UN calls for greater global tax coherence

| 03/05/2016 | 2 Comments

CNS Business(CNS Business): Statistics released by the United Nations Conference on Trade and Development (UNCTAD) Tuesday revealed considerable volatility in foreign direct investment flows in 2015, with investment flows to offshore financial centres retreating from a high of $132 billion in 2013 to $75 billion, in line with previous years. But the report noted that there was still a significant disconnect between where money is generated and where it is invested, and said more effort was needed in global tax reform.

Cayman Islands Financial Services Minister Wayne Panton recently warned about the reemergence in Europe of threats to blacklist no-tax or low-tax jurisdictions like the Cayman Islands. Now the UN is also calling for more effort to harmonise tax rates.

The most recent UNCTAD report found that international companies continued to channel overseas investments through offshore financial hubs in 2015, an indication that efforts to reduce tax payments have not necessarily been curtailed by the increased scrutiny and new rules. The report estimated that businesses avoided some $200 billion in taxes by locating the holding companies and other entities in jurisdictions with either low or zero direct tax.

“A key concern for policymakers globally is the potential for a substantial disconnect between productive investments and income generation by multi-national enterprises with implications for sustainable development in their economies,” the UN agency said in the latest report regarding global financial trends. “Losses due to MNE’s tax practices are sizable. The significant share of MNE’s total FDI income booked in low tax, often offshore, jurisdictions remain therefore problematic.”

The report revealed that Investment flows to Caribbean offshore financial centers continued to decline from their 2013 record levels, when a single large cross-border M&A caused them to surge. Although inflows were down across the Caribbean by 42% to an estimated average of US$75 billion, the Cayman Islands and BVI received the bulk of the business, with 65% of the investment now coming not from the US but China, Russia and Brazil.

See the full report here

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Category: Finance, Financial Services

Comments (2)

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  1. Anonymous says:

    Gee, I wonder why the bulk of it is coming from Russia China and Brazil?

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