Weekly press report to 5 January 2017


European Commission welcomes new transparency rules coming into force


As of 1 January 2017, Member States are obliged to automatically exchange information on all new cross-border tax rulings that they issue. This will be done through a central depository, accessible to all EU countries.


Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, stated: “We have a duty to make corporate taxation fairer and more transparent, and to use every means possible to block tax abuse and profit shifting. The entry into force of the automatic exchange of information on cross-border tax rulings on 1 January marks a major step forward. It equips Member States and their national tax administrations with the information they need to detect certain abusive tax practices and take the necessary action in response.”


Every six months national tax authorities will send a report to the depository, listing all the cross-border tax rulings that they have issued. Other Member States will then be able to check those lists and to ask the issuing Member State for more detailed information on a particular ruling. This first exchange should take place by 1 September 2017 at the latest.


By 1 January 2018, Member States will also have to provide the same information for all cross-border rulings issued since the beginning of 2012.



Germany seeks to crack down on tax havens


As reported by the Cayman Compass, the German Government has drafted legislation to present the use of “letter box companies in tax havens”. The draft bill was approved by Cabinet on 21 December and imposes reporting obligations on German taxpayers with foreign financial interests and on financial institutions managing foreign investment structures for their clients.


German Finance Minister Wolfgang Schäuble said “Germany is a leader in the fight against tax evasion, tax avoidance and tax structuring. We do not tolerate tax fraud through shell companies in tax havens.”


“Those who invest in shell companies must report it to the tax authorities. Going forward, banks must disclose any business relationships to shell companies they have set up or intermediate,” Mr. Schäuble said. He added that tax authorities will be issued with more extensive investigative powers to create transparency “in the intolerable dark area of tax evasion.”


If approved by Parliament, the Government plans to introduce the changes on 1 January 2018.



UK MPs unite to push for greater transparency from tax havens


A cross-party group, led by Margaret Hodge MP, have backed an amendment to the Criminal Finances Bill which would require the Overseas Territories introduce public registers, as reported by the Guardian.


It is extremely rare for the UK to use its special powers – known as “order in council” edicts – to impose laws on Overseas Territories, however Hodge said: “Of course political parties have shied away from using these powers. They can seem somewhat colonial. But I think there are overwhelming moral arguments at stake here.


“Over half of the corporate entities exposed by the Panama papers were registered in the BVI, a British overseas territory. The UK is at the centre of a global web of tax havens which are costing UK taxpayers and developing countries huge sums of money” Hodge further explained.


The Bill has now passed through to report stage, where the tabled amendments will be discussed, however there is no set date for this as of yet.



Crown Dependencies appear before House of Lords Committee in December to discuss Brexit


The implications of how Brexit will impact on the Crown Dependencies was the subject of an inquiry by the House of Lords’ European Union Committee last month.


The inquiry considered the following points:


·         On-Island reaction in the Crown Dependencies to the referendum;

·         The Crown Dependencies’ existing relationship with the EU (particularly for; trade, customs, data protection, air security and financial services) and how this would, or is likely to be, be affected by Brexit;

·         The risks and opportunities that Brexit will present for the islands – particularly regulation, trade tariffs, free movement of people ;

·         What relationship the Crown Dependencies would ideally like to have with the EU, post-Brexit; and

·         The structures for communicating the islands’ concerns and priorities to the UK Government during exit negotiations


Further evidence will also be taken in early 2017 before any decisions are made.


President of Panama states the Panama Papers were a good opportunity for tackling global corruption


Juan Carlos Varela, President of Panama, has had a piece published in the Miami Herald commenting on the impact of the leak of the Panama Papers – particularly with regards to how it has encouraged a global agenda for further cooperation on tackling corruption.


He states “Despite the unfortunate name, the Panama Papers has been good for Panama as well as for the world”, later explaining how Panama was focused on reform and that “transparency” and “ending corruption” were core to his political ambitions. He expands on the development of the country’s politics – once “ruled by military dictators and criminals to a functional, albeit young, democracy” and how it is on a continual path of reform.  


Varela concludes with: “It is my hope that, one day, Panamanians will come to regard "The Panama Papers" as a badge of honor; a moment where we took the lead globally to address the exploitation of our country by unscrupulous tax cheats, returned transparency and accountability to our nation and to others, as well, and improved the prospects for social development worldwide by redirecting needed tax incomes to the critical investments our people deserve.”


It has also been reported in international press (Yahoo Singapore and the Times Zimbabwe) that Panama are due to commence talks with France with regards to removing Panama from the country’s blacklist.



Channel Islands lead in listing first ever bitcoin fund


International Investment has announced that the Channel Islands Securities Exchange has admitted to its official list a regulated Bitcoin fund: Jersey’s Global Advisors Investment Fund plc.


In addition to being the first-ever listed regulated Bitcoin fund, the fund also lays claim to having been the world’s first regulated Bitcoin fund, following its certification as an Expert Fund by the Jersey Financial Services Commission.


It also comes three months after the Channel Island of Jersey made good on a pledge it had made in 2015, and introduced legislation that effectively creates a “regulatory sandbox” for businesses active in the digital currency industry, or hoping to be.