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The Greens / EFA group in the EP has commissioned a study to look at the amount
of wealth hidden by individuals in tax havens. Sarah Godar (HWR Berlin)
and Hannes Fauser (HU Berlin) have concluded offshore financial centres
seem to be doing fine, despite the financial crisis and the
international efforts to increase financial transparency. Wealth from
individuals hidden in offshore centres has sky-rocketed over the past
15 years, from USD 380 billion (in 2000) to USD 1.600 billion (July
2015).

Read the full report

 

Based on macro data from the International Monetary Fund (IMF), the
Bank for International Settlements (BIS) and the European Commission
based on a methodology from the French economist Gabriel Zucman, the
report concludes that there is no decline in the funds channelled
through tax havens at least until 2014. Instead, cross-border debt and
equity securities hidden in the most prominent offshore centres seem to
have increased further.

The report looks at two categories of cross-border transactions
involving personal wealth, portfolio investments (equity or debt
securities instead of taking a sizeable stake in a company) as well as
loans and deposits. While offshore financial centres seem to have
recovered from the economic crisis of 2009, there are differences
between the jurisdictions. There is an upward trend of deposits in the
most important offshore centres such as the Cayman Islands, Luxembourg,
Hong Kong and Singapore, while there is a declining trend of deposits
in Switzerland. Equally, cross-border deposits in European tax havens
such as Andorra, Austria, Gibraltar and Liechtenstein have been
declining or stagnating during the last years. This would indicate a
shift of offshore activities to other jurisdictions. In other words:
wealthy people increasingly stash their money offshore and they tend to
do it in specialized jurisdictions - to the detriment of their European
neighbours.

As the automatic exchange of information under the Common Reporting
Standard developed by the OECD is not effective yet, it is too early to
say whether this new measures are effective in curbing tax evasion. Tax
evaders may find new loopholes or shift their wealth to non-compliant
jurisdictions. Therefore, we cannot afford any rest. The fight against
tax dumping has to continue.

In their report, the two economists discovered huge gaps in the
international statistics. A lot of tax havens do not participate in the
global cooperation for the collection of financial data. We will follow-
up on this politically. Moreover, our group in the European Parliament
will commission an update of the report as soon as data for 2015 is
available. Only then we are in a position to evaluate whether the
international fight against tax evasion and tax dumping is effective.
The question is not how many declarations and laws are adopted but
whether the flow of global financial crime finally dries up.

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