Banana protests, paltry fines and a PR problem


Of all the world leaders shamed over hidden wealth stashed offshore, none was more unfortunate than Sigmundur Davíð Gunnlaugsson. The hapless prime minister of Iceland was caught on camera desperately trying to work out how to explain the presence of his signature on the documents of Wintris Inc, a company in the British Virgin Islands that held shares in one of the country’s failed banks.

As many as one in 10 Icelanders protested in front of the Alþingi, the national parliament, demonstrating their anger through the time-honoured tradition of hurling Icelandic yoghurt and waving bananas. Gunnlaugsson eventually resigned – and in so doing, launched a year of political upheaval; this month, the Pirate party was invited to form a government.


Three-time Pakistani PM Nawaz Sharif has spent the whole year trying to face down the discovery that his children had raised loans against multimillion-pound properties on Park Lane in London, owned through offshore companies.

“He is in trouble. I think he is going to find it impossible to govern Pakistan,” opposition leader Imran Khan told the Guardian in April. In November, Khan’s plan to “lock down” the capital Islamabad with a coordinated protest by thousands of his supporters was called off after the supreme court ordered a corruption inquiry. That the revelation prompted so much public anger is all the more striking in light of the fact that Sharif was first linked to the property 16 years ago.

Stolen art

Seated Man with a Cane, an £18m painting by Modigliani, has for years been at the centre of a legal battle between the Nahmads, a family of New York art dealers, and the descendants of Oscar Stettiner, the Jewish gallery owner from whom the painting was seized by the Nazis in 1940.

The Nahmads have long insisted that they don’t own the painting because the International Art Center, a company incorporated in Panama, bought it at auction. But the Panama Papers revealed the Nahmads to be the owners of the company, and within days the Modigliani, which had been languishing in a tax-free Geneva warehouse known as a “freeport”, was seized by Swiss police. The dispute continues.


About 170kg of silver bullion and $150,000 of coins were among the items seized by Australian police in Camp Mountain, Queensland, earlier this year after they conducted raids against suspected tax evaders based on analysis of the papers. More than $2.5bn was reportedly connected to the 1,000 Australians that appeared in the files, with 100 facing compliance action as a result of the revelations.


HMRC has a miserable record of pursuing offshore tax malfeasance, with just a single tax evader prosecuted after it was handed a disc of data naming thousands of British clients of HSBC Private Bank Suisse. So a swiftly created Panama Papers taskforce, set up by Downing Street to “deal with any wrongdoing” brought to light by the investigation, was looked upon by many with a degree of scepticism.

But a statement by the chancellor, Philip Hammond, to parliament in November suggests that, staggeringly, action is being taken: 22 people are now under suspected investigation for tax evasion; 43 high net worth individuals (the super-rich to you and me) are under examination over their links to Panama; two properties have been connected with a National Crime Agency inquiry, and 26 offshore companies with property ownership are considered by the NCA to be “suspicious”.


While the rest of the world focused on the leaked files’ revelations of massive wealth hidden offshore, potential sanctions-busting and the facilitation of grand corruption, the government of Panama called for attention to shift to a much more important problem: the name of the reporting series.

“Despite their name, the Panama Papers are not mainly about Panama,” wrote Panamanian president Juan Carlos Varela in the New York Times. “It’s not about Panama, it’s about one company. Nobody called it the Texas fraud when Enron [went] bankrupt,” agreed Ivan Zarak, the vice-minister of the economy. “It’s unjust. You are holding accountable the whole country for the actions of one company.”

An attempt at crisis management involving an independent report to assess the transparency of the country’s financial system promptly fell apart after the government refused to commit to publishing the findings.

The cellist

Sergei Roldugin, a close friend of Vladimir Putin and an inexplicably wealthy musician, gave a performance in Palmyra in May after the ancient city was liberated from Islamic State control. Beyond simply a celebration of Russian success in the military response to Isis, the spectacle could be interpreted as a public display of the president’s continued affection for the cellist, despite all that offshore awkwardness that exposed Roldugin’s links to Putin’s hidden fortune. Isis was reported to have retaken the city early this month.

Arron Banks

At the time the Panama Papers were published, Ukip financier Arron Banks was having a jolly time campaigning for Britain to leave the European Union and wasn’t about to let journalists spoil his fun by reporting on PRI Holdings Limited. PRI Holdings? Nothing to do with me! You’ll be hearing from my lawyers, sir!

