ActionAid’s offshore objection ‘moral rather than legal one’
Wednesday 12th October 2011, 2:29PM BST.
GUERNSEY has been implicated in a row over FTSE 100 companies placing money offshore.
National media stories included information from an ActionAid report that claims that 206 of the world’s biggest companies offshore cash in the island.
But named companies defended themselves and said that the report was not a fair representation of the facts.
ActionAid tax justice campaigner Chris Jordan argued that while multinationals used offshore jurisdictions to avoid paying their ‘fair share’, ordinary people in both rich and poor countries were left to pick up the bill.
Companies listed by ActionAid as those who stored money in Guernsey included Vodafone, Barclays and Schroders.
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A complaint should be lodged with the Charities Commission – in acting as a political lobby group ActionAid is violating its status as a charity
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The recent attack on the Fulfilment Industry by the UK Government is just a smokescreen.
The amount of tax lost due to this is just a pin prick in the whole scheme, when it come down to the Channel Islands “Tax haven” status.
Without it, the Island would have to go back to Privateering and Shipbuilding.
Thousands of jobs would be lost.
The price of houses would come down by 50%.
Might not be a bad thing.
However there are far too many people that have the final say with their fingers in the pie, so there is no chance of changes being made, unless there is a WW III.
Guernsey and Jersey have it all sewn up, with most people on the make over here and in the UK.
The Charities Commission are right in what they say.
However no one gets a prize for stating the bl**ding obvious !
Don’t bother coming back with the statement that Guernsey is a regulated and legal financial centre.
It is a Tax Haven and anyone who says different is suffering from delusions.
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Yes Fermain, lets attempt to stop all resistance to nefarious corporate behaivour…..
Personally I say bravo Action-Aid, the more spotlight on this the better in my opinion.
In an age where CEO bonuses and salaries grow exponentially compared to the static wage of average working man, company shareholders making big gains from this type of behaivour, corporate profits through the roof whilst unemployment is at its highest in 17 years, allied to the general lack of corporate social responsibily showed by most FTSE companies which makes the top tier of society hold an even greater portion of wealth, its about time companies were fully held accountable for their actions, but lets not forget, companies have more rights than the common man!?!?
Just google “goldman sachs tax avoidance”, and ask yourself 1 Is it fair? and 2 Would you get away with that?
But oh wait, we have politicians in all jurisdictions with vested interests and a general populace largely ignorant of just how badly they are being treated…….. “move along nothing to see here, the charity is acting outside its remit”
Its about time we started to wake up and smell the coffee along with Occupy wall street slowly the rest of the world is coming around, we can stay hapily cosseted in our complicit little bubble but the longer our head is in the sand, the worse it will get….
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Just to clarify – ActionAid’s research & report doesn’t focus on any particular jurisdiction, but seeks to highlight the development impacts of the current international tax system on developing countries.
ActionAid is calling for an international deal at the G20 next month to increase transparency across the board, create a level playing field and ensure that developing countries benefit.
African countries need to increase their tax revenues so they can employ the teachers and doctors they need to escape from poverty. While aid is great for building schools, it’s too short term and unpredictable to pay for teacher’s salaries and other long-term commitments. Longer term, building tax revenues would allow whole countries to break free from a dependency on aid. This campaign shows how widespread the problem is – hundreds of multinationals work in most developing countries and it is normal, usually legal, business practice to use tax havens, which can deprive poor countries of much needed corporation tax revenues.
Addressing the underlying causes of poverty, not just alleviating its symptoms, is central to ActionAid’s mission and that of many other development charities.
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I’m seriously considering cancelling my Action Aid direct debit.
I was accosted in London 2 weeks ago by a couple of their ‘Chuggers.’ Unfortunately they are now a menace in Town centres all over the UK. Signing up the polite, weak-minded and those too embarrassed to say no in public to a ‘charity’ – no matter whether these people can actually afford the monthly donation they are encouraged to sign up for.
This shows hypocrisy on ActionAid’s part for using such tactics to collect money – Chuggers themselves are very lowly paid workers exploited by the companies that big charities use to collect money for them.
So the ethical dilemma I’m left with is that I don’t in any way agree with the aggressive collection methods now used by a charity I support but if I cancel my DD then a little girl on the other side of the world is going to be worse off.
bit of further info here:-
http://thecommune.co.uk/2011/10/06/life-as-a-%E2%80%98chugger%E2%80%99-owing-money-to-your-boss/
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Chris Jordan
Could you clarify one thing for me – the article above (and the Channel 4 news piece the other night) is all about UK companies placing money offshore. The suggestion is that the UK is worse off as a result (a debatable point).
