‘Tax avoidance’ makes the G8 in Fermanagh more meaningful to Dublin than Stormont…

Yep, and if you want a short (if a little repetitive) pen picture of what and the who of the G8, this short video from the US Embassy in London is as good a grab as any.

You can see from the ariel photographs here just why the Lough Erne Golf Resort was such a no brainer to the organisers. To steal from Shakespeare’s John o’ Gaunt “it is a precious stone set in the silver sea/Which serves it in the office of a wall,/ Or as a moat defensive to a house,/ Against the envy of less happier lands…”

Ironic, since what made Fermanagh difficult territory for the British security forces makes it nicely defensible since the heads of some of the most powerful countries in the world will be coming to do business there on Monday and Tuesday.

Actually, the truth is that in terms of strategic global importance, the G8 has been eclipsed in recent years by the G20, which is a much more representative of how world economic power has been evolving over the last generation.

If it has a utility, particularly under an activist UK chairmanship, it is that most of its members (with the exception of Russia) are much more committed to multilateral actions than a G20 that comprises countries as far apart in interests as India, China and Brasil, plus the G8.

Of the three major topics at play in Fermanagh, trade is a regular given, but is the one issue on which there is rarely any significant movement. Transparency there is unlikely to be much progress. But the emergence of tax compliance as a key issue of concern for at least for the G7 subgroup is significant.

David Cameron laid his cards on the table in the WSJ last month:

We must fight the scourge of tax evasion by promoting a new global standard for automatic information exchange between tax authorities. And we must tackle aggressive tax avoidance by encouraging better global reporting to tax authorities in both the developed and developing world; and by letting tax collectors and law enforcement find out who really owns and controls each company.

Given Ireland continues to get the rough end of the US Congress’s tongue, you can bet your bottom Irish sandwiched dollar that’s why Cameron is making sure Enda Kenny is getting a seat pretty close to the top the table on that one.

As it happens, Russian is the current chair of the G20 and is due to take over for the next G8 summit in 2014. So few of the issues that get talked about in Fermanagh are likely to get much serious and broader play until Turkey hosts the G20 in 2015.

In the meantime, Peter and Martin will be hoping to leave some brochures on the lobby tables (no special friends from China I’m afraid) and may be get an invitation or two for next year, or better still the year after (having cleared the diary of any pesky Assembly elections)…

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  • Shouldn’t your headline be “Tax evasion” since tax avoidance is legal (for now).

  • Mick Fealty

    Nope. Avoidance is THE problem because whilst capital is international, there are no government systems for sharing tax information across borders to check gratuitous avoidance.

    Check out the Apple deal linked (if not very clearly) above: http://goo.gl/uUr9s

  • Mick,

    I think there will always be a need for a distinction. I thought the idea was to make a change so what the like of what Google and others do is reclassified as evasion. In either case you are right that it’s Dublin’s problem rather than Belfast’s.

  • Mick Fealty

    It’s Westminster’s and DC’s too. In that sense it’s a good thing for Ireland that Kenny’s getting access through this year’s G8 chair and that it’s on the island.

  • ‘Nope. Avoidance is THE problem ‘

    Nope, it’s the rules needing to be updated to bring them in line with the 21st century that is THE problem. Avoidance is perfectly fine, legal and shall forever remain, it’s when the rules don’t reflect reality such as Amazon paying close on nil tax in the UK as it’s taxed in Luxembourg on the vast majority of items sold in the UK for instance. He’s just looking to change what is avoided and what’s not.

    Whenever I hear Cameron or whomever his successor is discuss reneging on the double tax treaty with the States of Guernsey and Jersey will be the day tax avoidance will be taken seriously, otherwise all he is talking about is creating ANOTHER compliance check list which I shouldn’t complain too much about as this is one of the jobs I do, thus keeping me in work and in a style of living that I have become accustomed to 🙂

  • Mick Fealty

    Can you finesse that point a bit further? To Jersey you can add Delaware… I’m going to take a close interest in this issue through the next few days… Some good stuff on RTE yesterday and today…

  • ‘to Jersey you can add Delaware’

    Hmm, not necessarily. There’s lots of reasons for setting up a company in Delaware, tax only being one. To be honest, the state of Delaware is not an ‘offender’ when it comes to tax avoidance. In fact, I would have said its more to do with the settled case law, it’s proximity to Washington and business through out the north east and a super majority required for decisions among shareholders.

    Mick,

    I’ll assume that’s for me, which point specifically would you like me to discuss or finesse on? The part about the States of Jersey & Guernsey?
    I have worked in Dublin for a fund administrator and in the Channel Islands as well as the Caribbean for a stint. This term ‘aggressive tax avoidance’, has anyone challenged or asked what it means because to me the addition of the term aggressive is misleading to say the least, like you can just do it passively and it just happens and the accountant you employed just stumbled upon it (the scheme or loophole) per chance, it’s a nonsense and a nice slight of hand.

