(in Finnish) Finnairilla ja SAS:llä käytössään useita veroparatiisiyhtiöistä

NTJN ja Attac vaativat Finnairia luopumaan veroparatiisiyhtiöiden käytöstä
by matti (05/10/07)

LEHDISTÖTILAISUUS perjantaina 5.10. klo 12, Säästöpankinranta 6
(Graniittilinna), Helsinki

Norjassa tuli torstaina julki, että SAS vuokraa valtaosan käyttämistään lentokoneista ulkomailta. Ainakin 30 konetta vuokrataan kansainvälisistä veroparatiiseista, kuten Cayman-saarilta. Tiedon toi esiin norjalainen Klassekampen-sanomalehti ja se perustuu kansalaisjärjestö Nordic Tax
Justice Networkin paljastukseen. Ilmi kävi myös, että yhdeksän SAS:n suomalaisen Blue1 -tytäryhtiön koneesta vuokrataan Cayman-saarilta.

Perjantain norjalaislehtien tietojen mukaan Blue1 luopuu uutisen seurauksena veroparatiisiliisauksesta. "Vetäytymällä veroparatiisien käytöstä Blue1 myöntää, että veroparatiisiliisaukset eivät ole osa vastuullista liiketoimintaa", toteaa Matti Ylönen Nordic Tax Justice Networkista.

Myös Finnairilla on veroparatiisikytkös. Suomen valtion 55,8 prosenttisesti omistama Finnair on liisannut vuodesta 2002 kahta lentokonetta Cayman-saarilla sijaitsevasta yhtiöstä ja yhtä konetta

"Vuonna 1999 Finnair luopui eduskuntakuulemisten ja julkisen keskustelun seurauksena veroparatiisiliisauksesta. Nyt käytäntöön on kaikessa hiljaisuudessa palattu entistä vahvemmin", huomauttaa Otto Bruun Attacin veroryhmästä.

Nordic Tax Justice Network ja Attac vaativat, että

- valtioyhtiöt lopettavat veroparatiisien käytön
- lentokoneita vuokrataan ainoastaan maista, joissa niiden omistajatiedot ovat julkisia
- pohjoismaiden hallitukset työskentelevät kansainvälisen veroperustaisen leasing-toiminnan kieltämiseksi ja laajemmin veroparatiisiongelman ratkaisemiseksi ottaen mallia esimerkiksi Norjan
viimeaikaisista toimista

Tax Justice Network on vaatinut veroparatiisiongelmaan myös yrityksiltä mm. lentoalalla vastuullisuutta jo perustamisestaan lähtien. "Lentoyhtiöt ovat korostaneet eroaan muuhun julkiseen liikenteeseen sillä, että niiden toimintaa ei tueta julkisilla avustuksilla. Ne ovat
kuitenkin liisauksen kautta ottaneet itselleen veroetuja, joiden vaikutukset näkyvät valtioiden pienenevinä verotuloina", toteaa Matti Ylönen Tax Justice Networkista.

Veroparatiisien suurin ongelma on, että samat rakenteet voivat auttaa verojen minimointia, veronkiertoa ja kansainvälisen rikollisuuden rahanpesua. Pelkästään superrikkaiden valtioille aiheuttamat veromenetykset nousevat vuosittain yli 200 miljardiin euroon.

Otto Bruun, p. 040 771 4170, otto.bruun@helsinki.fi
Matti Ylönen, p. 040 723 1118, matti.ylonen@iki.fi
Nordic Tax Justice Network Norja / Sigrid Klæboe Jacobsen, +47 934 41 576

Tax Justice Network (TJN) on vuonna 2002 perustettu kansainvälinen kampanja- ja tutkimusjärjestö, joka haluaa edistää sosiaalista oikeudenmukaisuutta sekä liiketoiminnan avoimuutta, läpinäkyvyyttä ja tilivelvollisuutta. Nämä tavoitteet edellyttävät laajaksi kasvaneeseen veroparatiisiongelmaan puuttumista. Pohjoismaissa järjestö toimii Nordic
Tax Justice Networkin kautta.

