Being technically true is not the same as being honest

Our quote for the day (Hat-tip to James McLaren):

I realize that lawyers are brought up (probably from small children) to think that technically true is what matters, but when you make public PR statements, they should be more than technically true. 

They should be honest. 

There's a big f*cking difference.

Linus Torvalds, author of the Linux computer operating system.  Originating source here

Links Sep 4

Common ground for Obama and Putin is offshore Reuters

G20 Leaders Will Need Great Political Courage to Win Fight Against Tax Dodging allAfrica

Release Of Offshore Records Draws Worldwide Response ICIJ
Latest reactions and responses

From West Africa To Tibet, New Locales Enter The Offshore Secrecy Market ICIJ
See also: Australia: Tax haven ticket to uncharted territory SBS and Kenya: want a shell company? No question Financial Times

Swiss mull restitution of Mubarak funds to Egypt swissinfo

Argentina's ex-leader Carlos Menem back on trial in tax case BBC

Offshore tax-dodger dragnet widens with U.S.-Swiss bank deal Reuters
See also: Every American With Money Abroad--Anywhere Abroad--Is Impacted By Massive Bank Deal Forbes and Americans Hide Up to $32 Trillion; Singapore, HK, Caymans Top List ValueWalk

Panama’s government approves bearer shares immobilization law STEP / La Nación
See also: Bearer Share Law Contradictory The Bulletin Panama

British Virgin Islands: BVI office to open in Hong Kong, local discussions on FATCA, “shock” at France blacklist Financial Secrecy Media Monitor

The Turks & Caicos Islands sign international convention on tax transparency Turks & Caicos Islands Weekly News

Microsoft is funding its Nokia acquisition with cash it kept from the taxman Quartz

The Netherlands: German companies' favorite tax haven Deutsche Welle

Rising transfer pricing scrutiny dials up risk CGMA Magazine

SEC must take opportunity to re-issue a strong rule for the vital US transparency law under Dodd-Frank 1504 Global Witness'

The missing part is the tax gap – video from the European Commission Tax Research UK

Twelve steps to stop tax avoidance New Statesman

Tuesday Tax Tradeoff: Protect the Environment vs. Give Tax Breaks to Oil Companies Americans for Tax Fairness

Links Sep 3

Dutch, under pressure on tax, offer talks with emerging economies Reuters

United States and Switzerland Issue Joint Statement Regarding Tax Evasion Investigations U.S. Department of Justice
See also: Press unenthusiastic about US tax deal swissinfo and Bankers regret past conduct But does this translate into ceasing such activity for clients around the globe? 

Senate moves to end anonymous shell companies to crack down on money laundering, tax dodging and corruption Global Witness

Cyprus Bank’s Bailout Hands Ownership to Russian Plutocrats The New York Times

Samoa: Tax ‘secrecy’ faces new threat Samoa Observer
"Samoa’s offshore industry is facing a new threat to revenues with the signing of a major tax agreement between China and other tax authorities"

Labuan, a tropical safe Le Temps (In French)
"The Malaysian island of Labuan dreams of copying Liechtenstein."

‘Taking from the poor to give to the rich’ presseurop
"The Isle of Man, Jersey and Guernsey welcome billionaires who want to cheat the tax man. But campaigns against tax evasion have eroded these tax havens' revenues and even they have been forced to resort to budget cuts."

Liechtenstein Adopts Implementing Law For Austrian Tax Deal Tax-News

Liechtenstein: Banks issue voluntary tax compliance guideline “to keep untaxed assets away”  Financial Secrecy Media Monitor

Bermuda: Ministry Responds To France “Tax Haven” List Bernews

A familiar story.

Vodafone's £84bn tax avoidance bonanza: Nothing for taxpayers in Verizon deal while bankers share £500m in fees The Independent
See also: Should the Public Accounts Committee investigate Vodafone? My answer is an emphatic ‘yes’ Tax Research UK

Italy introduces tax on high-speed trade and equity derivatives Financial Times

Is Bitcoin the New Tax Haven? TaxProf Blog

Vulture funds: US court ruling on Argentina enrages debt justice campaigners Eurodad

Seychelles tops list of most indebted nations The Guardian

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Diabetes and CKD - Pitfalls: Cystatin C

Cystatin C has been proposed as an alternative marker of kidney function and studies have shown that CyC is a better predictor of mortality that serum creatinine. Although, when first introduced, it was thought that CyC was not influenced by factors apart from renal function, this assumption has been questioned in the recent past.

CyC is a 13 kDa cysteine protease inhibitor that is produced by all nucleated cells. It is freely filtered at the glomerulus and then catabolized in the proximal tubule such that very little appears in the urine. CyC levels are affected by renal function but also independently influenced by age, gender, BMI, fat mass, triglycerides and the presence of diabetes. Interestingly, these are all components of the metabolic syndrome.

In 2011, a paper was published in Diabetologia that found that elevated levels of CyC were associated with an increased incidence of type II diabetes. The thought was that CyC was potentially involved in the pathogenesis of diabetes. In July, a paper was published in NDT that shed a bit more light on this issue. The authors reported the results of a 3-year study of French adults in whom the incidence of diabetes was low. In this study, in common with previous research, CyC predicted incident diabetes. However, when stratified by BMI, CyC predicted incident diabetes only in participants with a BMI >25 at baseline.

