UBS, LGT Helped Hide Assets, Evade Taxes, Senate Says
UBS, LGT Helped Hide Assets, Evade Taxes, Senate Says (Update2)
By David Voreacos and Carlyn Kolker, Bloomberg.com
UBS, the world’s largest wealth manager, hid as much as $17.9 billion for 19,000 Americans who didn’t declare assets to the Internal Revenue Service, the Senate Permanent Subcommittee on Investigations said in a report released in
“UBS has opened thousands of accounts in Switzerland that are beneficially owned by U.S. clients, hold billions of dollars in assets, and have not been reported to U.S. tax authorities,” according to the 114-page report by the subcommittee, which is scheduled to begin hearings today on tax-haven banks.
UBS shares rose 7 percent to 20.16 Swiss francs at 12:20 p.m. in
Cover Up the Tracks
Both banks flouted agreements to help the IRS track foreign assets of
Lowy, 77, issued a statement saying he “totally rejects” the committee’s assertion that he tried to evade taxes.
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In Europe, widening probe targets tax haven
Nearly two decades after taking the helm of Deutsche Post, Klaus Zumwinkel had transformed Germany’s national postal service into a global mail and logistics giant with annual revenues of €66 billion ($102 billion) – more than double those of FedEx. A director on the boards of Morgan Stanley, Deutsche Telekom, and Lufthansa, he was one of Germany’s most prominent executives.
Then, on Feb. 14, he surrendered to police amid suspicion that he evaded €1 million in taxes. The next day, he resigned, becoming the first to fall in a massive probe that has broadened to nine other countries.
But even as Germany conducts its biggest tax-evasion probe ever, experts warn that technological advances and opaque banking practices are making it easier for individuals to stash trillions of dollars a year in havens such as Liechtenstein, Monaco, and Luxembourg.
“In this new, more globalized, integrated world, where you can go on to the Internet and open a secret offshore bank account in eight minutes, it’s getting easier for a wider spectrum of the population to hide assets offshore and more difficult for tax authorities to follow the financial trail,” says Grace Perez-Navarro, deputy director at the tax unit of the Organization for Economic Cooperation and Development (OECD) in Paris.
The OECD and the European Union (EU) have led the way in tackling tax evasion, and countries such as Ireland, Italy, and the Netherlands have all reported minor successes or launched new initiatives in recent months. The German probe, based on a list of 1,400 alleged tax cheats provided on CD by a paid informant, has yielded more than 300 suspects and $47 million in recovered taxes.
German tax inspectors are expected to launch a new round of raids shortly, and Spain, Britain, Australia, and the US are conducting their own investigations – some based on the same informant.
Liechtenstein, which has identified the informant as Heinrich Kieber, a former employee for a subsidiary of the royal family’s bank, LGT, has contested the legality of the information. Germany’s domestic intelligence services paid a reported $7.5 million to obtain and verify the lists, $6.2 million of which was pocketed by the informant.
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Italians gripped by leaks naming Liechtenstein account holders
Italians are calling it the “trickle-down effect” as names of holders of Liechtenstein bank accounts are leaked to the press, including politicians, entertainers, industrialists and even a dog called Gunther.
Denials and clarifications are hitting the headlines as the leaks keep pouring out, with the Italian media not in the least shy about releasing names before checking with the alleged holders at Liechtenstein’s Bank LGT.
Tax investigators note that holding an account itself is not illegal, but are still poring over some 400 Italian names obtained from the UK government to see if they were tax compliant.
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European tax scandal is widening
The list of countries involved in the European tax scandal is growing.
Austria is being asked by the EU commissioner to end banking secrecy (read article here) and ATO (the Australia Taxation Office) is investigating tax evasion and avoidance by Australian residents via legal structures in Liechtenstein (read article here).
Secrets Out
The tax haven scandal currently involving more than 1,000 Europeans, Germany’s foreign intelligence service, the BND, and billions of dollars in foregone tax revenue should be of more than passing interest to the governments of Hong Kong, Macau and Singapore.
Just last week, Germany’s finance minister, invariably described as the no- nonsense Peer Steinbrueck, stated at a EU finance ministers meeting that once the EU had dealt with the non- cooperative tax havens in Europe, it would invariably need to turn its attention to tax havens further afield including Macau, Singapore and Hong Kong.
Apart from disagreeing strongly with being designated as tax havens as opposed to low tax jurisdictions with strong banking secrecy laws, these Asian banking centers need to be concerned with the techniques the BND recently used to address German government concerns regarding what it considers Liechtenstein’s tax haven status and the impact it was having on Germany’s treasury.