Attac on maailmanlaajuinen kansalaisliike, joka perustettiin vuonna 1998 Ranskassa nostamaan esille talouden globalisaation haitallisia puolia ja työskentelemään sekä hallitumman, oikeudenmukaisemman että demokraattisemman globalisaation puolesta.

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Tax trends increase inequality - to what end?

by Jorma Penttinen (12/06/07)

In taxation, there have been some continuous trends the consequences of which are hard to swallow. There are of course those abominable tax havens and the financial industry around them that weaken the basis of any society but practically no-one right-minded denies the harmful effect they have.

Tax havens are enemies of state and regular tax-payers, and even enemies of market economy. The secrecy, illegality (and immorality) are not compatible with the theory of well-working markets.

The other major, and more recent, phenomenon in taxation is the fierce tax competition and the many forms it takes also here in the Nordic countries. Sweden’s new government decided to abolish the wealth tax in the vague hope that persons like Ingvar Kamprad (IKEA, corporate income channelled to an extremely shady Dutch foundation) or Hans Rausing (head of the family that owns Tetrapak; he is one of the richest men in Britain who in some years received more money from the British state than he paid taxes) will find their way back home.

Finland did erase wealth tax a bit earlier but (un)fortunately there are no billionaires we can seduce back with this kind of tax breaks.

The question, nevertheless, is that where will it all end? Will taxes be abolished from all companies and also from individuals that are part of the ever more important class of “experts”? And will more and more taxes then be paid through VAT, environmental taxes, and all kinds of user fees, which mean that the poor and lower middle class will in future pay a larger proportion of all taxes?

Finland, for example, was until mid 1960s a country with large income and wealth inequalities. The poorest fifth of the population received only three percents of all incomes, and the richest fifth nearly half (48,5%). In the following 30 years income differences narrowed markedly, but then they began to rise since 1980’s.

The major change happened in the early 1990’s when the corporate income tax was eventually reduced to 28%. As the following diagram shows, it had enormous effect especially for the very rich who more than doubled their incomes in a decade.

The growth of net real income in Finland in different income deciles, and in the upper 1% from 1990 to 2002.
Average growth 19.29%. From http://www.akatemia.org/info/uutiset/suomen_malli.htm.

This trend continues even stronger even if people are more and more alarmed of the rising inequality. Finland’s next government, for example, will ease inheritance taxes.

The funny thing is that decisions to scrap taxes from the wealthier part of population are justified by saying that this will help the poor. Following this logic through, one can say that the class society we had hundred years ago was better for the poor.

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The Leverage of the General Anti Avoidance Principle

by Matti Ylönen (14/08/06)

When it comes to tackling tax avoidance, I have understood that in one sense Finland is in rare company: it has adopted the general anti avoidance principle (GAAP) as part of its legislation. I think that this state of affairs could have some really interesting impacts on campaign work for tax justice.

In countries that don't have the general anti avoidance principle, the boundaries of legitimate tax planning are defined by listing the allowed and prohibited acts in different areas of business. For lawyers and accounting firms this has created endless possibilities in their search for loopholes in tax law: everything goes as long as it does not explicitly violate the letter of law (I'm not a jurist, so feel free to comment if there are any terminological errors).

The ingenuity of the general anti avoidance principle is simple. By introducing GAAP, all transactions that are done merely for seeking to lower company's tax burden are prohibited. This can effectively curb aggressive tax planning.

Of course, having a GAAP and effectively implementing it are two different things, and the Finnish tax administration and the Ministry of Finance haven't exactly shown enthusiasm in tackling tax avoidance. One example of the careless attitude is that no one knows the scale of tax avoidance and evasion in Finland. The information on the topic is scattered and partial.

Other thing is that the Finnish GAAP is written in civil law, which means that using distorted transfer prices in intra-firm trade isn't actually criminalised. If a company gets caught from distorting its transfer prices, it will only be served with an extra tax bill and an obligation to mention the issue by giving a public announcement and in their annual report. This is, I believe, anyhow a big incentive for not using aggressive tax schemes.

