THE FLOW OF FUNDS to low-tax jurisdictions has barely changed since 2007, despite significant global efforts to tackle the problem.
Deposit data from the Bank of International Settlements (BIS) demonstrates that $2.7trn (£1.7trn) is deposited offshore in spite of unprecedented action taken by worldwide political leaders and a flurry of bi-lateral treaties entered into by offshore banking centres such as the British Virgin Islands and the Cayman Islands, reports The Guardian.
Niels Johannesen and Gabriel Zucman, academics who were granted access to a rarely seen breakdown of BIS data, concluded: “So far, the G20 tax haven crackdown has … largely failed … Treaties have led to a modest relocation of bank deposits between tax havens but have not triggered significant flows of funds out of tax havens.”
That statement flies in the face of the G20’s verdict on the initiative. In November last year, Angel Gurria, general-secretary of the Organisation for Economic Co-operation and Development, the authority overseeing the crackdown, told the G20 in Cannes: “The era of bank secrecy is over.”
For their part, tax campaigners suggest that the study shows that bi-lateral agreements with low-tax jurisdictions are an ineffectual method of tackling the problem. They argue feebly-worded treaties only allow participants to request financial details when they can already demonstrate suspected evasion activity.
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