Banks later published a sort of self-congratulatory EU referendum diary, in which his entry for 5 April 2016 suggests that this steadfast denial might not have been entirely accurate.

“At first I denied having anything to do with it as it just didn’t ring any bells,” he explained. “However, I got someone at the office to look into it and discovered that we did actually use a law firm to set up a couple of companies for a project that didn’t end up happening.” Banks was “thousands of miles away on a boat in the British Virgin Islands” at the time, where it’s probably quite easy to forget about offshore companies.

David Cameron

The then prime minister’s four days of April prevarication over how to respond to the discovery of his father’s offshore fund in the Panama Papers was widely described as his “worst week ever”, which seems naive, post-everything else in 2016, but felt reasonable at the time.

In his rushed-out political memoirs, Cameron’s media adviser Craig Oliver revealed that he was worried the PM might have to resign over the scandal, and that Cameron had also invested “in something called the Vietnamese Enterprise Fund”. Oliver describes a remarkably chaotic press operation, with the Camerons spending hours on the phone with accountants and Oliver not actually discovering the PM had owned offshore shares until two days after the story first broke.

Mossack Fonseca

Mossack Fonseca, the offshore services firm at the centre of the entire scandal, continues to operate. The British Virgin Islands, where it incorporated most of its clients’ companies, administered a “record” fine of just under $500,000 (£404,000) and cheerfully allowed them to continue incorporating new shell companies.

However, the firm, which continues to insist it did nothing wrong, has had nine of its offices around the world, including in Jersey, Guernsey and the Isle of Man, closed down. Several of its staff have been arrested, including one junior Venezuelan employee currently being held in a military prison in Caracas.

— source By David Pegg

Google To Pay EUR280m In Back Taxes To Italy

Google has agreed to pay up to EUR280m (USD296m) to settle corporate income tax said to be due to the Italian Revenue Agency, according to Italian media reports.

One year ago, the Revenue Agency disclosed that the Guardia di Finanza, Italy’s financial police, had served notice on Google with regard to its past tax payments in the country.

It was then reported that the Guardia was alleging that Google had a permanent establishment in Italy in the years between 2009 and 2013, and Italian taxes were therefore payable, for example, on the income received from clients in Italy.

The launching of the case against Google followed the agreement made by the Revenue Agency with Apple Italia at the end of December 2015, wherein Apple Italia agreed to pay EUR318m to fully settle Italian corporate income tax said to be due since 2008.

— source

Google dodged 2015 Taxes by $3.6 Billion

Alphabet Inc.’s Google saved $3.6 billion in worldwide taxes in 2015 by moving 14.9 billion euros ($15.5 billion) to a Bermuda shell company, new regulatory filings in the Netherlands reveal.

The amount the company shifted through its Dutch subsidiary, Google Netherlands Holdings BV, and then on to a Bermuda mailbox was 40 percent greater than in 2014, according to filings the company made with the Dutch Chamber of Commerce on Dec. 12 and which were made available online Tuesday. News of the filings was first reported by the Dutch newspaper Het Financieele Dagblad.

Alphabet moves the bulk of its non-U.S. profits through this Dutch subsidiary, which has no employees. The company has used the Netherlands company since 2004 as part of a tax structure dubbed a “Double Irish” and a “Dutch sandwich.” By moving most of its international profits to Bermuda, the company was able to reduce its effective tax rate outside the U.S. to 6.4 percent in 2015, according to Alphabet’s filings with the U.S. Securities and Exchange Commission.

“Google complies with the tax laws in every country where we operate,” a Google spokesman said in a statement. In February, Google also said such calculations of an effective tax rate do not reflect the methods actually used to determine its international taxes in any jurisdiction.

Some 12 billion euros of the money funneled through the Dutch company in 2015 came from Google Ireland Limited, which collects most of Google’s international advertising revenues. The rest came from a Google subsidiary in Singapore that serves a similar role. The Dutch company then transfers this money on to Google Ireland Holdings Unlimited, which has the right to license Google’s intellectual property outside the U.S. That company is based in Bermuda, which has no corporate income tax. The use of the two Irish entities is what gives the structure its “Double Irish” moniker.

The total amount of profit Google had sheltered from U.S. taxation, most of which passes through its Dutch subsidiary en route to Bermuda, grew to $58.3 billion in 2015, according to Alphabet’s SEC filings.

The Irish government closed the tax loophole that permitted “Double Irish” tax arrangements in 2015. Companies already using the structure, however, are allowed to continue employing it until the end of 2020.

