MM Podcast: Tax efficiency or tax avoidance?
The New Economics Foundation and International Financial Centres Forum go head to head on offshore centres and tax.
New Economics Foundation finance and business researcher Lydia Prieg worked for Goldman Sachs before joining the NEF in 2010 to conduct research into the too-big-to-fail problem, taxation of the financial sector, the sovereign debt crisis and the offshore world.
Warren Cabral is managing partner of the law firm Appleby’s London office and a partner in the Corporate & Commercial department. He has over twenty years’ experience of complex cross-border commercial transactions. The International Financial Centres Forum is a member organisation which says it provides authoritative and balanced information about the role of offshore centres.
Here are a few highlights of the debate:
On tax efficiency/avoidance
Cabral says: “Tax avoidance means making a choice between two alternatives.”
Prieg says: “Avoidance is using complicated structures to outwit the tax authorities. Isas are not avoidance, they represent a door the government wants you to go through to encourage socially beneficial behaviour.”
On offshore centre transparency
Prieg says: “The problem with information exchange agreements signed by offshore jurisdictions is you have to know who the evader is and what they are doing before you could ask for the information. You have to know the answer before you ask the question.”
Cabral says: “If one wants to go beyond the information exchange agreements and advocate a general fishing expedition, people would need to accept that and in Britain and on the continent the feeling is private information is private.”
On corporate use of tax havens
Prieg says: “Country by country reporting would enable people to see if most of a firms employment and business is done in one country but its profit and tax is being reported in another, therefore avoiding paying tax to contribute to the infrastructure in the country it operates in.”
Cabral: “It would need to be done globally - if not, it would be great for destroying British industry and business would move elsewhere.”