March 17, 2009
Monique Perry Danziger, +1 202 293 0740 ext. 222
WASHINGTON, DC – Global Financial Integrity welcomed the introduction of the Stop Tax Haven Abuse Act.
“The provisions set forth in this bill are designed to prevent the types of illegalities and financial obfuscations that lay at the heart of the on-going legal battle between U.S. authorities and Swiss bank UBS and the Stanford Financial Group fraud case,” said Global Financial Integrity (GFI) director Raymond Baker.
“This is a systemic problem that goes beyond one or two financial jurisdictions or dishonest individuals,” added Baker. “Last December the Government Accountability Office (GAO) released a report showing that 83 of the 100 largest, publicly-traded U.S. companies and contractors have subsidiaries in tax havens. Furthermore, four of those 83 companies are banks which received $127 billion in TARP bailout funds. In the midst of historic economic crisis the U.S. cannot afford to be complicit of illicit financial practices which cost the U.S. hundreds of billions of dollars every year.”
Highlights of the 84-page bill:
- Establish presumptions for entities and transactions in Offshore Secrecy Jurisdictions.
- Determine “Offshore Secrecy Jurisdictions.”
- Authorize special measures against foreign jurisdictions, financial institutions, and others that impede U.S. tax enforcement.
- Treat foreign corporations managed and controlled in the United States as domestic corporations for income tax purposes;
- Allow more time for investigations involving Offshore Secrecy Jurisdictions;
- Increase disclosure of offshore accounts, transactions, and entities;
- Prevent misuse of foreign trusts for tax evasion;
- Limit legal opinion protection from penalties with respect to transactions involving Offshore Secrecy Jurisdictions;
- Close the offshore dividend tax loophole;
- Increase penalty for failing to disclose offshore holdings;
- Require anti-money laundering rule for hedge funds;
- Apply anti-money laundering obligations to company formation agents;
- Strengthen John Doe summons use in offshore tax cases;
- Strengthen foreign financial account reporting requirements;
- Strengthen tax shelter penalties;
- Deter financial institution participation in abusive tax shelter activities;
- Strengthen law enforcement through information sharing;
- Require tougher tax shelter opinion standards for tax practitioners.
“This is a pivotal time in global finance,” said Baker. “From the European Commission’s recent adoption of measures to improve cooperation between EU member states and increase transparency in tax assessment and collection to the G-20’s stated intent to crack down on tax havens when they meet in April, calls around the world are growing for definitive action on the problem of tax havens. This bill will ensure parity in U.S. tax remittance while strengthening overall global finance by increasing transparency and accountability.”
- Current cosponsors of the Senate bill include Senators Sheldon Whitehouse (D-RI), Claire McCaskill (D-MO), and Bill Nelson (D-FL). The House version will be introduced by Representative Lloyd Doggett (D-TX) with multiple cosponsors. The bill will be referred to the Committee on Finance in the Senate, and to Ways and Means Committee in the House.
- Stop Tax Haven Abuse Act: Summary
- Stop Tax Haven Abuse Act
- Statement of Senator Carl Levin Before Senate Finance Committee Hearing on Tax Issues Related to Ponzi Schemes and an Update on Offshore Tax Haven Legislation