TWN Info Service on Finance and Development (Oct16/04)
10 October 2016
Third World Network

Rights: Eliminate tax haven secrecy in light of Bahamas leaks, say UN experts

Geneva, 6 Oct (Kanaga Raja) -- Several UN human rights experts have called on governments to eliminate tax haven secrecy and offshore tax evasion, in the light of the recent ‘Bahamas leaks'.

According to a media statement released here, this call has come following the revelation of large-scale misuse of offshore accounts by financial service providers and wealthy individuals in the Bahamas.

The call was made by the United Nations Independent Expert on foreign debt and human rights, Mr Juan Pablo Bohoslavsky (Argentina), and two members of the Human Rights Council Advisory Committee, Mr Obiora Okafor (Nigeria) and Mr Jean Ziegler (Switzerland).

In their statement, the rights experts urged governments to act in concert and establish a United Nations body working to eliminate tax haven secrecy and offshore tax avoidance and evasion.

"While offshore structures can reflect legitimate business activity, individuals are estimated to hold between US$7 and US$25 trillion of wealth offshore, and the tax income lost by many countries could total hundreds of billions of dollars each year," they said.

When individuals and corporations hide unreported assets abroad to escape taxes or launder money, they are effectively stealing from the public.

The proceeds from these illicit activities could and should be devoted to funding public services, such as health care, housing, schools, transportation infrastructure, social security, law enforcement and courts, they said.

The rights experts recalled that illicit financial flows include funds that, through legal loopholes and other artificial arrangements, circumvent the spirit of the law, including, for example, tax avoidance schemes facilitated by the use of offshore corporations.

"Thanks to the work of investigative journalists, the taxpaying public is now aware of these immoral and illegal strategies, and understands how tax abuse undermines economic, social and cultural rights."

States must prove they take seriously the interest of billions of people all around the world who suffer from the erosion of public services owing to massive fiscal misconduct, they said.

"It is time for the United Nations to take efficient measures to prevent illegal activities of offshore companies located in tax havens."

Worldwide tax justice and the successful fight against money laundering will not be possible unless states cooperate to monitor and regulate the fiscal activities of offshore companies, they underlined.

"Transparency and accountability for offshore financial activity needs to be established. States must set uniform minimum taxation floors, to prevent individuals and business entities from shopping for the lowest possible tax rates."

Public disclosure of beneficial ownership information must be made legally binding in all countries, and the financial transparency of all banking jurisdictions should be ranked in an annual public report by independent experts appointed by the United Nations. This ranking should be based on a transparent set of criteria.

States and financial institutions should be required to automatically share information with foreign taxation authorities for the purpose of detecting offshore taxable income.

In this way, said the rights experts, the secrecy and anonymity that enshrouds illicit offshore financial activity can be lifted, and money intended to promote shared prosperity can be returned to its rightful owners: the public. +