    The Channel Isands has a double tax treaty with the UK; any activity conducted in the UK and taxed in St Helier or St Peter Port is not taxed in London. You’ve avoided paying tax in London and you pay tax in St Peter Port at the rate of …0%.

    Like I said, whenever I see this treaty rendered null and void then I’ll believe DC et al are taking this matter seriously, otherwise it’s the European Savings Directive all over again, it’s making a problem of taxing activities where they actually take place, something not being raised, into a problem of reporting, otherwise why the hell did DC get each and everyone of the guys who run the British Overseas Territories to sign up to his proposals with little of a peep?

  • Alias

    The reason why the details of other companies based in foreign states can’t be known is because those states are sovereign and therefore have their own taxation and reporting systems. The problem as far as those promoting global government are concerned – and Bilderberg is driving this agenda – is not tax avoidance but the sovereignty of those states. Global taxation means global government, so you are seeing the public being primed to have more of their sovereignty in regard to their rights to devise tax laws stripped from them and transferred to global elites. Google, after all, is a member of Bilderberg and UK Chancellor, George Osborne, was its guest at its Hertfordshire event so the animosity between the taxation authorities and the tax-avoiders is somewhat stage-managed.

    Now you use say the same spurious argument that Bilderberg and its useful idiots use in respect of taxation to any other sovereign realm such as, for example, extradition: “We can’t arrest this rapist because he is in a foreign jurisdiction. Therefore, we need a global system of governance fit for the 21st century.” What they really mean is that large corporations should be allowed to organise human society on a global scale via powerless local proxies (called national governments) in order to further their own interests.

    We saw this in full effect when Ireland gave its monetary sovereignty away to another elite (the EU). The foreign elite that the hapless Irish were hoodwinked into giving their sovereignty to used that sovereignty to ensure that said hapless Irish underwrote hundreds of billions of speculative losses that belonged to large corporations. The hapless ones assumed that the elites and their local proxies told them the truth when they told them it was in their best interests to give their sovereignty away. It only took a mere decade for them to discover whose best interests were actually served.

  • Just watched a report about the G8 by a BBC world news reporter. He said that one of the top areas for discussion would be the taxes paid by multi-nationals. Silly me had thought the concern would be about the taxes NOT paid by them.

  • Meanwhile Sammy Wilson keeps polishing his comedy routine.

  • Mick Fealty
  • Sp12

    “Meanwhile Sammy Wilson keeps polishing his comedy routine.”

    One day scientists will cross breed an octopus with a dodecahedron to give his input the reaction it deserves.

  • Thanks, Mick. I missed pasting the link.
    I wonder if Sammy and pals finally persuade Westminster (and Europe?) to reduce N.I.’s corporation tax to the same as Ireland’s, and some multi-nationals relocate, will Sammy be professing his theft from the rooftops.

  • Mick,

    ‘this is what Joe means…’

    Here was I thinking you were going to take this matter serious for a moment and move SOT away from normal tribal rumblings and on to serious matters. Ah well, we can but only hope…

    What Joe means is of course something he and only he can confirm but lets take your word for it that Joe is saying that ROI is ‘stealing’ money from the UK exchequer, lets ask the simple question, how?

    I note that the UK and Ireland have a double tax treaty in effect at the moment(http://www.revenue.ie/en/practitioner/law/double/uk.html) and I also note the difference between tax evasion and tax avoidance. Now, is Sammy using a bit of hyperbole against his age old enemy or is what he really saying that he would like the rules of what can be avoided changed? I suspect its the latter but then I would be accusing Sammy of thought.

    I also note you seem to be avoiding talk of some of the technical points and sticking with the politics, as opposed to how they both interact Mick, is there a particular reason for that?

  • ..Joe is saying that ROI is ‘stealing’ money from the UK exchequer..

    No no, not me; it was Sammy wot dun it.

  • I know Joe 🙂 My main gripe is this (not with you mind), we are given a real chance to discuss something non-tribal in politics and it appears that people don’t want to engage or do the research. I shouldn’t be too surprised as what chance do many in BT9 and elsewhere in NI have of dealing with this kind of work (the answer: not much and very irregular if they decide to stay in NI)?

    If this thread was about Norn Iron playing football we would be on comment 250 by now I’d imagine and everyone would be dredging up every slight known to man and a whole lot more that are imagined. When we discuss something like this and try and get into the nitty gritty of the matter, how all of this talk of beefing up tax reporting is what’s required (is it?) when in all honesty what is being proposed (‘robust reporting’) and the terminology used (‘aggressive’ tax avoidance; seriously, wtf does that actually mean?) is putting a thin film on the situation at present, another small level of red tape to make things look like the powers that be are tackling the situation when they have no intention of doing so (Alias has it right when he noted that the sham fight between corporations and tax authorities is all for the optics).

