And it’s perfectly legal.
Some of the biggest foreign investment and commercial banks operating in Britain paid an average tax rate of just 6% on the billions of dollars of profits they made in the country last year, a Reutersanalysis of regulatory filings shows.
That is less than a third of Britain’s corporate rate of 20%. There is however nothing illegal about how they managed to reduce their taxes, and includes using losses built up during the financial crisis to offset current bills.
Seven of the biggest international banks operating in London—Europe’s main investment banking center—have published profit and tax data ahead of a year-end deadline stipulated by EU law.
Credit Suisse has placed five employees on leave while it carries out an internal investigation related to tax matters, the Swiss bank said on Sunday.
Swiss newspaper SonntagsZeitung reported earlier the bank’s action was in connection with a U.S. investigation into Credit Suisse’s Israeli unit over possible tax evasion.
“Credit Suisse is carrying out an internal investigation relating to tax matters,” the bank said in a statement. “The review is focusing on employee conduct.”
If I refused to pay any taxes until the US government lowered my taxes to a so-called “fair rate,” I’d almost certainly be arrested for tax evasion. But when The Washington Post asked Apple CEO Tim Cook about the billions that his company has stashed in tax havens around the world, Cook declared: “We’re not going to bring it back until there’s a fair rate. There’s no debate about it.”
And nothing happened, either to Cook or to Apple. Because when it comes to taxes, it’s truer today than ever that only the little people pay.
Apparently though, that’s not enough for the CEOs of multinational corporations, like Tim Cook. He doesn’t just want to avoid taxes, he wants Americans to know that Congress isn’t writing the rules; Apple is.
Dave Johnson from Campaign for America’s Future wrote a great article about this titled, “CEO Of Giant Corporation Tells US Government He’s the Boss of Them.” In it, Johnson writes:
[T]hese days huge multinational corporations are the boss of our Congress. So, CEO Cook gets away with it, and with keeping $181 billion in tax havens to dodge paying $59 billion in taxes. Cook knows he can just come out and say they are not going to pay their taxes until there is a “fair rate.”
And he’s right.
But Apple is by no means the only corporation doing this.
In March, Citizens for Tax Justice reported that US Fortune 500 corporations are avoiding up to $695 billion in US federal income taxes by holding $2.4 trillion of “permanently reinvested” profits offshore. That’s nearly $700 billion that the largest US corporations — corporations like Netflix, Nike and Citigroup — are stashing in offshore tax havens.
Switzerland said it plans to give information to U.S. tax authorities about accounts at HSBC Holdings Plc’s (HSBA.L) Swiss private bank, as part of a U.S. investigation into tax evasion.
HSBC’s Swiss unit has already paid tens of millions of dollars in fines after admitting substandard compliance on tax evasion and other issues.
The Swiss government said it made the announcement about its plans on Tuesday to alert HSBC account holders whom it has been unable to locate, and to give them the chance to lodge a legal appeal if they object to having their information sent to the U.S. Internal Revenue Service (IRS).
The move comes after the IRS asked Swiss tax authorities in April for assistance on HSBC Private Bank (Suisse) SA accounts held by Swiss-registered “domiciliary companies” with U.S. beneficial owners between 2002 and 2014.
This piece originally ran on ProPublica.
Goldman Sachs, Citigroup, Merrill Lynch and other international banks have profited for years by arranging short-term loans of stock in Danish companies, a maneuver that has helped shareholders but deprived Denmark of substantial tax revenues.
With the banks’ help, stock owners avoid paying Danish authorities the dividend taxesthey would otherwise owe on their holdings of companies like Maersk, Novo Nordisk, Danske Bank, Tryg and Carlsberg, among others.
They do so by lending the shares to banks that temporarily transfer them to other investors with low or no tax obligations around the time when the dividend is paid. The terms are hedged and arranged months in advance. After dividend time, the borrowed shares are returned, and the tax savings are shared among the investors and banks that arranged the trades.
The maneuver — known as dividend arbitrage, or “div-arb” — cost Denmark about 400 million Danish crowns ($60 million) in lost taxes last year alone, according to an estimate that we askedCEPOS, a Danish think tank, to provide for this article
The tax-avoidance trades are detailed in confidential documents that ProPublica examined in collaboration with the Danish business daily Børsen. The documents include trade logs, emails, chat messages and marketing materials that show how such trades happen in Denmark and various other countries.
Officials in Frankfurt, Germany’s financial capital, have launched an investigation into tax avoidance trades enabled by the country’s second-largest bank.
German prosecutors have expanded an ongoing investigation of international tax-avoidance deals to cover questionable trades exposed last week by ProPublica and other media partners.
Handelsblatt, which collaborated on the report along with German public broadcaster ARD, reported that Commerzbank is the target of the new inquiry for its involvement in the trades, which cost German taxpayers $1 billion a year in forgone revenues.
The Frankfurt general prosecutor’s office confirmed that it had opened a new investigation but declined to name the target. A Bloomberg report also named Commerzbank as the target.
Commerzbank declined to comment. In an interview with Germany’s Bild newspaper, however, board member Michael Reuther said on Wednesday the trades were “no longer socially accepted” and that the bank will exit the business in Germany and elsewhere ahead of a government move to extinguish them.
The media group that coordinated the Panama Papers investigation into offshore companies said on Thursday it would not participate in a criminal probe by the U.S. Department of Justice.
Preet Bharara, the U.S. Attorney for Manhattan, wrote to the International Consortium of Investigative Journalists seeking additional information from the group to aid his investigation into tax avoidance claims, the Guardian reported on Tuesday.
The group on Thursday told prosecutors in Bharara’s office that it would not release unpublished data to them.
Mexican authorities are investigating 33 people for possible tax evasion or financial crimes after the “Panama Papers” leak, tax chief Aristoteles Nunez said on Wednesday.
Nunez told Radio Formula that if their money came from legal means they would be forgiven if they pay their taxes, bring their money back to Mexico and invest in a business in Mexico for at least three years. He also said the tax authority had already been investigating 18 of the 33 before Sunday’s media reports based on leaked documents.
Governments around the globe have started to investigate possible financial wrongdoing after 11.5 million documents from the Panamanian law firm Mossack Fonseca, nicknamed the “Panama Papers,” were leaked to a German newspaper and reports were published in cooperation with the U.S.-based International Consortium of Investigative Journalists (ICIJ).
Italian tax authorities said Thursday that they are pursuing Google Inc. for around EUR300 million (about $327 million) in back taxes over the course of six years, a new salvo from European governments seeking to boost corporate tax revenue from tech giants.
Italy’s financial police in Rome said they are probing the company, a unit of Alphabet Inc., as part of a long-running judicial inquiry into the company’s tax arrangements that covers the years between 2008 and 2013.
Italian authorities allege the company evaded taxes in the country by routing revenue to its office in Ireland and not in Italy, where the firm paid EUR2.2 million in corporate income tax last year.
“Google complies with the tax laws in every country where we operate. We continue to work with the relevant authorities,” a company spokesman said in an emailed statement.
HM Revenue and Customs boss Dame Lin Homer has been accused of allowing HSBC to “get away scot free” after she said it was unlikely to pursue allegations that the bank’s Swiss arm helped wealthy clients dodge tax.
Dame Lin confirmed to the Commons Public Accounts Committee that the authority would be unlikely to take action against the banking giant.
The admission comes after the Financial Conduct Authority announced it would not take any formal action on the allegation.
It prompted Conservative MP Stephen Phillips, who sits on the committee, to complain: “It looks as though they have got away scot free.”