Click here for complete article by Sam Porteous, TheStandard.com.hk
World’s Tax Havens Targeted In Cloak-and-briefcase Offensive
Agents from
Tax-dodgers, beware: The world’s leading havens for secret stashes of money face an all-out assault, as governments wary of leaner times grow more eager to snare levies that would otherwise go missing.
“There appears to be a change in the political mood,” said Richard Murphy, a U.K.-based adviser to the Tax Justice Network, a think tank that’s backing efforts to stamp out tax havens.
Fear of an oncoming economic slowdown and the resulting pinch on public purse strings has left tax collectors around the world looking anew at tax evasion, including assets hidden in notoriously hard-to-crack offshore locations, experts say.
The potential haul is considerable. By some estimates, the use of offshore tax havens costs the U.S. Treasury each year as much as $100 billion in tax revenues. German authorities, for their part, say offshore havens contribute to around 30 billion euros ($45.8 billion) worth of tax evasion each year.
Given the secrecy surrounding many accounts, it’s difficult to gauge total offshore holdings, much less determine the level of funds parked in individual tax havens, the experts say.
But officials at the Organization for Economic Cooperation and Development have used their own figures and data from the International Monetary Fund and the Bank for International Settlements to estimate that $5 trillion to $7 trillion in assets are held in offshore havens around the world, though not all are undeclared.
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Tax Haven Crackdown
Last week, European finance ministers rallied behind Peer Steinbrück, their German colleague, and backed a crackdown on tax havens, claiming that some £77 billion in revenues was being lost by national governments each year.
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European Tax Scandal Reaches U.S.
Dozens of Germans have confessed to massive tax fraud via Lichtenstein as the affair widens to other countries, including the
Besides Washington, the governments of
“Combating off-shore tax avoidance and evasion are high priorities for the IRS,” Linda Stiff, the Internal Revenue Service’s acting commissioner, said in a statement on Tuesday. “It should be clear from recent events that there is no safe hiding place for the proceeds of tax avoidance and evasion.”
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Island tax havens factor into Romney’s business success
LA Times 12/17/07 article reported:
“While in private business, Mitt Romney utilized shell companies in two offshore tax havens to help eligible investors avoid paying U.S. taxes, federal and state records show.
Romney gained no personal tax benefit from the legal operations in Bermuda and the Cayman Islands. But aides to the Republican presidential hopeful and former colleagues acknowledged that the tax-friendly jurisdictions helped attract billions of additional investment dollars to Romney’s former company, Bain Capital, and thus boosted profits for Romney and his partners.
Romney has based his White House bid, in part, on the skills he learned as co-founder and chief of Bain Capital, one of the nation’s most successful private equity groups. His campaign cites his record while governor of Massachusetts of closing state tax loopholes; his involvement with foreign tax havens had not previously come to light.”
Complete article:
Island tax havens factor into Romney’s business success
Tax Haven Abuse: Walter Anderson Case
The 8/1/06 Report: United States Senate (Permanent Subcommittee on Investigations/Committee on Homeland Security and Governmental Affairs), Walter Anderson Case:
Anderson: Hiding Offshore Ownership.
This case history examines actions allegedly taken by a wealthy American to hide hundreds of millions of dollars in stock and cash offshore by disguising his ownership of the corporations that controlled those assets and failing to pay taxes on those assets. Walter C. Anderson was indicted for tax evasion in 2005, and is now awaiting trial. The government has developed evidence that Mr. Anderson took advantage of secrecy laws in multiple tax haven countries to create a structure of offshore corporations and trusts. According to the indictment, through a series of assignments, sales, and transfers, Mr. Anderson placed into these offshore entities about $450 million in cash and stock, including large interests in telecommunications firms. He allegedly disguised his ownership of these assets through a range of techniques including shell companies, bearer shares, and nominee directors and trustees. In one instance, according to the indictment, Mr. Anderson set up an offshore shell corporation in the British Virgin Islands, gave its shares to a second shell corporation he established in the same jurisdiction, and had the second corporation send the shares to a bearer-share corporation in Panama, which he controlled. The government stated that it seized a document granting Mr. Anderson’s mother the exclusive option to purchase, for $9,900, ninety-nine percent of the bearer share corporation which then held assets worth millions of dollars. According to the indictment, Mr. Anderson used these methods to evade more than $200 million in Federal and District of Columbia income taxes.
View complete report: Tax Haven Abuses: The Enablers, The Tools, & Secrecy
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