Yet another thing is that the GAAP is toothless in curbing the use of export processing zones and their tax holidays. For example, the Finnish forest industry company Metsä-Botnia has recently been target of severe criticism (see TJN Focus 1/2006, PDF document) in Uruguay where it is building a huge paper mill with full tax exemptions.

An educated guess is, however, that in general the big Finnish companies engage in aggressive tax avoidance through transfer mis-pricing or thin capitalisation much less than their competitors in e.g. U.S. There are some major Finnish companies with tax haven subsidiaries, but having one (yes, one, not several of them) seems to be more like an exception than a rule. Quite on contrary with situation in the U.S., I would say.

One reason behind this reluctance in using offshore subsidiaries is certainly the GAAP. Another one is that paying taxes has traditionally been considered as a responsibility in the Nordic welfare state model, and I think that tax avoidance has more negative image in Finnish corporate culture and in the eyes of Finnish consumers than in many other countries.

Here are the interesting prospects for campaigning: if big Finnish companies engage in aggressive tax avoidance less than some of their global competitors, it would certainly be an advantage for them to implement the key principles of the SustainAbility's "Taxing Issues" report, most importantly by reporting the taxes paid by different subsidiaries in their corporate responsibility (CR) reporting. I recently discussed this issue with the head of tax consultancy division of the PricewaterhouseCoopers Finland, and got very positive response to SustainAbility's principles, as a way for showing global corporate responsibility.

Secondly, curbing the harmful tax practices should be in the interests of the Finnish business community. They should demand that the state would work actively in international arenas for this goal. The foreign competitors that rely on extensive use of tax havens get certainly a competitive edge, at least in the short term (in the long term the negative image and tax risks may actually offset the quick savings, especially as taxes are rising in the CR agenda). Closing this "offshore gap" would definitely be good for those major Finnish corporations that do pay their fair share of taxes.

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Ollila's Challenge

by Matti Ylönen (12/07/06)

The former chairman and CEO of Nokia, Jorma Ollila, turned a new leaf in his career by accepting post as the non-executive chairman of the oil giant Royal Dutch Shell. Professor Owolabi M. Bakre's presentation in Tax Justice Network’s annual seminar at Essex raised an important issue: when it comes to taxes and corporate social responsibility (CSR), Ollila has a huge task ahead.

It should not come as a big surprise that oil companies' relationship with CSR has been a messy affair. Giant oil corporations, with Shell in forefront, have been accused of environmental catastrophes, human rights abuses and of giving support to undemocratic and repressive governments. Amidst the growing public concern some lessons have also been learned.

Apparently, tax issues were not amongst them.

Nigeria is the eight largest oil producer in the world and the second poorest country on earth. Professor Bakre showed that this strange equation turns feasible largely because of the astounding US$521 billion capital flight resulting from tax evasion/avoidance and theft of the ruling elite between years 1960-1999.

The common image of developing countries' capital flight is that it derives from bribes that oil the wheels of government bureaucracy. Although the state corruption is a serious problem that needs to be tackled, the trail of big bucks leads elsewhere.

Professor Simon J. Pak showed in his presentation at Essex that capital flight from Nigeria to U.S. has been primarily result of corporations' mis-priced imports since 1991, and that the capital outflows to U.S. tripled between 1996 and 2005. Boyce and Ndikumana arrived in similar results by using IMF's Direction of Trade Yearbooks, as did Raymond W. Baker in his milestone book Capitalism’s Achilles Heel.

Mispricing is handy tool for corporations that want to avoid their social responsibilities. By manipulating few entries in account books corporations can show negative profits in countries where they operate and show profits in low-tax states, often in tax havens. This is exactly what happens in Nigeria.

The blameworthy get seldom caught. After all, professor Bakre told that the Nigerian tax officials have not been encouraged to any training programs for the past 10 years. Compare that to the high-paid, highly skilled tax planning teams of multinational corporations.

What if someone would show negligence in covering this 'tax planning' and would be caught with pants down? This kind of incidence happened to Shell in 2003 as Nigerian tax authority served Shell with a tax assessment notice of almost US$18 millions for one year’s unpaid taxes.

The company's response? Statement that they are not obliged to pay taxes in Nigeria.