However, your post focusses on negative impacts on developing countries. So, how would developing countries have greater tax revenues if the FTSE 100 countries all incorporated their subsidiaries in the UK?
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Chris Jordon
Action Aid has an excellent vision for how increased tax revenues can help build and maintain the infrastructure needed to lift African nations out of poverty.
However, unless this increased tax revenue goes hand in hand with strong action (by which I mean more than a “strong telling off” by the impotent UN) to address the endemic corruption in many African governments, all this increased revenue will buy is more guns and private jets for top officials – it will do very little to benefit those in need.
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The British tax payer has forked out billions to rescue the banks in Britain and here’s one of them Barclays putting money offshore to avoid paying British tax. Disgusting, no morals just greed.
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ActionAid seems well intentioned but ultimately clouded by a political perspective.
For a charity supposedly focused on developing countries I am surprised that they think that restricting the free flow of international capital would help their cause. The policies they advocate would inevitably restrict inward investment into these countries, reducing infrastructure development and job creation.
Offshore jurisdications should be championed for the role they play in facilitating inward investment into developing countries.
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Pete – first, Barclays has not received any government bailouts.
Second, if the UK government (and its people) are to ever get a good return on their investment in the part-nationalised banks, then it is imperative that those banks are run profitably and efficiently. One way in which any business achieves that is to ensure that it pays no more tax than it needs to, within the tax laws laid down.
The UK population has a vested interest in the efficient tax planning of certain UK banks.
In any event, you cannot simply “put money offshore” and not pay tax on it – that is a myth. The business needs to be offshore in order for it to be outside of the HMRC residency rules, so companies are not avoiding tax paid on UK operated businesses, they are choosing to move some of their business offshore, where it does not require an establishment in the UK.
If they moved it to the Netherlands would that make you feel happier? They could pay very low tax rates by doing that – and would do exactly that if other offshore routes were closed off. It is unlikely that they would ever just move it back to the UK.
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Fermain
Please tell me what the political aspect of an anti-poverty charity applies itself?
Surely it’s aim is to reduce poverty in the ‘developing’ world.
This predicates investigation into underlying causes of poverty.
It’s findings are unequivocal.
Also, the make-belief of capital inflow is blown apart by numerous studies of illicit capital outflow.
As ActionAid say, there is no jurisdiction under specific scrutiny, just an increasing body of evidence that the system itself is just not what you, and the marketing of such things, says it is.
As for your claim of “restricting the free flow of international capital”, I say, surely that can be done without secrecy jurisdictions? What you’re talking about is the:
“ability to circumvent other jurisdiction’s legislative and democratic rights using complex cross-border interactions of transactions to enable, without interference from those seeking to end the injustice and the facilitation of criminality, and from democratically elected authorities, in order for capital to be churned away from the people that create the wealth, towards those that hide the wealth.”
It as simple as googling any number of indicators to find the results of widening poverty, more abuse by the global finance industry and increasingly desperate defences from the ideologues.
Ask yourself why an anti-poverty charity that directly applies aid to the impoverished would take this stance? because they want to get elected for something?
Or maybe make a difference?
PR fluffing is not factual. Wake up
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TL
I still don’t comprehend your naivety.
It’s a matter of fact that UK residents, be they corps or individuals, can set up all manner of globally connected instruments which can end up sitting anywhere legitmately but not be liable to UK, or anywhere else’s, tax law. If you have the money to buy the expertise, I am sure it only takes a phone call.
Let’s say an ‘investment’ is made through a Cayman trust, funded from a Swiss nominee account, into a deposit account in Guernsey, to be used as collateral against a loan in order to finance a commercial property loan that forms part of an underlying fund, administered in Guernsey but registered in Mauritius.
Add in multiple incorporations at every stage to churn fx hedging, mutual management fees etc, and tell me how benficial all this is for anyone apart from the who-knows-who?
We don’t really do vanilla over here, TL. It’s deeply enmeshed in the shadow system. The transparency claims are bare minimum, apart from taking a lead in EUSTD, things like TIEAs are well known nonsenses designed by people who want this abuse to rumble along as long as possible (OECD, IMF etc).
So we provide capital for the City, hmmm?
Since Guernsey does not PRODUCE wealth, you have to wonder where this cash came from in the first place, don’t we?
Could it be that it came from the UK in the first place, got ‘made legal’ and then it’s simply sent back again?
Why no study into inflow, only outflow?
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Arnald – Let’s say…gobbledegook. Your example simply does not make sense.
