Financial Transparency Coalition

On September 11th the European Parliament voted in favour of introducing a minimum tax rate on interests and royalty income. This is a crucial step in the fight against tax dodging by multinational companies. Royalties and interest payments made between subsidiaries of the same company are two of the main instruments used by multinational companies to evade taxes, at the moment this is far too easy.

According to a recent editorial from The Guardian, the illicit activities that drive capital flight, such as drug trafficking and terrorist financing, are actually supported by legal infrastructure. Namely, the lack of transparency in regions designated as "tax havens" allows for elaborate tax avoidance schemes and money laundering that funds these sorts of activities. As an example, banking company HSBC reportedly held a Cayman Islands subsidiary that "handled some 60,000 accounts," which "drug lords used . . . to fuel their jet-set lives." According to the newspaper, politicians must address the issue of tax haven abuse. In affected countries such...

Where do multinational corporations go on their holidays, and how much money do they spend when they get there? Despite their global reach, Transparency International’s recent Transparency in Corporate Reporting report – which assesses 105 multinational companies’ anti-corruption reporting – shows that these companies reveal very little information about their financial and non-financial contribution to the countries in which they operate. The European Parliament is now calling for legislation to require companies to report financial information on a country-by-country basis.

WASHINGTON, DC – Global Financial Integrity (GFI) praised G20 leaders today for prominently focusing on the issue of illicit financial flows, committing to move toward the automatic exchange of tax information, and renewing the mandate of the Anti-Corruption Working Group for another two years, but expressed disappointment in the leaders’ failure to address the issue of anonymous shell companies.