaries were in non-transparent jurisdictions for which no data at all was available, along with 40% from oil and gas giants, 30% from insurance firms, 27% from banks and 25% from media companies.

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City Of London 'Black Hole' Due To Tax Haven Use, Warns Charity

May 122014

A weekly column that puts the fun into learning

Lets admit it. Most of us get a little thrill out of finding new ways to save taxes. This is exactly what corporate biggies such as Google, IBM and Amazon have been doing too. Theyve been cleverly routing their global profits through subsidiaries set up in destinations called tax havens. This has been going on for long. But, having been denied their fair share of taxes, governments are now cracking the whip.

What is it?

Tax havens are countries that have low or near-zero tax rates, especially for some kinds of transactions. Switzerland, Singapore, Hong Kong and Mauritius are the popular ones. But the list includes others such as Luxembourg, British Virgin Islands, Cayman Islands, the Netherlands and Bermuda too.

Multinationals set up their holding companies in these locations which then invest in operations located at other high-tax locations. So, even as the company carries out its real business in a high-tax regime such as the US or India, its able to dodge the taxman by showing a large share of profits as emanating from a tax haven.

But its not just companies; tax havens have something on offer for rich individuals too, promising complete confidentiality. Now youre wondering if everything about tax havens is so clandestine, why havent they been banned at the outset? Well, this is not how things were meant to be. When tax havens first sprang up, they came up in small countries endowed with limited natural resources or other competitive advantages. Such nations saw near-zero tax rates as a good way to attract reluctant foreign capital. But with corporations and affluent individuals taking advantage of the secrecy to save taxes, the whole thing went awry.

Why is it important?

Irked by tax revenue losses, governments have now begun to come down heavily on the menace of tax havens, threatening to revoke tax treaties and demanding more disclosures from them. In India, the phenomenon of routing black money to tax havens has given birth to what is called round-tripping. Foreign direct inflows from Mauritius, Indias second biggest source, totalled $4.5 billion during April-Feb of the last fiscal. But is the tiny island nation really such as industrial powerhouse? Not really. Cynics suspect a large part of the investment flowing in from Mauritius is actually Indian money sent abroad and routed back to avoid taxes. If its Mauritius for us, its British Virgin Islands for UK and Luxembourg for Russia.

The worry is that the anonymity that tax havens offer allows other kinds of illegal activity to flourish too. The world over billions made through illegal routes such as drug trafficking and arms smuggling are said to be laundered through tax havens.

Why should I care?

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All you wanted to know about



Clemens Fuest Oxford University Tax Havens and the Economic Perspective1

By: Leeann Laclair

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Clemens Fuest Oxford University Tax Havens and the Economic Perspective1 – Video

New tour possible: Take That members Gary Barlow, Howard Donald, Mark Owen and Jason Orange in 2006. Barlow, Donald and Owen are facing a huge tax bill. Photo: Reuters/AP

The pop group Take That will consider a new world tour to pay a 30 million tax bill following a court case brought by Britain’s tax department.

A source close to the band said three of the groups members Gary Barlow, Howard Donald and Mark Owen were weighing up their options in the wake of a judgment that found a scheme in which the three men invested was set up for tax avoidance purposes.

The other two members of the group Robbie Williams and Jason Orange are not involved.

Take That in 1992. From left: Robbie Williams, Mark Owen, Gary Barlow, Jason Orange and Howard Donald. Photo: Getty Images

The trio will consider a legal appeal against Fridays ruling. But they will also have to contend with further reputational damage if they choose to protest against the decision.

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An industry insider, with detailed knowledge of the music business, said the prospect of a huge tax bill, which will include interest payments on top, is likely to result in Take That embarking on a new world tour. The group last toured in 2011, earning the five members of the band, which dominated the charts in the 1990s, a fortune.

The three men invested 66 million into two partnerships styled as music-industry investment schemes but which the court ruled were artificial tax havens for the super-rich.

The partnerships, set up by a company called Icebreaker Management, allowed musicians to avoid tax on about 63 million from world tours and CD sales following their reunion in 2005. Of the trio Barlow was the biggest investor in the scheme.

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Take That stars consider world tour to pay 30m tax bill

Howard Donald, Mark Owen and Gary Barlow were members of a tax avoidance scheme, a judge has found[GETTY]

The X Factor judge, 43, Howard Donald, 46, and Mark Owen, 42, are likely to be ordered to repay 20 million to HM Revenue & Customs (HMRC), according to reports.

They funnelled 66 million into two partnerships styled as music-industry investment schemes now exposed as tax havens for the super wealthy.

