Survival of the Richest

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Acronyms AMLD APA BEPS CBCR CCCTB CFC CRS EC EU FDI Anti-Money Laundering Directive Advance pricing agreement Base erosion and profit shifting Country by country reporting Common Consolidated Corporate Tax Base Controlled foreign company Common Reporting Standard European Commission European Union Foreign direct investments G20 Group of 20 G77 Group of 77 GAAR ICIJ IMF MNC ODA OECD R&D SDG SPE TIEA TJN-A UN UNCTAD UNDP UNDAW General anti-avoidance rule International Consortium of Investigative Journalists International Monetary Fund Multinational corporation Official development assistance Organisation for Economic Co-operation and Development Research and development Sustainable Development Goals Special purpose entity Tax information exchange agreements Tax Justice Network Africa United Nations United Nations Conference on Trade and Development United Nations Development Programme United Nations Committee on the Elimination of Discrimination Against Women 4 • Survival of the Richest
Glossary Advance Pricing Agreement (APA) See under ‘Tax ruling’. Anti-Money Laundering Directive (AMLD) An EU directive regulating issues related to money laundering and terrorist financing, including public access to information about the beneficial owners of companies, trusts and similar legal structures. The 4th Anti-Money Laundering Directive was adopted in May 2015. In July 2016, the European Commission initiated another review of the directive (see below under ’Hidden ownership’). Automatic exchange of information A system whereby relevant information about the wealth and income of a taxpayer – individual or company – is automatically passed by the country where the funds are held to the taxpayer’s country of residence. As a result, the tax authority of a taxpayer’s country of residence can check its tax records to verify that the taxpayer has accurately reported their foreign source income and wealth. Base erosion and profit shifting This term is used to describe the shifting of taxable income (profits) out of countries where the income was earned, usually to zero- or low-tax countries, which results in ‘erosion’ of the tax base of the countries affected, and therefore reduces their revenues. Beneficial ownership A legal term used to describe anyone who has the benefit of ownership of an asset (for example, bank account, trust, property) and yet nominally does not own the asset because it is registered under another name. Common Consolidated Corporate Tax Base (CCCTB) CCCTB is a proposal that was first launched by the European Commission in 2011. It entails a common EU system for calculating the profits of multinational corporations operating in the EU and dividing this profit among the EU member states based on a formula to assess the level of business activity in each country. This is referred to as ’consolidation’. The proposal does not specify which tax rate the member states should apply to the profit, but simply allocates the profit and leaves it to the member state to decide on the tax rate. The proposal was redrafted and relaunched in 2016 (see below under ’Common Consolidated Corporate Tax Base’), but this time the proposal will be negotiated in two steps, and the first step will leave out the key element – the consolidation. Controlled Foreign Company (CFC) rules CFC rules allow countries to limit profit shifting by multinational corporations by taxing profits made in other jurisdictions where it ‘controls’ other corporate structures, unless taxes have already been taxed in the other jurisdictions. There are many different types of CFC rules with different definitions of the jurisdictions and incomes covered. General Anti-Avoidance Rule (GAAR) GAAR refers to a broad set of different types of rules aimed at limiting tax avoidance by multinational corporations in cases where abuse of tax rules has been detected. Whereas GAARs can in some cases be used to prevent tax avoidance by allowing tax administrations to deny multinational corporations tax exemptions, they do not address the general problem of the lowering of withholding taxes through tax treaties, nor do they address the general division of taxing rights between nations. Harmful tax practices Harmful tax practices are policies that have negative spillover effects on taxation in other countries – for example, by eroding tax bases or distorting investments. Illicit financial flows There are several definitions of illicit financial flows. This can refer to unrecorded private financial outflows involving capital that is illegally earned, transferred or utilised. In a broader sense, illicit financial flows can also be used to describe artificial arrangements that have been put in place with the purpose of circumventing the law or its spirit. LuxLeaks The LuxLeaks (or Luxembourg Leaks) scandal surfaced in November 2014 when the International Consortium of Investigative Journalists (ICIJ) exposed several hundred secret tax rulings from Luxembourg, which had been leaked. The LuxLeaks dossier documented how hundreds of multinational corporations were using the system in Luxembourg to lower their tax rates, in some cases to less than one per cent. 1 Offshore jurisdictions or centres Usually known as low-tax jurisdictions specialising in providing corporate and commercial services to corporations and individuals that aim to avoid or evade taxes. The services are primarily offered to non-residents and are often combined with a certain degree of secrecy. ‘Offshore’ can be used as another word for tax havens or secrecy jurisdictions. Survival of the Richest • 5
Page 1 and 2: Survival of the Richest Europe’s
Page 3: Contents Acronyms 4 Glossary 5 Exec
Page 7 and 8: Glossary Tax treaty A legal agreeme
Page 9 and 10: Executive summary Global solutions
Page 11 and 12: Global developments 2016 Developing
Page 13 and 14: Global developments 2016 Box 1 Conc
Page 15 and 16: Europe’s role in upholding an unj
Page 17 and 18: Europe's role in upholding an unjus
Page 35 and 36: Report findings Financial and corpo
Page 37 and 38: Specific findings Survival of the R
Page 39 and 40: Methodology for country rating syst
Page 41 and 42: AUSTRIA TRANSPARENCY REPORTING TAX
Page 43 and 44: FINLAND TRANSPARENCY REPORTING TAX
Page 45 and 46: ITALY TRANSPARENCY REPORTING TAX TR
Page 47 and 48: NORWAY TRANSPARENCY REPORTING TAX T
Page 49 and 50: SWEDEN TRANSPARENCY REPORTING TAX T
Page 51 and 52: Recommendations 7. All EU countries
Page 53 and 54: Austria Taxation Tax treaties Austr
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Belgium Taxation Tax treaties In to
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Belgium Global solutions Belgium di
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Czech Republic According to the 201
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Denmark Taxation Tax treaties Tax t
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Finland Ownership transparency Finl
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France “Of course, the fight agai
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France Taxation Tax treaties In tot
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Germany In July 2016, the European
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Ireland Furthermore, it should be n
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Italy “After our meeting in Milan
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Latvia “We still have a high inco
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Latvia Global solutions The Latvian
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Luxembourg One Luxembourg newspaper
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Netherlands One of the most crucial
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Norway Overview Once the Panama Pap
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Poland “It seems to us that those
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Slovenia In May 2016, the Financial
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Slovenia Global solutions Despite p
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Spain Taxation Tax treaties The Spa
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Sweden Taxation Global solutions Ta
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United Kingdom Anti-Corruption Summ
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United Kingdom There are broadly tw
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References 34. Government of the Un
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References 87. European Parliament.
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References for the screening of thi
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References legal-content/EN/TXT/?ur
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References 255. Rekenhof (2011), In
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References 321. Response to questio
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References com/section/euro-finance
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References 451. Irish Government, D
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References da-savu-solidaritati 511
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References 583. Tweede Kamer. (2016
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References http://www.ft.com/cms/s/
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References 720. Questionnaire answe
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References Rules. Article published
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