“came from the UK, got made legal, is sent back again” – what does that mean? The money would have been originally taxed in the UK when generated and then taxed again when repatriated. Not sure what the “made legal bit” bit is. Where is the point when it is not legal?
Yet again, nice soundbites but you have no idea what you are talking about (although you are convinced that you do)
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As an aside aren’t the Guernsey branch of Action Aid the most successful fund raisers in the UK?? A slight paradox?
I wonder how many local members of Action Aid are employed by in the Finance Industry?
Fermain; You’re a comical apologist and sound more like a 9/11 conspiracy theorist. Of course a charity involved in poverty would get involved in politics!! What do you want the Charity Commission to do? Fine them and take more money away from those in abject poverty??
Anyway Fermain shouldn’t you be banging the drum for Lyndon Trott, Guernsey’s own Neville Chamberlain impersonator, who has a meal ticket flying round the World signing useless pieces of paper disguised as tax agreements!!
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Terry
Whether you dont like Arnalds example or not, the phrase “we dont really do vanilla over here”, could not be more accurate, and then if you ask yourself why? The answer becomes more obvious, you can argue specifics all week which has no merit on these forums. Simply if there wasnt massive tax benefits for the corporations and people setting up these structures, and performing these transactions they simply wouldnt bother. Yes its legal, but it is right? No its not, hence the title of the story.
I would also completely disagree with your point about banks needing to make a profit so
” UK population has a vested interest in the efficient tax planning of certain UK banks.”
That is quite frankly the most ridiculous phrase I have read in long long time. Perhaps if the public were to benfit in any way from increased profitability, then fine yes that comment has merit, but remember these were the same banks turning over massive profit for years at the benefit of no-one but themselves and thier senior staff and election donations.
If you really think that the banks are going to put back into the system the profits they generate after being saved by public money, then you are very much deluded. They will continue on until they need more public money (which some of them invariably will), and will need extra public money because the intervening profit will go nowhere near where it should be going for the banks balance sheet or the public at large.
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Mr Jordan – this is not the first time your “charity” has made such comments about the Channel Islands – may I suggest that you stop putting your begging envelopes through my door – you should be ashamed of asking Guernsey or Jersey folk for money!
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Guernsey resident sends Action Aid envelope to recyling bins ….
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Mr Lloyd – if you read my post again you will see that I was referring to the UK banks that are part owned by the UK government. When they are profitable again the government will be able to sell the shares in the market to recover it’s bailout money, probably with a decent uplift. The sooner those banks become profitable, the sooner the UK government can get its money back, so yes, the UK public will directly benefit from the profitability of those banks.
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Terry
And if you read my comment again I say ” “IF” the puiblic benefits”, it is my sincere beleif that whatever the performance of the state owned banks is, the public will not benefit, I mean they have been riding roughshod over the common man with succesive complicit governments, why should that suddenly change now.
Yes monies saved using tax structures will benefit the banks, but thats as far as the benefit will go.
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What people seem to miss is that the Islands actually benefit the UK and by quite a lot, because much of the money attracted into the islands from outside (which, incidentally, would not be invested directly in the UK) is re-invested in the UK helping the UK economy and Sterling.
Fortunately, the Islands have an excellent record in not accepting the ill-gotten gains from corrupt African regimes. Action-Aid, if you have any gripes, then lay them at the door of these regimes and see how far you get!
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So, TL:
http://www.taxresearch.org.uk/Blog/2011/10/18/offshore-lawyers-admit-that-tax-haven-claims-of-transparency-are-bunkum-as-some-of-us-have-argued-for-a-long-time/
Note the MourantOzannes quote which comes from here:
http://www.caymannewsservice.com/finance/2011/10/18/clients-can-be-protected-tieas-say-trust-experts
And the sensible reaction, which quotes from both:
http://www.taxresearch.org.uk/Blog/2011/10/18/offshore-lawyers-admit-that-tax-haven-claims-of-transparency-are-bunkum-as-some-of-us-have-argued-for-a-long-time/
Please don’t bother saying this stuff doesn’t happen.
Just accept and make better.
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Apologies for double link…………..
Of Course Guernsey has moved to auto-exchange within parameters, but as we scored second in The Banker magazine poll of ‘Best’, please note the issue of the CEO of Olympus who unconvered dubious financial transactions and was duly sacked.
One particular $700K payment went to an entity in Cayman.
PwC, oh yes, PwC were not able, when commissioned, to uncover why.
One high profile case in the last few days, amongst the whole bunch that involve companies that operate subsidiaries here, that use Guernsey, the island, as a place to perform their obvious business.
Guernsey is second after Cayman in a poll that rates the finance industry’s proficiency.
What do we hide?
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