Global Financial Integrity

 

G20 Makes Progress on Tax Haven Abuse, Automatic Tax Information Exchange

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Clark Gascoigne, +1 202 293 0740 ext. 222

G20 Says Automatic Tax Information Exchange “Expected to Be the Standard”

Finance Ministers Fail to Adequately Address Anonymous Shell Companies

WASHINGTON, DC – Global Financial Integrity (GFI) lauded G20 Finance Ministers and Central Bank Governors Friday for prominently focusing on the issue of tax haven secrecy and strongly declaring that automatic exchange of tax information is “expected to be the standard” moving forward, but GFI expressed disappointment in the leaders’ failure to sufficiently address the issue of anonymous shell companies.  The leaders released their communiqué Friday afternoon after two days of meetings in Washington ahead of the annual spring meetings of the World Bank and International Monetary Fund.

“Tax haven secrecy and anonymous shell companies facilitate crime, corruption, and tax evasion, costing the developing world roughly US$1 trillion in illicit outflows every year,” said GFI Director Raymond Baker, citing the organization’s research. “This secrecy costs the U.S. Treasury $150 billion annually in lost tax revenue, it siphoned $261 billion out of the Greek economy in the run-up to the Eurocrisis, and it drained $212 billion from Russia—the current chair of the G20—in the years following the collapse of the Soviet Union.  Automatically exchanging tax information between countries and getting rid of anonymous shell companies would significantly curtail these illicit flows, bolstering government revenues in poor and rich nations alike.”

Automatic Exchange of Tax Information

“We are thrilled to see the G20 declare that the automatic exchange of tax information is expected to be the new global standard,” stated Heather Lowe, GFI’s Legal Counsel and Director of Government Affairs.  “Automatic tax information exchange ensures that tax authorities and law enforcement have the necessary records they require to detect and deter billions of dollars in tax evading money.”

The G20’s statement follows a week after ten European nations—including, among others, France, Germany, Italy, Spain, and the United Kingdom—announced that they would begin a pilot program to exchange information automatically on a multilateral basis.  The European nations also committed to promoting multilateral automatic information exchange as the new global standard, a move lauded by GFI.

“The next step is for the G20 is to explicitly endorse automatic exchange on a multilateral basis—as a number of European nations have done—as the global standard, moving beyond the significantly less effective system of bilateral exchange,” added Ms. Lowe.

Anonymous Shell Companies

While GFI welcomed the G20’s language on tax information exchange, officials at the organization were not pleased with the G20’s failure to make any meaningful progress on the issue of anonymous shell companies.

The G20 communiqué released today endorsed the Financial Action Task Force (FATF) standards for the disclosure of beneficial ownership information.  GFI warns that the FATF standards are insufficient to eliminate anonymous shell companies and their abuse.

“In the nine months since the Los Cabos Summit, the G20 has completely failed to move the ball forward on the issue of anonymous shell companies,” noted. Ms. Lowe.  “As long as G20 nations like the United States, United Kingdom, and others allow for the incorporation of anonymous shell companies, trusts, and foundations, they will continue to facilitate terrorism, sex slavery, and tax evasion. These phantom firms pose a systemic risk to our financial system, and they enable the most heinous crimes.  I am very disappointed by the lack of progress on this issue.”

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Notes to Editors:

  • To schedule an interview with Mr. Baker, Ms. Lowe or other GFI spokespersons, contact Clark Gascoigne at +1 202 293 0740, ext. 222 / cgascoigne@nullgfintegrity.org. On-camera spokespersons are available in Washington, DC.
  • Click here (Word Doc) to download the full text of the Communiqué from the G20 website.
  • Click here (PDF) to read the new OECD report to the G20 released today.
  • Click here (Word Doc) to read Senator Carl Levin’s statement on today’s G20 Communiqué.
  • Click here for more information from GFI on last week’s announcement from the Governments of France, Germany, Italy, Spain, and the UK about the pilot program to automatically exchange tax information multilaterally.
  • Click here for a follow-up release (bottom half of release) from GFI praising the Czech Republic, Poland, Belgium, Romania, and the Netherlands for joining in the multilateral automatic exchange of tax information.
  • Click here to read the press release from HM Treasury announcing the multilateral tax action last week.
  • Click here (PDF) to read the joint letter from the Governments of France, Germany, Italy, Spain, and the UK to the European Commission announcing last week’s multilateral action and encouraging other members of the European Union to join them.
  • Click here for more information generally on the automatic exchange of tax information.
  • Click here for GFI’s analysis of the FATF standards and how they relate to anonymous shell companies.
  • Click here to read GFI’s analysis of the G20 Leaders Summit in Los Cabos, Mexico in June 2012.

Contact:

Clark Gascoigne
cgascoigne@nullgfintegrity.org
+1 202-293-0740 ext.222

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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system as a means to global development.

For additional information please visit www.gfintegrity.org.

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