News & Media

5 Steps Governments Can Take To Prevent Another Mauritius Leaks Scandal

July 29, 2019

A 5-point plan to stop big corporations cheating poor countries out of billions of dollars in tax revenue, was published by Oxfam today in the wake of the Mauritius Leaks.

When multinational corporations and the super-rich use tax havens to dodge paying their fair share, it is ordinary people, and especially the poorest, who pay the price. The Mauritius Leaks show that tax havens continue not only to exist but to prosper, despite government promises to rein in tax dodging. Oxfam’s plan lists five steps governments can take to tackle tax avoidance and end the era of tax havens.

Susana Ruiz, Oxfam International’s tax advisor, said:

“Politicians could put a stop to tax scandals if they wanted to. Oxfam has listed 5 concrete solutions that would prevent another Mauritius Leaks scandal and ensure multinational corporations pay their fair share of tax wherever they do business. Developing countries can revise or void their tax treaties and introduce withholding taxes to better protect their tax revenue, and all governments – rich and poor – agree to set a global minimum effective tax rate on corporate profits.

“There is no time to waste. Developing countries lose an estimated $100 billion a year in tax revenue as a result of tax dodging by multinational corporations, and even more as a result of damaging tax competition between countries. This money is desperately needed to end hunger, tackle the climate crisis, and ensure all children have the chance of an education.”

Oxfam’s 5-point plan to build a fairer global tax system calls on governments to:

(1) Agree new global tax rules in the negotiations led by the OECD under the mandate of the G20 to ensure fair taxation of big corporations. This should include the introduction of a global minimum effective tax rate set at an ambitious level and applied at a country-by-country basis without exception. This would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens out of business.

(2) Developing countries should not give away their taxing rights. Many treaties result in multinational companies not paying certain types of tax at all in any country. Rich countries have a responsibility in ensuring fair taxation with their investments and the projects they finance. Governments of developing countries can protect their tax base from erosion by revising or voiding their tax treaties, introducing withholding taxes and implementing strong tax anti-abuse rules.

(3) End corporate tax secrecy by ensuring all multinational companies publish financial reports for every country where they operate. The current OECD initiative on country-by-country reporting falls well short of the mark as it does not cover all multinational corporations and it does not require companies to make their financial reports publicly available. This means poor countries are unable to access the information to identify tax cheats. Stronger European proposals on public country-by-country reporting were due to be agreed this year but are being blocked by EU member states such as Germany, Ireland, and Luxembourg.

(4) Agree a global blacklist of tax havens based on comprehensive objective criteria and take strong countermeasures including sanctions to limit their use. Governments have yet to agree an objective global list of tax havens. A farcical OECD-G20 blacklist published in July 2017 features only Trinidad and Tobago. The more comprehensive European Union list omits European tax havens such as the Netherlands and Ireland.

(5) Strengthen global tax governance by creating a global tax body where all countries can work together on an equal footing to ensure the tax system works for everyone. The new round of global tax negotiations (BEPS 2.0) is a historic opportunity to put a stop to damaging tax competition and corporate tax avoidance, and to build a fairer tax system that works for the benefit of all people and not just a fortunate few. Even if the new round of global tax negotiations (BEPS 2.0) delivers positive results, a more inclusive tax body is required to oversee the global governance of international tax matters and strengthen international tax cooperation.

Notes to editors:

Download Oxfam’s 5-point plan here.

Mauritius Leaks is a global investigation by the International Consortium of Investigative Journalists (ICIJ). For more details see: https://www.icij.org/investigations/mauritius-leaks/

Oxfam’s 5-Point Plan to Build a Fairer Global Tax System

July 29, 2019

Endless corporate tax scandals?

When multinational corporations and the super-rich use tax havens to avoid paying their fair share, it is ordinary people, and especially the poorest, who pay the price. The Mauritius Leaks show that tax havens continue not only to exist but to prosper, despite government promises to rein in tax dodging. This briefing lists five steps governments can take to tackle tax avoidance, and end the era of tax havens and the race to the bottom on corporate taxation.

Oxfam’s 5-Point Plan to Build a Fairer Global Tax System.PDF

Mauritius Leaks Reveal Africa is Losing Crucial Tax Revenues to Tax Haven of Mauritius

July 23, 2019

Leaks reveal Africa is losing crucial tax revenues to tax haven of Mauritius.

