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New International Tax Fraud, Evasion Agreement Forged

New International Tax Fraud, Evasion Agreement Forged

Los Angeles, CA – Finance officials from 51 countries have signed an agreement to speed the automatic exchange of tax information, eliminate banking and tax fraud and reduce international tax evasion.

The new pact – the Multilateral Competent Authority Agreement – was negotiated over several years and was finalized at a recent conference in Berlin, Germany, organized by the Paris-based Organization for Economic Cooperation and Development (OECD).

OECD Secretary General Angel Gurria said the taxation deal should “help to recover the trust the public today has lost” during the global financial crisis and economic downturn.

“Tax evasion is not just illegal, it is immoral,” Britain’s finance minister, George Osborne, told a news conference by the ministers. “You are robbing from your fellow citizens and you should be treated like a common thief.”

French Finance Minister Michel Sapin described the Berlin agreement as the “first pillar in fighting tax fraud committed by private people”. “Then we need to reduce tax optimization by companies,” he added.

The European Union has enforced the automatic exchange of interest income since 2005 and America’s Foreign Account Tax Compliance Act (FATCA) has required non-U.S. institutions to provide U.S. tax authorities with data on accounts since 2010.

The U.S. was not a signatory to the new agreement, however, Germany, France, Italy, Spain and the UK  are negotiating with Washington for FATCA to be implemented reciprocally.


Major Exporters Taking ‘Little Action’ on Bribery

Los Angeles, CA – Corruption in trade “is undermining global development as contracts don’t go to the best suppliers, prices are being inflated to cover bribe payments, environmental requirements are not being enforced and taxes are not being collected,” says Germany-based Transparency International (TI).

As a result, it said, “the convention’s fundamental goal of creating a corruption-free level playing field for global trade is still far from being achieved.”

According to the anti-corruption watchdog says 22 countries exerted “little or no” energy in enforcing international anti-bribery laws last year.

According to TI, those countries involved account for 27 percent of world exports and almost 90 per cent of total foreign direct investment outflows.

The non-governmental government (NGO) said only four OECD countries were actively enforcing the anti-bribery convention – Germany, Great Britain, Switzerland, and the U.S.

Among those with little or no enforcement, TI said, were Japan, the Netherlands, South Korea, Russia, Spain, Belgium, Mexico, Brazil, Ireland, Poland, Turkey, Denmark, Czech Republic, Luxembourg, Chile and Israel.

Others, including France, Sweden, South Africa and New Zealand, were chided for exerting only “limited” enforcement of the convention.

The binding, international Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was enacted by the Paris-based Organization for Economic Cooperation and Development (OECD) in 1997.

Widely seen as an important instrument in the drive to curb global corruption, the treaty requires the 41 signatory countries to make foreign bribery a crime for which individuals and enterprises can be made responsible.

TI annually assesses compliance with an anti-bribery convention signed by 41 countries that prohibits bribes to win contracts, or dodge taxes and local laws.

The agency urged the world’s exporting countries to take a “tougher stance on bribery and provide adequate support, including staffing and funding for enforcement with rigorous OECD monitoring.”


EXIM Defends Itself Against Defunding Campaign

Washington, DC – With talk of defunding its operations circulating on Capitol Hill, the US Export-Import Bank (EXIM) has released its latest Annual Competiveness Report to Congress in an effort to “underscore the need for continued EXIM support for American exporters to help level the playing field in an increasingly competitive global marketplace.”

According to the report, while for decades, global export competition was governed by international standards put in place to ensure that companies could compete on free-market factors like price and quality rather than on aggressive government financing, today the global marketplace is changing.

“While 100 percent of official support for trade operated under these international rules 15 years ago, today that number has plummeted to 34 percent. Currently Russia, China and other countries offer subsidies and financing terms – including support of their state-sponsored companies – that threaten American jobs and export opportunities,” it said.

The report also stated that “the rapid growth of export financing from three Asian competitors: Korea, Japan and China.”

Those countries, it added, “provided significantly more export-credit support to their respective domestic companies and industries than did the United States in 2013.”

“Unregulated Competition is Expanding”

In addition, the report asserts that unregulated competition is expanding and commercial banks have largely withdrawn from pockets of the export-finance arena, including providing support for small businesses.

“The United States faces more robust competition from export-credit agencies offering terms that are not regulated by the Organization for Economic Co-operation and Development (OECD), which encourages global export competition based on free-market principles and mutually agreed-upon standards,” it said.

For example, EXIM support for all of its $15 billion in medium- and long-term financing was regulated by the OECD Arrangement, but other OECD member countries offered more than $60 billion alone of unregulated export financing support (on top of $83 billion in export financing governed by the OECD Arrangement).

“Nations that are not subject to the OECD framework, including Brazil, Russia, India and China, provided $115 billion in trade-related financing,” according to the study.

Unregulated support, it said, totaled substantially more than all OECD-regulated support, “a trend the report expects to continue and one which is poised to place US exporters at a competitive disadvantage absent the tools made available by EXIM.”

The report also stated that “the appetite of commercial banks for long-term projects continued to diminish” since the implementation of Basel III and other banking reforms.

“As liquidity sources for certain projects remain scarce, export-credit agency support has become more necessary to fill gaps in the trade finance marketplace and ensure that American exporters remain competitive,” it said.

“Consequently, US exporters will continue to rely upon EXIM support as they seek to take advantage of emerging economies and the 95 percent of consumers that live abroad.”

In the statement accompanying the report, EXIM Chairman and President Fred P. Hochberg, said, “There is no stronger brand in the world than ‘Made in America,’ but the increasingly aggressive approach by some foreign competitors in the export financing marketplace presents an ever-growing threat to US jobs.”

The bank’s job, he said, “is to back American workers and ensure that US exporters, especially small businesses, remain competitive and have the support they need to export their products and create jobs here at home.”