|Tax Evasion Taskforce to Probe UK|
International group will track $1 trillion of illicit funds
Plans have been drawn up for an international taskforce to crack down on tax haven abuses orchestrated in large part by bankers, accountants and lawyers in London.
As authoritative evidence suggests that $1 trillion of illicit funds flow to secretive havens managed by financiers based in London, New York and Dubai, the Norwegian government is forming a global coalition to 'facilitate the recovery of assets illicitly stacked away in tax havens'. Several countries are set to join, but Britain, recently classed as an offshore financial centre by the International Monetary Fund, is not among them.
International attention is focusing on London's role in facilitating tax evasion and money laundering. The news will alarm incoming Chancellor Alistair Darling. The Treasury said it had not been contacted about joining a taskforce and that it worked with the OECD on such issues.
It is 'obviously interested in where companies pay tax' and it is in the midst of simplifying 'arcane rules' that will make it less of an administrative burden for firms to pay tax here.
The imminent formation of an international tax haven taskforce comes as the World Bank, headed by Robert Zoellick, is coming under pressure to establish its first forensic study into the illicit cash flowing out of developing nations.
In a letter seen by The Observer the Norwegian government has taken the unprecedented step of offering to fund the research on behalf of the Bank.
Exactly 10 times the $100bn spent on aid and debt write-offs by rich countries is siphoned out of developing countries, with corporations responsible for 60 per cent of that figure through a web of trusts, nominee accounts and the flagrant mispricing of goods to escape tax.
Evidence is emerging of how City financiers are using new techniques on behalf of corporations and the super-rich through the creation of protected cell companies and sham offshore trusts. New 'redomicilation' clauses enable vast sums to move from one jurisdiction to another without trace. There is concern over the formation of a Ghanaian offshore centre which it is feared will be used to siphon oil money out of West Africa. And there is anxiety about firms circumventing customs by the flagrant underpricing of exports from developing countries.
Cracking down on tax havens and the evasion of taxes by some of the world's biggest companies is seen as the 'missing link' in the poverty alleviation agenda.
Investigators and lawyers at a conference on the Movement of Illicit Funds in Washington last Thursday confirmed it was corporations and not corrupt politicians in the developing world that accounted for most tax evasion. Oil, commodity and mining firms are most culpable. Bribery and corruption only accounts for 3 per cent of the estimated $1 trillion of illicit funds.
Raymond Baker, director of Global Financial Integrity and an expert on money laundering, said: 'For the first time in 200 years we have an integrated global structure in the Square Mile and Manhattan whose basic purpose is to shift money from the poor to the rich.'
It is understood the Treasury is considering proposals that may see firms compelled to give details of exactly how much tax they pay in specific countries.