Responding to research published by the International Consortium of Investigative Journalists today that multinational corporations are using the tax haven of Mauritius to avoid paying millions of dollars of tax across Africa, Peter Kamalingin, Oxfam’s Pan Africa Director, said:

“Mauritius Leaks provide yet another example of how multinational corporations are gaming the system to shrink their tax bills – and cheating some of the world’s poorest countries out of the vital tax revenues they need to get children into school or ensure people can see a doctor when they are ill.

“The true scandal is that this – like most tax avoidance schemes – is completely legal. Real political will is needed urgently to rewrite global tax rules and introduce a global minimum effective tax rate that is paid by all multinational corporations no matter where they are based. This would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens like Mauritius out of business.

‘’African governments should revise their tax policies with Mauritius and other tax havens and defend their tax revenues better. Countries do not need to wait for global action, unilateral action is possible.’’

Oxfam New Zealand’s Executive Director Rachael Le Mesurier said: “These revelations show the importance of political will for cracking down on tax avoidance. We need the New Zealand government to support the calls for a global minimum effective tax rate at the OECD negotiations.

“New Zealanders care about corporations and the super-rich paying their fair share like everyone else; Oxfam NZ’s ‘Fair Tax Now’ campaign saw over 430 people write a submission to Ministers Nash and Robertson on priorities to take to the OECD, and many more have signed our petition calling for tax transparency legislation for multinationals.

“Without action from our political leaders, these companies and individuals can continue to game the system and cheat some of the world’s poorest countries of vital tax revenue to fund public services and help people lift themselves out of poverty.”

Notes

Mauritius Leaks revealed that multinational corporations artificially but legally shifted their profits out of African countries where they do business to the corporate tax haven of Mauritius, where foreign income like interest payments are taxed at the very low rate of 3 percent. Unfair tax agreements signed between Mauritius and countries in Africa and Europe allow some companies to cut their tax bills even further.

Mauritius Leaks is a global investigation by the International Consortium of Investigative Journalists (ICIJ). For more details see: https://www.icij.org/investigations/mauritius-leaks/

Since 2014, a huge number of documents, including the Panama Papers and Paradise Papers scandals, have been leaked by ICIJ unveiling how tax evasion and avoidance have become standard business practice across the globe.

Countries from across the globe, including several African countries, are currently participating in a round of international tax negotiations under the OECD-G20 umbrella, including issues such as the introduction of a global minimum effective tax rate. To effectively curb profit shifting, countries must ensure the global minimum effective tax rate is set at an ambitious level and applied at a country-by-country basis without exceptions.

In 2016, Oxfam exposed Mauritius as one of the world’s 15 worst corporate tax havens in its report ‘Tax Battles.’ Download a copy of the report here.

On 28 May, 2019, the Tax Justice Network launched the Corporate Tax Haven Index (CTHI). Tax Justice Network Africa cited Mauritius as “among the most corrosive corporate tax havens against African countries”.

Company loans from Mauritius and nine other tax havens to African countries total over $80 billion. This means that for every $6 of foreign investment in Africa, $1 was a company loan from a tax haven. Two infographics detailing this information are available for download here.

Oxfam New Zealand has been campaigning for the New Zealand government to do more to stop tax avoidance to support poor countries and their people. A petition calling for legislation to be introduced requiring public, country-by-country financial reporting for all large multinational corporations has been signed by over 8600 people. For the Government’s recent consultation on options for taxing the digital economy, we helped over 430 people write a submission calling for New Zealand to advocate at the OECD-G20 level for a global minimum effective tax rate and other changes to the international tax rules.

Hunger is spiralling, but has fallen off the political agenda, says Oxfam

July 15, 2019

Climate crisis and conflict driving rise in hungry people.

Responding to new figures released by the United Nations Food and Agriculture Organisation (FAO) today, which show that the number of hungry people has risen for the third year in a row, mainly as a result of conflict and the climate crisis, Oxfam International’s Executive Director Winnie Byanyima said:

“Despite spiralling hunger and two global food price crises in a little over ten years, hunger has fallen off the political agenda.

