Wednesday, November 30, 2022

Pandora Papers: Media fury over billionaire tax cheats ignores Boris Johnson’s failure to reform tax havens

Pandora Papers: Media fury over billionaire tax cheats ignores Boris Johnson's failure to reform tax havens

Many of the world’s richest and most powerful people are once again in the limelight for the wrong reasons. The Pandora Papers is the third and largest leak of documents that exposed the secret financial practices of the wealthy in the media. They highlight widespread tax avoidance and evasion, as well as potential money laundering.

Like the Panama and Paradise Papers, the UK is referred to as either origin or destination, which are transferred through offshore financial centers to obscure the final recipients. The papers highlight the still prominent role of British overseas territories such as the British Virgin Islands and the Cayman Islands in such plans.

But what is missing from this story is that this UK involvement could have been avoided. The UK has long known that it can do more to prevent individuals from transferring money into and out of the country through offshore jurisdictions. The National Crime Agency identified the practice as an issue in its 2014 report. And in 2016, after the Panama Papers leaked, then-Prime Minister David Cameron pushed for a beneficial ownership register that would force UK companies to reveal to the person the benefits of owning an asset that would ultimately enjoys even though they are not the designated owner. Five years later, we are no further.

Registration of foreign entities

In 2018, Theresa May’s government published a draft Bill for the Registration of Migrant Entities. It focused on establishing a register in which any “foreign entity” seeking to purchase property in the UK would have to disclose its beneficial owners.

The Register, which was originally due to go into operation in 2021, would have reduced the chances of Britain engaging in future scams by making ownership of UK assets transparent. But the legislation was not passed while May was in office and since Boris Johnson took office in 2019, it appears to have been pushed aside.

The UK also clarified, by publishing a draft order to the Council under the Sanctions and Anti-Money Laundering Act 2018, that they would be required to establish a public register of beneficial owners of companies by 2021, after consultation with British overseas territories . However, it has since been reported that it will no longer be needed until 2023.

The UK government has a commitment to reform the Companies House, giving it the power to conduct investigations to verify the identities of proposed company directors before they are appointed. But no time limit has been fixed for its implementation. So once again, for all the rhetoric about making Britain more resilient to financial crime, the lack of government action speaks louder than words.

Rode Town, British Virgin Islands, tax haven par excellence.
Tim Gartside Travel/Alamy

This lack of political will is also proved by Johnson’s decision not to implement the EU’s 6th Anti-Money Laundering Directive. While the UK is no longer a member of the European Union, it was still in the transition phase when the directive was to be implemented by member states (3 December 2020). However, Britain had a special concession under the Treaty of Lisbon whereby it had the freedom to choose police and criminal justice measures in the national interest. In this case, he simply chose not to opt in.

The UK government’s justification for this was that the UK was largely compliant with the directive. But this is not the case with beneficial owners: if the UK had implemented the Directive, it would have introduced the same requirements as the Foreign Entities Registration Bill. It therefore represents another decision not to implement the Register of Foreign Entities and their Beneficial Owners.

What does it mean

The disappointment is that while mechanisms exist to combat offshore secrecy, they are not being upgraded – or certainly not with any urgency. If the political will was there, perhaps a bill could go from draft to approval in months.

My concern is that this inaction amounts to a tacit acceptance by the UK government of the tax-avoidant rich and the illegal finances going on in the country. Years of leaks and negative attention have paid little attention to the government. And as other countries launch inquiries into the Pandora Papers, the UK has largely remained silent.

Why is it like this? There have been suggestions that some Conservative Party donors are beneficiaries of the currently flawed system. There is also a fact that the proceeds from such transactions ultimately benefit London’s financial district, and that the elite who benefit under this system are the individuals who hold governments in power.

Whatever the case, media anger at the wealthy taking advantage of the system instead of Johnson and his government for failing to reform the law perpetuates this passivity. This enables the prime minister to relax and deliver conference speeches about helping voters by leveling the country, while the same voters are forced to pay more taxes than those paid through the ultra-wealthy offshore. able to avoid. privacy

This article is republished from – The Conversation – Read the – original article.

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