    Further, the wheeling of Sammy Wilson out to wade into a discussion on tax collection THROUGH OUT THE DEVELOPED WORLD is akin to me wheeling out a pub drunk and trying to palm him off as some kind of intellectual, it’s hard to take it seriously.

    So, my gripe is that I was hoping that this discussion would be more macro and less micro but old habits die hard I suppose.

  • Mick Fealty

    FC,

    Are we in some kind of parallel universe here FC? I hoping for some expert comment to counter the illogic of Sammy’s posturing/positioning. And to help penetrate that ‘thin film’, as you put it…

  • Very true, footballcliches. As an aside, isn’t it absolutely amazing and wonderful that N.I. has come so far since the GFA that an event like the G8 meeting can be held in Fermanagh?

  • Mick, what the hell is up with you? Way, way past your bedtime. Or did the birds singing wake you up?

  • It would appear so whenever you posted

    ‘This is what Joe means’, honestly, what has that got to do with what I have been posting because I have no idea? If you were looking to tease something out by all means do but you haven’t exactly been clear about what specifically tbh.

    The illogic of Sammy’s comments? Simples, there’s a double tax treaty involved, tax avoidance is perfectly legal and theft is a criminal act. Then there is of course the fact that he basically wants NI to go into a tax regimen whereby people get to avoid paying taxes at a particular rate to the exchequer in Whitehall for a Treasury/Finance department in Stormont, how’s that?

  • Another aside.
    From the BelTel, They (Robinson and McGuinness) will also be keen to make political use of the President’s sentiments, arguing that more harmonious relations depend partly on economic improvement. Is that putting the cart before the horse, or what?

  • Mick Fealty

    Birds Joe… Laters FC…

  • Joe,

    ‘Very true, footballcliches. As an aside, isn’t it absolutely amazing and wonderful that N.I. has come so far since the GFA that an event like the G8 meeting can be held in Fermanagh?’

    Short answer, yes. It is nice to see major pols coming to Fermanagh and seeing then Irish countryside in all its glory (at least I hope they have given the security lock down they are all under).

    Mick,

    Laters indeed mate.

  • Mick,

    ‘to help penetrate that ‘thin film’, as you put it…’

    OK, I’ll bite as I have 20 mins left in work today.

    Essentially, you will have a problem in a large number of these British Overseas Territories (BOT) in doing anything significant with the financial authorities whereby you will have a proactive regulator for a large number of reasons:

    i) They don’t have the man power by way of numbers. This is not likely to change unless there is serious outside pressure placed on them and not from someone like DC but more likely whenever the IMF, OECD or Worldbank calls by every year to review their legislation, systems, operations and controls. None of these BOTs want to go on the OECD Black List and will bring forward legislation to counter any suggestions that they are not cooperating.
    ii) They don’t have the corporate institutional know how to deal with this kind of oversight. These jurisdictions sell themselves on being light touch so to ask these guys to all of a sudden put in place systems to be a lot more proactive on reporting is never going to fly.
    iii) The powers that be in the G8 don’t want to rock the boat as the major business interests are too heavily involved with off shore structures.

    So, when I said ‘otherwise all he is talking about is creating ANOTHER compliance check list’ I mean that BOTs and the corporate service providers will go with what they know; make it into a one off project that’s a check list.

    Example: in the BVI some companies can issue bearer shares ie the bearer owns the shares, no need to list who owns them. Now, from an AML (anti money laundering) perspective, that’s just a no no as you couold act as a front for some drug dealer or what not for a company or asset. So in the BVI they basically didn’t rid themselves of bearer shares, they just made it more expensive to have this company (annual domiciliary fees increased), all of the corporate service providers had to have a registrar of the owners of these companies which they only disclosed to the BVI FSC (financial services commission) and they had to confirm where the shares for these companies were held. That’s really it. Does this exercise rid the BVI of companies that are potentially fronts for someone? Not really, you’ve just solidified the front and haven’t really found out who is behind the company.

    So, I wonder how some islandslike the BVI for instance, pop c26k, with a very limited tax department with little or no experience with corporate taxation (there is none on the island) will be able to collate this information and send this back to London, Washington and wherever else. Further, I do not see how this stops someone like an Amazon that sells millions of pounds of items in the UK and yet is taxed for this inLux will be effected as it doesn’t actually challenge the way they do business. DC is essentially saying he’s looking to stop tax evasion and is confusing it with tax avoidance (he’s happy with the loop holes, and is going for the few % points of business that work illegally).

  • There are so many wonderful things to see in Fermanagh, Devenish island with its round tower, Boa Island and the Caldragh Cemetery stone figures to name just a few, that it would be a pity if the visitors didn’t get a chance to visit some. Of course world leaders don’t get to do much sightseeing – they’re too busy being important .