The musicians avoided tax on almost 63 million raked in from world tours and CD sales by stashing the huge sums into partnerships set up by a company called Icebreaker Management.

A tax judge has now rejected claims that more than 50 Icebreaker partnerships – which allowed almost 1,000 investors to shelter more than 300 million – were set up not to make profit but to dodge tax.

In what has been hailed as a landmark ruling for HMRC, Judge Colin Bishopp said: “Icebreaker is, and was known and understood by all concerned to be, a tax avoidance scheme.

He added: “The aim was to secure [tax] relief for members and to inflate the scale of the relief by unnecessary borrowing.”

Gary Barlow may face a huge tax bill alongside Howard Donald and Mark Owen, [GETTY]

The aim was to secure [tax] relief for members and to inflate the scale of the relief by unnecessary borrowing.

Judge Colin Bishopp

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Take That stars face 20million bill for tax avoidance

A pair of Democratic senators said they intend to close loopholes in the corporate inversion tax rules that encourage multinational corporations to move their headquarters outside the U.S. by acquiring a company overseas.

The practice was recently highlighted by news that the pharmaceutical giant Pfizer is seeking to cut its taxes by proposing a hostile takeover of a rival drug maker, AstraZeneca, which is based in the United Kingdom (see Pfizer Bids for U.K. Address as U.S. Tax Reform Stalls). Sen. Carl Levin, D-Mich., who chairs the Senate Armed Services Committee and the Senate Permanent Subcommittee on Investigations, has introduced a series of bills in recent years aimed at preventing U.S. corporations from using offshore tax havens, and he released a statement Thursday warning that he and his colleagues plan to introduce a bill focused on inversions.

Ive long been concerned about inversionscompanies moving offshore on paper, for tax purposes, while the management and operations remain in the United States, said Levin. Its become increasingly clear that a loophole in our tax laws allowing these inversions threatens to devastate federal tax receipts. We have to close that loophole. I am talking to my colleagues about legislation to close the loophole, which I intend to introduce soon. Companies that exploit this loophole benefit from the protections and services the federal government provides, including patent protection, research and development tax credits, national security and more; they shouldnt be allowed to shift their tax burden onto others.

Sen. Ron Wyden, D-Ore., who chairs the Senate Finance Committee, wrote an opinion column for The Wall Street Journal indicating that he wants to curb corporate inversions as part of a larger tax reform overhaul that would include lowering the corporate tax rate. Legal or not, this loophole must be plugged, Wyden said Thursday. Current law requires that U.S. companies reincorporating overseas must ensure that at least 20 percent of their stock is owned by their new, foreign partner. As chairman of the Senate Finance Committee, I am committed to raising this floor to at least 50 percent for all inversions taking place from May 8, 2014, on. I dont approach retroactivity in legislation lightly, but corporations must understand that they wont profit from abandoning the U.S.

Wyden pointed out that approximately 50 U.S. companies have leveraged the inversion tactic over the past 50 years and more than 20 have done so in the past two years. He would like to lower the corporate tax rate to 24 percent from its current high of 35 percent to discourage U.S. companies from moving overseas. Comprehensive tax reform will entice leading companies to invest further in the U.S. and reduce the ability, as well as the need, to manipulate the system, he said. Im committed to making this happen and including changes in the inversion rules as part of a tax overhaul. Tax reform is a heavy lift and wont be done overnight, but it has been done before and it can be done again.

Wyden said that over the next few months, he will be working closely with other members of the Senate Finance Committee to delve into the areas necessary for modernizing the Tax Code, including international taxes, building on the tax reform efforts of House Ways and Means Committee chairman Dave Camp, R-Mich., and Wydens predecessor, former Senate Finance Committee chairman Max Baucus, D-Mont.

Carl Levin

Patrick Cox, a partner at the law firm Withers Bergman, also sees the high U.S. corporate tax rate as one of the main culprits behind corporate inversions.

Companies are concerned about their nominal tax rate, said Cox. In the U.S. it is amongst the highest in the world, at 35 percent. Therefore companies are motivated to try to find a jurisdiction in which their corporate tax rate would be lower, which is not difficult to do.

He pointed out that inversion transactions have been going on for decades, including companies such as Tyco and Arthur Andersens former consulting arm, which was renamed Accenture. Cox noted that the rules have evolved over the years in Sections 367 and 7874 of the Tax Code to require companies to demonstrate real business substance in such transactions so they arent purely for tax purposes. Those include requiring there to be activities in the foreign jurisdiction, or a certain amount of ownership in the entity by foreign owners. Those rules continue to evolve, including a new notice that came out from the IRS late last month, Notice 2014-32, promising to further clarify the rules relating to triangular reorganizations involving foreign corporations, commonly known as the Killer B regulations (see IRS Modifies Killer B Regulations).

