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Latest blog entries:
14 June 2009
WHO Declares TIEA Pandemic
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.
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03 May 2009
Time To Get Out Of Money?
What's a girl to do? Men don't give you things any more since they stopped
getting their fat bonuses; that is unless you're lucky enough to have snared
a Russian billionaire, and even those are in short supply nowadays.
I've saved up enough from the days of diamonds and roses though to invest it
to get a reasonable income, the problem is, in what? You can forget about the
banks, interest rates are so low I'd be down to having champagne only once a
day. And hedge funds have turned into a black hole.
So let's try to be rational, and look at the economic background. Virtually
every country there is has put itself alarmingly into hock, and it's not going
to get any better for the foreseeable because unemployment is getting worse
by the day, which means that government expenses go up while the tax take goes
down. Itaque (you didn't know I could speak Latin, did you? I was quite a blue
stocking when I were a lass): taxes are going to go up. Also there is going
to be inflation.
That is actually good news for companies. Why? Well, silly, because they are
going to be able to sit on their hands and wait for the real cost of wages to
go down - wage-slaves aren't going to have any bargaining power for years to
come because there aren't any other jobs out there to go to, so they're desperate
to hold on to the ones they've got. And while their wages stay static, goods
and services will cost more, meaning that companies will get to keep a higher
proportion of their inflating incomes. So it all adds up to buying equities.
The only fly in that ointment is that, with economies flat or declining, companies
may be over-provided with productive facilities. So, look either for companies
in sectors which are more or less immune to the economic cycle, or service providers
with low fixed costs and a flexible work-force. Business publishers would be
an example of the former, and Internet brokerages an example of the latter.
You may object that taxation is going to hit businesses just as hard as ordinary
folk; but I don't think so. Any country that increases its corporation tax rate
is going to see an immediate exodus of companies to more favourable jurisdictions.
In fact, companies are learning to do that even without tax increases. The UK's
tax regime is now so unfavourable to companies with major international involvement
that the steady trickle of deserting plcs is going to turn into a flood. The
shares of Informa plc rose 14% last week when it announced it was going to become
tax-resident in Switzerland.
Even worse is going to happen in the USA, from the tax-collector's perspective:
the Democrats are fielding swathes of inimical corporate legislation, lightly
disguised by a smoke-screen of anti-tax-haven propaganda, and they're about
to get a filibuster-proof majority in the Senate. The option for US companies
to shelter much of their international income overseas is going to disappear
in short order, leaving them with only one option - to quit. I will particularly
look for US multinationals that have low exposure in the US itself, and back
them to make the right, tax-saving choice. And then I'm going to order another
six cases of Bolly.
- A Penny For Your Thoughts
- Thank You, Gordon, Now Here's The Money For Your Bus Home
- A New Economic Order
- About Geese And Golden Eggs
- Asset protection, bearer shares and anonymity
- There's No Fool Like A Gold Fool
- Time To Tax The Vegetarians!
- Better The Devil You Know!
- Orwell, You Were Wrong - But Only By 25 Years
- Break Out The Champagne! Bring On The Dancing Girls!
- How Do You Achieve The Lifestyle Of Complete Freedom Without Having The First Million In The Bank?
- Please Securitize Me
- You Don’t Know Until You Go!
- A Keynesian Vacancy The IMF Can't Fill
- You Can't Escape; Resistance is Futile
- Why the Financial Crisis Doesn't Really Matter
- Is Oil Cheap?
- Tax Harmonization Is Coming!
- The British Government’s ‘Ill Considered’ Use of Anti-Terrorist Financing Legislation against Iceland and the Wider Implications
- How To Commit Collective Financial Suicide
- How and Why You Should Buy Physical Gold Offshore
- Thank You, Mr Paulson
- Scam Busters: Second Citizenship and Passport
- EU Defeated By Bean-Counters
- Offshore Banking: Failure to Open a Bank Account
- A New Lord Of Taxation
- How to Avoid Envy by Keeping a Low Profile
- High Yield Offshore Investment Programs: Do They Exist?
- Blacklisted Offshore: Private Consultant's Opinion
- Why taking a vacation can improve your health – and wealth!
- Alphabet Soup
- Your Ships Come in Over a Calm Sea
- Taxpayers: 1; India 0
- While Offshore Banking Giants are in Trouble
- Microchips with Everything
- It's All The Fault Of The Speculators
- Don't Play Poker With Uncle Sam
- Is Dominica Good for Your Offshore Business?
- How to Leverage Offshore E-Commerce in Your Existing Business
- 'I Love Tax' - Anonymous Offshore Banker
- Is there a trade-off between Freedom and Security?
- Return of Capital is More important than Return on Capital
- Thoughts on Investing in Panama
- Why Offshore Banking Privacy is More Important than Ever
- You Really Can Physically Create Wealth Offshore: Part 2 of 2
- You Really Can Physically Create Wealth Offshore: Part 1 of 2
- The Freedom to Create Real Value and Wealth in the Offshore World
- Goodbye To Privacy
- Panama Today, Tomorrow And Always
- Another Nail In The Currency Coffin
- Please Turn Out The Lights As You Leave
- Hands Off The Poor, Starving Tax Lawyers!
- The Death Of Corporation Tax
- How To Learn To Love Accounting Standards
- Caveat Emptor?
- No More Fat Cat Investments For Me!
- Flat Tax, Not Flat Earth, Please!
- On-Line Gaming Banned In The UK
- To Buy Or Not To Buy?
- The Last Supply-Sider Felled
- King Canute Spotted On Brighton Beach
- Private - Good; Public - Bad
- Don't Have A Foreign Boy-Friend!
- Don't Put Your Husband On The Board, Mrs Worthington
- Down With Corporation Tax!
- Geolocation -- the greatest thing since sliced bread?
- The Dinosaurs March In Europe
- Never Trust Your Money To A Nation State
- Good Advice From Adam Smith For Gordon In His New Home
- Will The Treasury Get To Bert Smith Before The Grim Reaper?
- Beards Can Make You Rich
- Financial Regulators To Create Global Anti-Investor Cartel
- America Goes To War Against - wait for it - The Cayman Islands
- Down With The IMF!
- Everyone Wants To Live Offshore
- Goodbye, Gordon!
- Auntie Brussels Wants To Know About Your Money
- Governments Fail Business One More Time
- Tax Harmonization Disharmony
- The Sorry Tale Of Offshore Telecommunications
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