The same corporations that get subsidies and ready infrastructure from the government of Nigeria have decided that paying tax is not part of their responsibilities. Shell has been amongst them, together with many other oil giants. By doing so they undermine not only democracy but also the idea of genuinely competitive capitalism, where winners would be the ones with the best products, not with the most cunning tax advisors.

Correcting this anomaly is the most ambitious and important task Ollila can take if he is to promote the CSR values he endorsed while being the head of Nokia. If companies do not pay their taxes, they have little grounds to speak about corporate citizenship or corporate social responsibility.

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Mispricing in Essex

by Jorma Penttinen (09/07/06)

Near Colchester, the oldest town in England, at the university of Essex the Tax Justice Network held its fourth summer seminar on 6th and 7th July. There is hardly any other place where you can see so many experts on global tax evasion at the same time.

The title of the seminar was ”Tax, poverty and development finance”. Some 60 people (the maximum amount, the organisers put a limit so that discussion could be more intense) of activists, experts and persons from political circles from 15 different countries attended the seminar.

Perhaps the most intersting presentation was given by professor Simon J. Pak who has analysed the foreign trade of the United States for more than ten years. He has himself developed and written a computer program with which he can detect abnormally priced goods from a vast trade database. This, he explained, shows how assets are moved from on country to another.

Two years ago at Essex professor Pak lectured on the trade between the USA and Russia. This year he told facts about the capital flow from African countries through mispricing.

The examples of mispricing he has discovered are astonishing. In one instance, for example, raw cane sugar was imported to the US from U.K: at 1,407 dollars a kilo. Another shipment of same product from the same source country was valued at 50 cents a kilo. Clearly, someone is telling lies to the US customs.

In estimating the annual capital outflow from Africa to the US, professor Pak went through virtually every transaction of goods between Africa and the US as reported in the US trade statistics. After the program detected abnormal pricing the significance of it was, if possible, evaluated. It's important to understand that his study does not reveal if abnormal prices are inside one company – i.e. transfer pricing – or trade between individual agents. Naturally with abnormal prices there must be some relation between an exporter and an importer, otherwise the trade transaction would be utter foolishness for either partner.

There are two sides of mispricing in Africa's foreign trade: low-priced exports and high-priced imports. When someone imported new radial tires from the US to Ghana at a price of nearly 6 000 dollars a piece and the US-World median price for the same product was $188.15 the exporter made a fortune. Why would anyone buy tires that are 32 times more expensive than similar tires elsewhere? Of course, there is a case of asset transfer from Ghana to the US. Whether there was a question of corruption, tax evasion, criminal money, unfortunately professor Pak's study doesn't reveal the reason behind abnormal prices. Vice versa, when someone exports industrial diamonds from Ghana to the US at a price of 43 cents a carat when the US-World median price is $131.94, it is also a question of asset transfer to the US.

After analysing the effect of mispriced imports and exports between Africa and the US for every country and every article, professor Pak ended up with the total annual outflow of capital to the US. In the ten year period 1996-2005 the amount was over £31 billion. The results varied from country to other but larger capital movement was due to low-priced exports than high-priced imports.

One important finding was that capital flight from Africa to the US has more than doubled in the last ten years. Practices vary from one country to another but evidence is nevertheless striking.

Professor Pak is eager to get detailed trade statistics from different countries in order to study abnormal pricing throughout the world. The question for the Nordic countries is what information we would get from using his analysis. One example of the effects of transfer pricing in Europe is the moving of profits to Ireland's low-tax regime. For example in 2004, Microsoft's subsidiary in Ireland called Round Island One Limited had profits of $9 billion, and it paid taxes only for $300 million (effective tax rate little over 3 percent). In the rest of Europe Microsoft paid 17 million dollars.

This kind of transfer pricing would not probably show in professor Pak's analysis because companies like Microsoft, Lidl or IKEA operate with large quantities and narrow price ranges. Therefore even if the prices would not be seen so abnormal, they could effectively move assets from one country to another.

Nevertheless, professor Pak's method gives us totally new information on international trade and Nordic countries' tax authorities should consider using his expertise to unveil hidden practices.

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