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Senators Plan to Close Corporate Inversion Tax Loophole

By Peter Campbell

Published: 15:55 EST, 9 May 2014 | Updated: 15:55 EST, 9 May 2014

The US drugs giant that plans to take over AstraZeneca has almost 200 offices registered in tax havens across the world, the Daily Mail can reveal.

Pfizer uses a complex network to run its global businesses. Almost half of its subsidiaries some 40 per cent are based in offshore shelters or other low-tax regimes such as the Cayman Islands and Jersey.

The revelations come after it emerged that the company took 67m more from the UK Government than it paid in tax over three years.

Revelation: Almost half of Pfizer’s subsidiaries are based in offshore shelters or other low-tax regimes such as the Cayman Islands

Some 85 Pfizer companies are registered in the US state of Delaware, a highly controversial tax shelter. It also has dozens of businesses registered in the Netherlands, Ireland and Luxembourgs.

In total, 185 of its 468 subsidiary companies are based in low-tax areas.

The group has an estimated 43bn nestled away in havens a sum tax experts expect to grow by 6bn a year.

Tax accountant Richard Murphy said: It has accumulated 43bn in tax havens across the world, and that doesnt happen by accident. Its profits from everywhere outside the US end up in low-tax jurisdictions and there is no doubt that the same would happen if it acquired AstraZeneca.

More here:
US drugs giant Pfizer builds up 43bn in tax havens

Pfizer Inc. (NYSE:PFE) has AstraZeneca plc (LON:AZN) firmly in its sights as a home for the $69bn of earnings it has stashed in offshore tax havens

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Is The Pfizer Takeover Offer for AstraZeneca plc Un-American?



An 'unregulated financial sector' – London used by banks for tax havens lack of regulations
Watch the full episode here: http://bit.ly/1jztxe9 Ronen Palan, Professor of International Political Economy at City University London, talks to Going Underg…

By: goingundergroundRT

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An ‘unregulated financial sector’ – London used by banks for tax havens & lack of regulations – Video

offshore jurisdictions explained

A tax haven is a country that exempts foreign investors who hold bank accounts or set up companies in its territory from taxes. Typically, two different tax systems exist together:

While citizens and corporations residing in the country are required to pay their taxes like elsewhere in the world, foreign investors enjoy, in most cases, total exemption, or at least a substantial reduction of taxes to be paid. Provided they do not carry on business within the tax haven itself. States that apply this kind of tax policies do so with the intention of attracting foreign deposits to strengthen their economy. Most of them are tiny nations with few natural or industrial resources. Their whole existence would be threatened were it not for the booming financial industry growing in the shadow of foreign capital.

Tax havens, also called offshore jurisdictions, have attracted an increasing number of foreign investors, especially in recent decades. Usually they are people and businesses fleeing their own countrys tax collecting voracity in search of a more favorable business environment. This is not surprising, since in some countries with high taxes, especially in Europe, the taxes paid by a person or business account for up to 50% of their profit.

This capital flight, of course, is not viewed favorably by tax officials of the countries that suffer from it, as in the end an important part of their tax revenue gets away. Therefore, they have tried to react with different measures to hinder the transfer of assets to tax havens or to make it unattractive.

But the new world order that emerged with the globalization of the economy makes it difficult to exert effective control over the movement of money. Trying to hinder the free flow of capital clashes with the claims of global trade liberalization, which is defended by, besides most companies and governments, also by such important institutions as the World Bank, the WTO (World Trade Organization) and the OECD (Organization for Economic Co-operation and Development).

On the other hand, the legal measures taken with the intention of hindering the outflow of capital, and which usually consist of an unfavorable tax treatment of investments in tax havens, have not yielded the expected results either.

This is because it is relatively easy to hide the ownership of offshore corporations or offshore bank accounts, so many people have simply opted to conduct their operations in secret.

The main actions have been aimed at putting pressure on the governments of tax havens seeking to limit their confidentiality laws and bank secrecy. This is currently being done through various international organizations, usually under the banner of combating terrorism, drug trafficking and money laundering networks.

The OECD, the G-20 and the FATF (Financial Action Task Force) are the most active bodies in this field. In any case, the solution to the problem is very complex, since for many of these countries their own survival as a nation is what is at stake, having no other viable economic alternatives.

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What is a tax haven. – Tax Havens Guide



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