A global pandemic and the economic strain that many nations face as they struggle to contain the virus has not deterred the Organisation for Economic Cooperation and Development (OECD) from its quest to reorganise the entire international tax system.
Through a series of steadily escalating demands, paired with coercion and threats targeting low-tax jurisdictions, the OECD has spent the last two decades seeking to eliminate tax competition. With a much more ideologically sympathetic partner in US President Joe Biden and his administration, they may finally be close to their goal of global tax harmonisation.
Recognising its importance for global economic growth, the OECD began over half a century ago with a goal of facilitating trade and addressing problems like double taxation that can arise from cross-border economic activity. But thanks to ideological capture by European tax collectors and the steady march of mission creep, today’s OECD is now concerned primarily with extracting as much “revenue” as possible from the productive sector of the economy.
As part of a “historic” deal, G7 finance ministers have agreed to a two-pillar plan aimed at targeting large multinationals including online tech giants such as Facebook and Google. The intention of the initiative is to ensure that tax is paid in the jurisdiction in which profits are made, as well as to introduce a global minimum tax of 15 per cent in an attempt to combat tax evasion and profit shifting.
The OECD have welcomed the developments, with Secretary-General Mathias Cormann stating that "The combined effect of the globalisation and the digitalisation of our economies has caused distortions and inequities which can only be effectively addressed through a multilaterally agreed solution." (Source)
However, commentators such as Anthony Travers OBE argue that the reforms are “a step en route to the ultimate OECD game plan - an overarching global tax authority” in which tax autonomy and competition are at risk and economic colonialism is a certainty. In our latest Big Debate, we consider the implications of this latest initiative with contributions from stakeholders in the jurisdictions most affected.
The last year has been marked by an upheaval in global mobility, prompted by the COVID-19 pandemic and a wave of regulation and infringement procedures. Our special focus includes comment and analysis from the Investment Migration Council, Henley & Partners and Arton Capital; plus case studies outlining the key features and benefits of citizenship programmes offered by Greece, Dominica and Antigua & Barbuda.
In this feature, we look at the challenges posed for ethical finance in the post-COVID environment; while also considering trends and developments in jurisdictions such as Ireland and Luxembourg; as well as ESG investment risks in Southeast Asia.
Over the last decade, there has been a remarkable shift in attitudes about structures that private wealth practitioners have long regarded as normal and ordinary.
Offshore companies, family trusts, and the use of offshore financial centres have increasingly come under intense scrutiny from the public, the media, and governments alike.
Typical tax planning and succession planning structures likewise have been thrust into the public eye (and in respect of the former, perhaps deservedly so). The perception is that such structures are used only by the wealthy and only for some nefarious purpose such as tax evasion or other criminal activity.
Official HMRC figures show that the amount of private wealth being passed on to themselves is growing a lot faster than the amount being passed to loved ones.
This is almost certainly due to lack of planning rather than a sudden change amongst the moderately wealthy to contribute extra taxes to the Exchequer over and above those they paid throughout their lifetime.
This apparently startling example of philanthropy might be very welcome to the government but is unlikely to please relatives who might have otherwise benefitted. It is almost certainly not deliberate. But it is avoidable.
Inheritance Tax (IHT) has often been described as a voluntary tax. Despite recent efforts by HMRC to tighten up the rules, it remains quite easy to avoid with relatively simple planning but there are traps which will catch the unwary or ill advised.
This feature looks at the past, present and future of IFCs, considering what their reputation is built on, what factors aﬀect or inﬂuence choice of IFC, and how IFCs can ensure survival in the face of ongoing legislation and policy restrictions.
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