A report from the EU Tax Observatory offers six suggestions to align global offshore tax activity with effective tax regulation.
Recently, we discussed a report released by the EU Tax Observatory, an institute affiliated with the Paris School of Economics. The Observatory used a team of analysts to collect and translate data to provide a real-time statement concerning international tax evasion and its regional and global impact. In our earlier blog, we outlined six main findings of the report.
The report also offers six suggestions to continue to push the needle toward tax justice, and away from the tax crime that occurs when assets flow away from legitimate tax jurisdictions into opaque offshore tax havens. This global activity unjustly enriches tax havens and their resident shell companies at the expense of countries that need tax revenues to remain where they are earned.
These recommendations are aimed at reducing the gap between what multinational companies and the wealthy actually pay in taxes and what they would otherwise pay if legitimate taxation was enforced:
- Create a global asset registry: First suggested in 2014, an international asset registry would align wealth and assets to their actual owners to provide a tool for tax regulation and the reduction of global tax crime. The authors suggest a first best step in this direction would be for the U.S. to join the Common Reporting Standard (CRS), a tool implemented to ease the exchange and reporting of financial and asset information along the lines of the current FATCA requirements pursued by the U.S.
- Strengthen anti-abuse laws: Strengthen laws to expose and respond to transactions that occur for the single goal of avoiding taxation.
- Negotiate and increase the global minimum tax rate: Remove the current loopholes (called “carve-outs”) and endorse a global minimum tax on the profits of multinational companies.
- Taxation of wealthy individuals and institutions: Several recommendations cluster around improving the reporting of billionaires, and collection of tax deficits of multinational companies and global billionaires relative to a rate of 25 percent and two percent, respectively.
- Consider taxing non-residents: Explore the feasibility of taxing long-term residents of countries after they leave the country. For example, in Norway, those who lived in the country for more than ten years are liable for personal income taxes for three years following their departure from the country.
- Minimum tax standards for the wealthy: Agree upon and set a minimum international tax rate on the wealthy.
The report offers a status check and blueprint for continued work toward global tax justice and deterrence of large-scale tax fraud. Obviously, there is a lot of work ahead to deter tax evasion using foreign bank accounts while not penalizing those who use these tools legally.
Do you have an offshore tax question or concern about an IRS audit? Contact our law firm
If you receive an IRS audit letter or are challenged by a tax controversy in Cleveland, Chicago, or elsewhere nationally or abroad, the tax attorneys at Robert J. Fedor, Esq., LLC can help. Call us at 800-579-0997 or contact us online.
