Financial Transparency Coalition

LONDON -- In the latest development in the global crackdown on tax havens, two of the world's biggest offshore financial jurisdictions were scheduled on Thursday, to sign their 12th Tax Information Exchange Agreements (TIEA), officially taking them off the "grey list" of offshore tax havens put together by the Organization for Economic Cooperation and Development.

A few weeks ago, I wrote a blog recapping some of the ways companies use trade mispricing to dodge their bill from Uncle Sam. In response, one reader asked “why don’t these companies just set up subsidiaries outside of the U.S. and keep their finances in a lower tax jurisdiction?” The answer is: they do. It’s called transfer pricing and it’s all the rage. Multinational corporations use transfer pricing to shift profits from a comparatively high-tax country (like the U.S. or UK) to a low-tax jurisdiction (like the Cayman Islands or Aruba)...

Tax-News.com: Tax haven bashing, while politically popular during a time of worldwide recession, may not be the most economically-sensible course of action for world leaders to take with a view to restoring longer-term global prosperity, the UK’s Institute of Directors (IoD) has warned.

The U.S. Congressional Research Service (CRS) has issued a detailed new report looking at secrecy jurisdictions (also sometimes known as tax havens). The report, which references our work in several places, is packed with data and useful material. For example, looking at methods of corporate tax avoidance, it mentions:

• Allocation Allocation of Debt and Earnings Stripping (p8, "borrow more in the high-tax jurisdiction and less in the low-tax one." - note also our latest blog)
• Transfer pricing(p9, "By lowering the price of goods and services sold by parents and affiliates in high-tax jurisdictions and raising the price of...