Archive | Tax RSS feed for this section

Le Monde on the Historic accord reached by the OECD on Combatting Tax Evasion

6 May

http://www.lemonde.fr/economie/article/2014/05/06/vers-la-fin-du-secret-bancaire-en-suisse-et-a-singapour_4411897_3234.html

(link to original article, above)

History, or at least economic history, will remember vividly this date: Tuesday 6 May 2014, the day when Switzerland and Singapore both agreed to cooperate on a way of automatically exchanging banking information for tax purposes, from state to state, embraced by the G20 powers to combat fraud.

According to our information, this surprising announcement had to be made in Paris, at the revelation of a ministerial reunion of the Organisation of Economic Cooperation and Development (OECD), a forum for international debate and action.

OFFICIAL DECLARATION

After intense diplomatic wrangling, the two countries had to sign an official declaration committing them to make the automatic exchange, a measure supported by more than 40 countries of which 32 were OECD members, -vbut also G20 countries which were not OECD members, including China and Russia.

tax dodger

tax dodger

The announcement of the ‘surrender’ by Switzerland and Singapore, countries whose economy is build on the financial industry and inviolable secret banking, and which have for a long time resisted any change, must be seen as a major advance in the struggle against tax evasion and fraud internationally.

It is a strong political signal, signifying that these states no longer want undeclared accounts. In fact, the automatic exchange of banking customer information is considered the most effective weapon against the concealment of capital. And with the capitulation of Switzerland and Singapore, the two strongest bastions of secret banking will fall, and what is more, the five of the biggest financial centres on the planet (after London, New York and Hong Kong).

To put it simply, the official practice of exchanging data on demand will be substituted, from 2017 onward, for a system of exchanging what is actually demanded, not one which clams up in the face of inquiries by the tax authorities or the law, and works according to the will of the states being interrogated, – therefore very badly.

END TO OPACITY

Within the designs of the OECD, in its single world standard presented to the directors of the G20 in February, the future accords on exchange of information are all-encompassing, in order that states will exchange all the information which appertains to the financial assets retained on their territory by an individual or a society: balance of bank accounts, interests and projected dividends or event financial products. All the financial institutions will have to comply with the new rules of disclosure.

In theory therefore – and on condition that this commitment to practising information exchange will be transformed into law and enforced to the letter, and on condition also that the information will be available on demand from the source – an act of fraud would no longer have anywhere to hide.

There would be no more possibility of interposing between you and the authorities kilometres, oceans, intermediary opaque structures. In practice, considering the ingeniousness of tax fraud perpetrators and of certain tax experts, we should say that the places to hide will become less and less numerous, indeed very rare.

FORTY COOPERATING COUNTRIES

In total, in the world, there are more than 40 countries which have committed to legislate on the automatic exchange of data, including all the major world financial centres, which are obliged to extend the measures to their offshore satellites: Jersey and Guernsey have said they will comply when the day comes, like the Canaans, the Isle of Man, Antigua, the Virgin Islands…

In addition to Switzerland and Singapore, other countries have joined the concert of nations, such as Austria, Malaysia and Saudi Arabia.

Inconceivable five years ago, much of the pressure for progress originated with the United States, resolved to recover fiscal revenue in a context of budgetary shortfall, and thanks to the determination of the OECD directors, determined to confront a subject that has been in their sights since the 1960s. The revelations of the Offshore Leaks in 2013, the great fraud scandals like the Cahuzac affair in France, did the rest.

The OECD has profited from the American law FATCA, intended to obtain from foreign countries data on Americans wherever in the world they are, in enforcing this international information exchange standard. Five European countries, the self-described G5, supported the measure from its launch: France, Germany, the UK, Spain and Italy.

SYMBOLIC BUT BINDING

Simultaneously symbolic and binding, Tuesday’s declaration must be followed closely by action to enforce it. Effective political accords must be signed between states, without doubt this autumn by France and its G5 partners, at the reunion from the 28-29 October, in Berlin, of the world forum on the transparency of information exchange for fiscal ends (according to an OECD directive)

Then, the technical panel, after having developed its famous world exchange directive, the OECD experts have to deliver the information standard which allows for the collection of proprietary info from the banks, then exchange it with foreign countries (encryption of information, documentation format). This could be carried out from June onwards, ready for a presentation to the directors of the great powers of the G20 in Brisbane the next 14-15 november.

Swiss HSBC bank’s master plan for evasion of European savings tax (translated, Le Monde)

28 Jan

There is not just one, but two HSBC affairs. After a long inquiry, Le Monde reveals, Monday 27 january, the underside of an incredible episode which has poisoned Franco-Swiss relations for five years, and gives cold sweats to the French establishment.

