| 14 June 2009
Everybody knows about Double Tax Avoidance Treaties, those big beasts which
roam the international fiscal jungle attempting to reduce the danger that a
company or individual will get taxed twice on the same slice of income, and
usually also reducing withholding taxes between countries, which encourages
trade and foreign direct investment. In brief, they are a Good Thing.
The only problem is, that what you get is often not what it says on the tin,
because the treaties have become infected by Mutual Assistance parasites which
are bred in the cellars of the OECD in Paris. These nasty little animals are
not free-living; but if you go anywhere near a Tax Treaty, they can jump onto
you and infect you. They allow, indeed require, a signatory country to provide
its co-signatory with all possible information that might be to do with an attempt
to minimize (escape, avoid, evade) tax, either unilaterally or on request. One
of the most insidious aspects of these pests is that the their DNA is highly
secretive - no taxpayer, citizen or individual (you and me, in other words)
will ever know that information about them is being passed around between governments.
Not content with unleashing the Mutual Assistance Trojan (MAJ) onto the fiscal
landscape, the OECD's scientists went one further and came up with a free-living
version of the MAJ called the Convention on Mutual Assistance in Tax Matters,
which has infected all the countries of Europe and the OECD on a multilateral
basis. This therefore allows (indeed requires) all those 50 or so countries
to share among themselves all the information they have that might have a bearing
on tax minimization.
The only way for a country to avoid infection by the Convention is to avoid
bodily contact with any of those 50 countries, and this has classically been
the stance of the 'offshore' tax havens, which in the main have resolutely refused
to have anything to do with them, and have thus remained uninfected.
Needless to say, this was anathema to the OECD's experts, who have now come
up with the ne plus ultra of anti-avoidance, an independently viable, free-living,
self-reproducing MAJ called the Tax Information Exchange Agreement. This highly
unpleasant, rodent-like creature can travel around the world until it finds
an uninfected host country, where it immediately takes root and begins breeding.
The TIEA is so designed that once a country has 12 TIEAs in place, this acts
as a critical mass in terms of its relationships with OECD members, and it is
only a matter of time before the host country is completely over-run with TIEAs.
The TIEA has already been very successful, to such an extent that the World
Health Organization raised its TIEA warning level to 6 this week, meaning that
the spread of the disease has reached the level of a pandemic. Governments in
the few remaining uninfected countries, such as Andorra and Vanuatu, are considering
a total ban on inward and outward travel in order to protect themselves, but
it is probably already too late for them to resist.
Welcome to the future! The only consolation is that governments are so incompetent
that they are probably losing all this information about you even more quickly
than they are assembling it. Not the identity thieves, though, who are as efficient
as governments are inefficient, and will undoubtedly steal the information before
it can be lost.
The real answer of course is to be so poor that no-one cares about you. See
you in the pub later on and we'll spend out last euros together.
You have been reading an entry on the following blog:
Jeremy Hetherington-Gore Unleashed
Jeremy tackles the difficult issues head on!
Contact: jeremy@lowtax.net
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