So what is the explanation for this? CyC secretion has been shown to be 2-3 times higher in obese patients than in non-obese patients. CyC is also highly expressed in subcutaneous adipose tissue. Data from the Framingham Heart Study has shown that adipose tissue was not associated with CKD using creatinine-based estimating equations while it was associated with CKD using a CyC-based equation. CyC may play a role in preventing inflammation associated with increased adiposity explaining the increased secretion in obese patients.

The implications of this are that, although CyC may predict diabetes, it is unlikely that it adds any more to prediction algorithms considering that it is not independent of BMI and the metabolic syndrome - both of which are well known to be associated with diabetes. The second implication is that the fact that CyC is better at predicting mortality than creatinine (at the same level of eGFR) is related to non-renal factors - again, adiposity and the metabolic syndrome. It similarly suggests that in obese patients, estimating equations that utilize CyC may not be as accurate as previously suggested. The search for a better biomarker of GFR continues...

Public registries on companies, trusts: an idea whose time has come

For a long time we and many of our colleagues in the tax justice movement have been calling for public registries to be set up containing beneficial ownership for all companies, trusts and foundations, and their like.

We thought we would share part of an e-mail this morning from Robert Palmer of Global Witness, an NGO that has played a pivotal role in this crucial area.

"We've seen real support growing behind the idea of public registers - from businesses, law enforcement and even the banks themselves."

For examples, he cites Simon Walker, head of the UK's Institute of Directors, a large business lobby groups, who has come out in favour of public registers of beneficial ownership, here.

The head of the British Bankers Association has also spoken publicly about the need for registers, though he’s less clear on whether they should be public.

The head of tax for the Confederation of British Industry, the most powerful UK business group, Will Morris, has stated that having such a register was a “no-brainer” - and his personal preference was to make it available to the public.
A public Avaaz petition from businesses calling on the UK government to adopt public registers of beneficial ownership attracted 23,000 signatures so far.

And then of course there's Britain's Prime Minister David Cameron:

"I hope G8 Leaders will consider publishing national Action Plans by June that set out concrete steps that their governments will take to achieve this – including, for example, by enhancing the availability of beneficial ownership information through central public company registries."

Many others in other countries support such an idea. See, for example, Frank Knapp's article in The Hill in Washington, D.C. supporting the idea, or this, from the Manhattan District Attorney.

See also this, via the World Economic Forum, (courtesy of Joe Stead and Robert Palmer)

Elsewhere, the European Banking Federation has stated (p6) that it regards public registries as “imperative if credit and financial institutions are expected to discharge their obligations concerning Beneficial Ownership identification” under the EU's Anti Money Laundering (AML) legislation."
 
As Global Witness' Palmer notes, timing is crucial on this, since the European Union is currently debating how to deal with the problem of hidden company ownership as part of the discussions around the revision of its anti-money laundering directive.

Public registries with beneficial ownership information: this is clearly an idea whose time is coming. Why not just get on with it?

Fixing the cracks in corporate tax: new policy brief

The Tax Justice Network and 33 other non-governmental organisations have just released a new policy brief responding to the OECD's large and widely reported Action Plan on "Base Erosion and Profit Shifting (BEPS) by multinational companies," (otherwise known as corporate tax dodging.)

Our new report is entitled Fixing the Cracks in Tax: A Joint Plan of Action.

As it states, and as we have stated before:

"The international system for the taxation of TNCs is no longer fit for purpose.  International tax rules, drawn up 80 years ago, have not kept pace with the changing business environment."

This new report, also available from here and here, issues a range of recommendations to the OECD and the G20, with three key pillars:

• Take effective steps to ensure that developing countries can participate in the BEPS process on  an equal footing, and assist them in implementing measures to stem their losses from international tax avoidance that deprives governments of badly needed revenues.
   
• Undertake – jointly with other organisations, policy makers from developing and developed countries, and independent experts – a rigorous study of the merits, risks and feasibility of more fundamental alternatives to the current international tax system, such as unitary taxation, with special emphasis on the likely impact of these alternatives on developing countries.
  
• Implement additional measures to tackle financial and corporate secrecy, including the requirement for TNCs to provide public combined and country-bycountry reports, the establishment of comprehensive multilateral automatic exchange of tax information, and the public disclosure of the beneficial owners of companies, foundations and trusts.

We wholeheartedly endorse and support all of these. For reasons best known to its members, the OECD has a history of viscerally, intransigently attempting to close down all discussion of unitary taxation; the BEPS report was the first time it allowed a tiny chink of an opening, when it acknowledged that measures "beyond the arm’s length principle" may be required to
deal with some of the problems it identifies.

In more fine-grained detail, the report also makes a series of other recommendations, of which we will highlight these two here:

• The OECD and the G20 should strengthen the UN tax committee. Quite so, as we've noted before.
• Governments must promote a shift from tax competition to global and regional tax cooperation. Read more about the evils of tax 'competition' here. 

This blog will be posted permanently on our transfer pricing page.