“Governments need to urgently agree new strategies that tackle the key drivers of hunger – the climate crisis, conflict, and a global food system which puts narrow commercial interests ahead of the needs of hungry communities, small-scale farmers and sustainable farming.

“Governments must change agriculture policies, so they contribute to the fight against hunger. They must urgently cut greenhouse gas emissions and help farmers adapt their agriculture to the more extreme and unsettled climate. They must increase their efforts to end violent conflicts and war and make humanitarian aid available to meet the food needs of millions of people affected by crises.

“Governments must strengthen the support provided to women: they make up nearly half of food producers in development countries, but typically eat last, least and least well when households run short of food.”

Notes to editors:

Oxfam spokespeople are available for interviews and background.
Oxfam’s new report “Gender inequalities and food insecurity: 10 years after the food price crisis, why are women farmers still food insecure?” analyses the reforms implemented since the food price crises in 2007-2008 and 2010-2011, and it highlights why these reforms will not be enough to prevent another crisis or end hunger.
Women play a crucial role in agriculture, feeding hundreds of millions of people worldwide. Yet, they face systemic discrimination – for instance when it comes to the right to own land or access to credit. Moreover, the FAO has repeatedly highlighted that women are more likely to go hungry than men. They are also disproportionately affected by climate change, conflict and displacement.
In a first food price crisis, the price of food commodities rose by 83% between early 2007 and May 2008. A similar spike in food prices happened again between 2010 and 2011. These spikes were driven by a range of factors, including food price speculation, increased global demand for biofuels, decreasing food stocks, the diversion of food for livestock, and extreme weather events linked to climate change. Structural problems which also contributed to the spike in food prices include the liberalization of agricultural trade, the concentration of distribution and input supply in the hands of a few corporations, the marginalization of smallholder farmers, declining public investment in agriculture and decreasing development aid to small-holder agriculture.
In a 2008 report, the World Bank states that growth in small-scale agriculture is two to four times more effective at reducing in hunger and poverty than growth in any other sector.

Oxfam warns of flood risk to Rohingya refugees as further monsoon rain forecast

July 12, 2019

Oxfam is warning that thousands of Rohingya refugees in Bangladesh are in danger after almost a month’s worth of rain fell in just a week.

Cox’s Bazar is home to the world’s largest refugee camp where more than 900,000 refugees live in fragile homes built from bamboo and tarpaulin.

Elizabeth Hallinan, Oxfam’s advocacy manager in Cox’s Bazar, said: “Days of heavy rain and landslides have left homes teetering precariously on the brink of steep ravines. Roads have turned into rivers and streams run down the steep hillsides between people’s houses.

“Oxfam is rushing to reinforce and repair vital infrastructures like toilets and handpumps. Our teams of Rohingya volunteers are ensuring that the most vulnerable refugees who have been forced from their flooded homes have basic household items and are in touch with the camp authorities.”

Safwatul Haque Niloy, Oxfam’s head of public health, said: “The mega-camp is built on hilly terrain and sandy soil that cannot withstand days of heavy rain. Low-lying areas are completely waterlogged and the ground has been churned up.

“People are worried that their homes will collapse. Our immediate concern is for children, pregnant women, older people and those with disabilities who will struggle to leave their homes in these dangerous conditions.

“We have also started monitoring for outbreaks of diarrheal disease which is a risk when there is contaminated water caused by flooding.”

Notes:

According to the IOM, more than 45,000 people have been affected by weather-related incidents since the end of April, and 5,600 people have been displaced.

Bangladesh is near the beginning of monsoon season, which will last until September. Weather monitoring stations in Cox’s Bazar registered 700mm of rain in the week to Monday 8 July. Average rainfall for July in Chittagong, the province in which Cox’s Bazar is located, is 733mm.

Oxfam and its partners are providing vital aid including clean water and food to Rohingya refugees in Bangladesh. So far, we’ve helped more than 266,000 people. You can donate to Oxfam’s Rohingya Crisis appeal here.

Let’s even it up with rules for all

July 4, 2019

Here at Oxfam we work hard to beat inequality.

We do this because inequality perpetuates poverty, erodes trust, fuels crime, makes us unhappy, negates economic growth, and robs opportunities from people who are struggling to get by. It even cuts short people’s lives.

