Tag Archives: tax havens

Leak Reveals How Mauritius Siphons Tax From Poor Nations to Benefit Elites

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Bob Geldof’s firm wanted to buy a chicken farm in Uganda, one of the poorest countries on earth. But first, an errand.

After soaring to fame in the 1980s for organizing Live Aid and other anti-famine efforts, the former Boomtown Rats rocker had shifted to the high-powered world of international finance. He founded a U.K.-based private equity firm that aimed to generate a 20% return by buying stakes in African businesses, according to a memorandum from an investor.

The fund’s investments would all be on the African continent. Yet its London-based legal advisers asked that one of its headquarters be set up more than 2,000 miles away on Mauritius, according to a new trove of leaked documents.

The tiny Indian Ocean island has become a destination for the rich and powerful to avoid taxes with discretion and a financial powerhouse in its own right.

One of the discussion points in the firm’s decision: “tax reasons,” according to the email sent from London lawyers to Mauritius.

Geldof’s investment firm won Mauritius government approval to take advantage of obscure international agreements that allow companies to pay rock-bottom tax rates on the island tax haven and less to the desperately poor African nations where the companies do business.

In 2012, American philanthropist Craig Cogut and his multibillion-dollar private equity firm, Pegasus Capital Advisors, looked 9,217 miles from the firm’s home base in Stamford, Conn., for a place to locate the management headquarters of one of its new investments. What unfolded is a textbook case of the way businesses can prosper by using Mauritius’ offshore tools.

A Pegasus fund had bought Six Senses, a luxury spa and hotel brand with more than 30 operations on four continents. Frequented by Hollywood stars and other global glitterati, Six Senses drips in luxury. Villas on private islands in the Seychelles, off East Africa, cost as much as $15,000 a night. The Al Bustan Palace spa in Oman, one of the less affluent countries on the Arabian Peninsula, offers private men- and women-only beaches and personalized face scrubs made with locally grown clove and myrrh.

As a “resident” firm of Mauritius, Sustainable Luxury could take advantage of the country’s super-low, effective maximum corporate tax rate: 3%. Sustainable Luxury also applied for — and received — special legal status from the government of Mauritius, allowing it to benefit from tax treaties between Mauritius and countries where Six Senses had spas and hotels. Treaties allow companies to reduce or entirely avoid common taxes received on cross-border payments, including interest, dividends and royalties.

Sustainable Luxury listed Oman among 11 countries where the company had investments and wished to apply for a special status and document issued by the government of Mauritius, according to company board meeting minutes. That document would allow the company to cut taxes paid to countries around the world that signed treaties with Mauritius. The leaked files don’t say whether the company ever received the document.

Read the complete article on ICU here.

 

Richest 62 billionaires as wealthy as half the world population combined

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Photograph: Valery Hache/AFP/Getty Images

Photograph: Valery Hache/AFP/Getty Images

A new Oxfam report shows that the 62 richest billionaires own as much wealth as the poorer half of the world’s population.

Mark Goldring, the Oxfam GB chief executive, said: “It is simply unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich – so few, you could fit them all on a single coach.

“World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action to ensure that those at the bottom get their fair share of economic growth. In a world where one in nine people go to bed hungry every night, we cannot afford to carry on giving the richest an ever bigger slice of the cake.”

Leading figures from Pope Francis to Christine Lagarde, the managing director of the International Monetary Fund, have called for action to reverse the trend in inequality, but Oxfam said words had not been translated into action. Its prediction that the richest 1% would own the same wealth as the poorest 50% by 2016 had come true a year earlier than expected.

The World Economic Forum in Davos comes amid fears that the turmoil in financial markets since the turn of the year may herald the start of a new phase to the global crisis that began eight years ago – this time originating in the less-developed emerging countries.

Oxfam said a three-pronged approach was needed: a crackdown on tax dodging; higher investment in public services; and higher wages for the low paid. It said a priority should be to close down tax havens, increasingly used by rich individuals and companies to avoid paying tax and which had deprived governments of the resources needed to tackle poverty and inequality.

Three years ago, David Cameron told the WEF that the UK would spearhead a global effort to end aggressive tax avoidance in the UK and in poor countries, but Oxfam said promised measures to increase transparency in British Overseas Territories and Crown Dependencies, such as the Cayman Islands and British Virgin Islands, had not been implemented.

Goldring said: “We need to end the era of tax havens which has allowed rich individuals and multinational companies to avoid their responsibilities to society by hiding ever increasing amounts of money offshore.

Read the complete article in The Guardian newspaper web site.