The 26th December 2008, the computer programmer Hervé Falciani  sent to French tax investigators four DVDs containing about ten giga-bytes of raw data, encrypted, analysed over the course of long nights of work in Geneva, and concerning two years: 2005 and 2006. This HSBC employee is in flight, suspected of having wanted to sell the data to Libyan banks. The Direction national des enquêtes fiscales (DNEF) – national head of tax inquiries – with the aid of the Direction générale de la sécurité extérieure (DGSE), re-transcribed and then reconstituted a listing containing, in total, 2,846 identities of tax evaders.

The 20th January 2009, the courts in their turn went into action. They seized the computers of Hervé Falciani, and they too processed the raw data. A second listing was established through police investigation, harbouring for its part 2,956 names of suspects. A preliminary inquiry was ordered, much to the annoyance of the Swiss. There would be traps, checks, attempts to obstruct the work of the inquirers, and even the ousting of the head of the DNEF, whose file is sensitive.

600 Prominent Figures in the Listings

Le Monde has also had access to these two lists. The identities are often the same, and, in cross-referencing the information, certain categories materialise. They are traders, chemists, lawyers, comedians, singers, antiques dealers, sportsmen. A precious resource for the investigators, letting them establish a typology documenting the French holders of Swiss accounts.

In the majority of cases, the taxpayers found at fault have already regularised their situation. On examining the listings, one thing is obvious: the different circumstances. Around 600 prominent figures feature there. We have contacted them and listed those who permitted it. The first category, is those incumbents whose affairs are perfectly in order. For example the French residents in Switzerland. Among them is the footballer Christian Karembeu, the brothers Christian and François Picart (founders of the restaurant chain Buffalo Grill), or even Alain Affelou. In contrast to their treatment, the investigators interrogated a former teammate of M. Karembeu in the French team, who was also a world champion in 1998, holder of 1.6million euros with HSBC, as well as two superstars of French cinema, a famous comedian, a popstar, a former Miss France. And finally, a senator (UDI?) They did not respond to our inquiries.

The film-maker Cédric Klapisch figures on the list. “The tax authority contacted me the same moment I had started to regularise my affairs,” he revealed. “My father lives in Switzerland, he had opened an account in Geneva, he did not have an enormous amount of money under it (247,000 euros according to our information). I did not know that it was illegal. I regularised everything in 2012, and I don’t have money over there any more.” Gérard Miller had a similar experience. His testimony echoes that of lawyer Michel Tubiana, or of Richard Prasquier, ex-president of the Conseil representative des institutions juives de France (CRIF). Paul Bocuse is not in the same class. The celebrated chef pleads a thoughtless mistake. He held an account well stocked with 2.2 million euros.

But besides the identity of the tax evaders, which will all be known by the police, the biggest impact of this inquiry will be when it moves onto leaning on the internal practices of HSBC. When contacted, the bank assured us it is combating tax evasion and adheres to the laws. The information confided by the judges Renaud Van Ruymbeke and Charlotte Bilger suggests the contrary.

The investigators have seized the visitors reports of account managers at HSBC, when advising their clients. First, a certainty. According to the public prosecutor in Paris, François Molins, contacted by Le Monde, “nothing leads us to think that the files have been manipulated to give a false impression.” Et donc voila the protests of the Swiss authorities, who maintain the files have been altered.

The police, in a report of the 1st August, want to “direct the investigation towards the system put in place by HSBC to bypass the ESD tax.” The ESD tax derives from a European directive on the taxing of savings, applied to bank accounts from 2005. According to the inquirers, in view of the reports on the visits of 239 French clients, “the bank proposed in systematic fashion diverse evasion tactics in order to avoid the levy. Even worse, the bank also offers its services for setting up a company.”

The judges have already prepared precise testimonials. Like those of Parisian lawyer Laurent Azoulai. He, who wanted to standardise his affairs in Switzerland, – almost a million euros – was faced with the opposition of HSBC. He cites in defence of his view the case of a manager, who “tried with insistence to dissuade me from standardising my accounts.” And explains, “He told me that there were these stolen documents and that to try and regularise my situation, I would have to go up against the wrath of the French tax authorities. In a word, he was trying to make me afraid.” The investigators have also obtained extracts indicating that the bank would have recommended to certain of its clients to destroy their files…

The magistrates now have to try and identify the people eligible for numerous offshore companies, but also the true beneficiaries of the accounts attributed on the listings, the “HSBC employees” without doubt to blame, who could not use anything but fake names. The French establishment has not yet stopped quivering.

(link to original article, http://www.lemonde.fr/societe/article/2014/01/27/evasion-fiscale-les-secrets-des-fichiers-suisses-de-hsbc_4354900_3224.html)