Google is under pressure from regulators and tax authorities around the world for not paying enough tax. On Tuesday, Indonesia set a Dec. 31 deadline for Google to resolve a tax dispute there, including a possible $223 million fine. The company’s offices in Spain and France have also been raided by tax investigators in the past year.

U.S. President-elect Donald Trump has discussed possible changes to U.S. tax laws in order to allow American companies to repatriate foreign profits at a one-time tax rate of 10 percent. That would eliminate some of the incentive U.S. companies currently have to hold foreign profits outside the U.S. Tech firms have some of the largest such stockpiles, with Apple holding $181 billion outside the U.S. and Microsoft holding $94.4 billion, according to their 2015 annual SEC filings.

— source By Jeremy Kahn and Martijn Van Der Starre

SC indicates setting up SIT for Panama papers leak probe

The Supreme Court on Monday indicated that it may at a “relevant time” order the setting up of a Special Investigation Team (SIT) to exclusively look into revelations made in the Panama papers on nearly 500 high-profile Indians who have allegedly parked money in off-shore accounts.

A Bench of Justices Dipak Misra and R. Banumathi said “everything” cannot be under the control of the SIT set up to investigate black money. That SIT is headed by former Supreme Court judge, Justice M.B. Shah.

“One SIT should not control everything. We are thinking of another SIT. We want an independent SIT,” Justice Misra observed.

The government, represented by Additional Solicitor General P.S. Narasimha, told the Supreme Court that it was “absolutely serious” about investigating disclosures in the Panama papers.

Meanwhile, SEBI has sought time to file its counter in the writ petition filed by Supreme Court advocate M.L. Sharma, who alleged that the leaked documents reveal the commission of a serious fraud.

In an earlier hearing, Additional Solicitor General Tushar Mehta had submitted that a Multi Agency Group (MAG) of various investigative agencies was formed by the government to go into the disclosures made in the list which included about 500 Indian entities.

The Panama leaks contain an unprecedented amount of information, including more than 11 million documents covering 2,10,000 companies in 21 offshore jurisdictions.

— source By Krishnadas Rajagopal

Corporate tax-dodging in Australia costs billions

Two reports on company taxation show that more than a third of the largest companies operating in Australia paid no tax in 2014–15 and that multinational tax evasion cost an estimated $4.8 billion that year. These reports show the fraud of the claims being made by the Australian government and corporate media that Donald Trump-style tax cuts will boost plummeting investment and benefit the country’s population.

Addressing a business dinner last month, Prime Minister Malcolm Turnbull renewed his call for the company tax rate to be reduced from 30 to 25 percent in an attempt to meet the demands of the financial elite for his government to match the unprecedented cut from 35 to 15 percent promised to the US ruling class by President-elect Trump.

Turnbull insisted that investment would flood out of the country and into the US and other lower-taxing countries, unless the population accepted tax cuts for the corporate giants and other pro-business “reforms” to boost profits. “Hard decisions” required “winners and losers,” he declared.

Yet billions of dollars in corporate tax concessions—all permitted by the law—have failed to halt the slump overtaking Australian capitalism. Far from using tax windfalls for investment, major corporations have continued to boost their profits and reward their wealthy shareholders while restructuring their operations at the cost of workers’ jobs and conditions.

In the most recent result, the Australian economy contracted by 0.5 percent in the September quarter, driven by an ongoing collapse in business investment—down 9.7 percent over the past year.

Almost 700 of Australia’s largest 1,904 companies paid nil tax in the 2015 fiscal year, according to an annual corporate tax transparency report issued by the Australian Tax Office (ATO) this week. It showed that 36 percent of the companies—whether locally-listed, private or foreign-owned—paid no tax. But the ATO insisted that this was perfectly legitimate and not a sign of tax evasion or avoidance.

Of the companies that paid no tax, 291 reported an accounting loss. Another 125 reported an accounting profit but reconciliation items (for example, tax deductions allowed at higher rates than accounting permits) resulted in a tax loss. A further 128 reported a taxable income but prior-year losses were available to deduct against that profit so no tax was payable. Lastly, 135 reported a taxable income but were entitled to offsets (such as research and development incentives) at least equal to the tax otherwise payable.

One reason that the ATO cited for the outcome was the collapse in commodity prices, which continued into the 2016 fiscal year. In all, energy and resources corporations paid $3.2 billion less tax to the government during fiscal 2015, with almost 60 percent of the companies in this sector paying no tax at all.