How can tax fight poverty

It might surprise you to know, but one of the most important things we can do to build an inclusive world of abundance is to transform our international tax system.

The tax system is how we share resources to get the big-ticket items that we all benefit from: roads, schools, police, teachers, public libraries, nurses, clinics, rubbish collection, safe water, and electricity. These are the public services that everyone makes use of, but that people who are poor rely on. Evidence tells us that the tax system can be a powerful tool to end inequality and poverty.

Making the rules fair for all

Our international tax rules say what multinational corporations can do and what governments can tax. They are old, dating back to WWII. Multinational corporations have found ways to game the rules to drain profits away from countries where they should contribute taxes, to countries where they contribute next to nothing.

Multinational corporations have also used countries’ need for investment as leverage to drive down corporate tax rates to the lowest they have ever been. This bad behaviour robs opportunities from people across the world.

Preparing for a more digital future

Meanwhile, our economies are changing. More and more of our lives are online: we buy and sell things and information; and we create value for corporations through sharing our own information. This digital economy makes it hard for people in government to get multinational corporations – including digital corporations – to make their fair contribution where they actually operate.

In response to this, representatives from 129 governments around the world – including New Zealand – are coming together to talk about how to fundamentally change the rules to make the international tax system fit for the modern world.

If governments get this right, we could see the end of shadowy corporate tax havens and the damaging race to the bottom on corporate tax. It could mark the beginning of a new tax era with fair taxes; where countries get what they need to nurture their people and the planet.

Four things have to happen.

One. Let all countries take part in decisions about international tax rules

When decisions are being made that impact on us, it is only right that we have our say.

Yet, for decades the Organisation for Economic Cooperation and Development (OECD) – a small club of only 36 wealthy countries, including New Zealand – has led decision-making about international tax rules. This has meant that countries that benefit from the rules have made the rules, leaving out countries that are poor.

This isn’t right, especially because countries that are poor rely most heavily on taxes from multinational corporations to provide services like health and education. They should be at the decision-making table.
The OECD has recently opened up to allow other countries to take part in decisions about international tax rules. But even now, only countries that have signed on to implement the OECD’s minimum tax standards are allowed to take part in decision-making. These 120 countries belong to what is called the ‘Inclusive Framework’. This means that many countries that are poor still don’t get a say in decisions about rules that impact on them.

Two. Simple rules that work for all

At the moment, the international tax system is incredibly complex. Even for New Zealand. When our people in parliament passed a law last year to help hold multinational corporations to account, the Specialist Tax Advisor said the legislation was “the most complex and technically challenging tax Bill that I have seen in the thirty years during which I have been a full-time tax professional”. *When an experienced tax accountant says something like this, you know it is bad.

Countries that are poor don’t have the resources to invest in sophisticated tax systems. This makes it more difficult for them to catch multinational corporations when they are gaming the rules and shirking from contributing their fair share. We need international tax rules that make the system simpler, not more complex. This will help us here in New Zealand, and also our neighbours across the Pacific region and beyond.

Three. Make rules that mean tax is paid where profits are made

For far too long, multinational corporations have been able to game the international tax rules to shift profits away from where they are made. They avoid contributing their fair share to the well-being of people in the countries where they make profits. It is time to make sure that the rules ensure all multinational corporations contribute their fair share, based on the actual profits they make in each country where they operate.

Four. Set a global minimum tax rate for multinational corporations

To beat inequality, we need a global minimum tax rate for multinational corporations – so they can’t get away with shirking their fair share. One way to stop multinational corporations driving corporate tax rates down and avoiding taxes across the world is for governments to agree on an ambitious minimum tax that all multinational corporations have to pay. This tax rate shouldn’t be too low – it needs to be set at a level that makes sure multinational corporations contribute their fair share in every country they operate. For this reason, the minimum tax rate also needs to be calculated at a country level – not just in the country where the multinational corporation has its headquarters.

*Turner, Therese, March 2018, Taxation (Neutralising Base Erosion and Profit Shifting) Bill, Report of the Specialist Tax Advisor to the Finance and Expenditure Select Committee, Turner & Associates: Wellington, Accessed on 2 September 2018 at: https://www.parliament.nz/resource/en-NZ/52SCFE_ADV_75623_942/041d34fc190035632c50dc2a00018cbee08b4fc7