The world’s biggest mining company, BHP Billiton, more than halved its tax bill from $3.95 billion in 2014 fiscal year to $1.7 billion after its taxable income fell from $40.4 billion to $33 billion. Its effective tax rate fell from less than 10 percent to about 5 percent.

Mining giants were not the only tax-dodgers, however. Among the big names that paid nil tax, IBM paid nothing despite recording $3.6 billion in total income and $49.3 million in taxable income. Amazon Corporate Services paid just $4.3 million on $148.3 million in revenues and $14.2 million in taxable income.

Apple and Google increased their tax payments a little in 2014-15, after coming under public fire for global tax evasion. Apple’s tax bill almost doubled to $146.3 million, on the basis of local income of $8.4 billion. That is an effective tax rate of less than 2 percent. Google’s tax bill lifted $3 million to $12.2 million, on reported income of $438.7 million—a rate of under 3 percent.

The Business Council of Australia, representing the largest firms operating in Australia, backed the ATO’s declaration that nil tax returns were not a sign of tax evasion or avoidance. “This includes 109 companies that paid no tax, despite reporting more than $1 billion in total income,” BCA chief executive chief executive Jennifer Westacott said.

Westacott claimed the discrepancies could be explained by the fact that companies only pay tax on their profits, “after paying all expenses including wages, capital replacement, supplier costs, fleet costs and other operating expenses.” Such items, however, often allow companies to reshuffle their results to minimise tax liabilities.

An Oxfam report on global tax evasion, due out next Monday, estimates that Australia loses more than $4 billion a year due to the use of 15 of the worst global tax havens by multinationals.

The top three offshore financial centres used by those multinationals operating in Australia were Switzerland, Singapore and the Netherlands. On a global basis, Bermuda topped the list as the most serious tax haven, with 0 percent corporate income tax, 0 percent withholding taxes, evidence of large-scale profit shifting and a lack of transparency.

The charity’s report implores the government not to join the “race to the bottom” on corporate tax rates. Oxfam notes the average corporate tax rate across G20 countries was 40 percent 25 years ago. Today it is less than 30 percent.

Despite net profits by the world’s largest companies tripling in real terms over the past 30 years, from $US2 trillion in 1980 to $7.2 trillion by 2013, tax contributions of large corporations were diminishing, the report says. On top of that, Oxfam says 90 percent of the world’s biggest companies had a presence in at least one tax haven.

Oxfam’s report appeals to the Australian government to ensure that companies pay their “fair share” of taxes, so that money is available for schools, hospitals and other social services. In reality, as the record of the past 30 years demonstrates, what the financial elites regard as “fair” is determined purely by their capacity to keep ramping up profits and dividends via a combination of tax-dodging, cheap labour exploitation and free-market deregulation.

In this process they constantly play one country, and one section of the working class, off against the others, shifting production and financial operations to wherever they can extract the lowest costs and biggest margins. As a result, social inequality has widened immensely, and even more so since the 2008 global financial breakdown.

Trump’s tax cuts and “America first” economic program will only heighten this endless international “race to the bottom” at the expense of workers and young people, who face further job destruction, the driving down of wages and conditions and the devastation of essential social services.

While Turnbull’s Liberal-National government is under immense corporate pressure to accelerate this offensive, it has long had bipartisan support in the political establishment. During the 1980s and 1990s, the Labor governments of Hawke and Keating began the assault, lowering the corporate tax rate from 49 to 30 percent, and the top marginal personal tax rate from 60 to 49 percent. Even so, as the latest reports confirm, major corporations and the wealthy often pay little or no tax.

— source By Mike Head

CII wants corporate tax rate slashed to 18% in budget

With more economic activity entering the tax net post demonetisation, government should lower the corporate tax rate to 18 per cent, said CII in its pre-Budget memorandum to the Finance Ministry. The current corporate tax rate works out to be 30 per cent plus cess and surcharge. CII noted that there are 32 incentives applicable on corporate profits before calculating tax. The effective tax rate works out to about 19.8 per cent. “we believe that lowering the tax rate to 18 per cent and removing all tax exemptions will not negatively impact government revenues on this head,” they said. [may be incentive can be added again!]. Finance Minister Arun Jaitley had announced in his 2015 Budget speech that the rate of corporate tax will be reduced from 30 per cent to 25 per cent over the next four years along with corresponding phasing out of exemptions and deductions.

— source