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Global Tax News -June 2019

Global Tax News : a monthly media round-up of news, views and comment pertaining to global taxation

RUSSELL BEDFORD NEWS

RBI appoints Shinsei International

Russell Bedford International has appointed Shinsei International Tax Co. as the global professional services network’s member in Tokyo, Japan. Shinsei, which was established in 2011, has a strong focus on tax and transfer pricing and supporting clients’ global activities in the areas of international tax, financial matters and accounting. The firm’s services  include tax filings for small businesses, start-ups, individuals and families, and support for clients facing tax inspections/audits. Shinsei also provides support for international corporate M&A and reorganisation, transfer pricing reviews and documentation, and cross-border asset reporting and inheritance tax planning.

Russell Bedford International

Record numbers attend Russell Bedford International Tax and EMEA Conference

Record numbers attended the Russell Bedford International Tax and EMEA Conference 2019 held between 17-18 May in Nice, France. The conference comprised topical sessions and workshops led by several professional industry speakers, and included networking and social activities for our member firms from around the world.

Russell Bedford International

NORTH AMERICA

Tax cuts did little to boost economy in 2018

New research from the nonpartisan Congressional Research Service, an arm of the Library of Congress, claims that the Tax Cuts and Jobs Act, signed into law by President Donald Trump at the end of 2017, had little impact on the U.S. economy’s strong performance in 2018. Economists Jane Gravelle and Donald Marples said that, while GDP rose 2.9% for the full calendar year, the economy was poised to perform well regardless. The study indicated that the tax changes contributed only marginally to the overall economic gains, at around 0.3% of a “feedback effect.” “The initial effect of a demand side is likely to be reflected in increased consumption and the data indicate little growth in consumption in 2018,” the report said, adding “Much of the tax cut was directed at businesses and higher-income individuals who are less likely to spend. Fiscal stimulus is limited in an economy that is at or near full employment.”

Los Angeles Times   CNBC

Tax breaks are popular – even when wealthiest benefit the most

New research published in the journal Political Behavior says that U.S. taxpayers are generally in favour of expanding benefits via the tax code, even when it is apparent that higher-income households will get the majority of the benefits. The study found that Republicans have a much stronger preference for delivering nutrition and workplace training aid through the tax code, when compared to Democrats. Democrats were actually indifferent, on average, between the direct deposit and tax credit versions of the job training policy. Additionally, Republicans express a strong preference for the job training tax credit, believing that citizens are less likely to misuse it and less likely to grow dependent on government assistance than they would with the direct deposit.

Washington Post

U.S. business contributes smallest share of taxes in generation

U.S. corporations are contributing the smallest share of federal tax revenue in a generation, according to the Data Book for 2018 published by the IRS. In the fiscal year covered, the IRS processed more than 250m tax returns and collected nearly $3.5tn in federal taxes paid by households and businesses – 57% of which was paid by individuals. Thirty-three per cent came from employment taxes, with corporations contributing only 7.6% of the overall take, the lowest share since at least 1960. The Data Book also revealed that around two-thirds of respondents agreed it’s their civic duty to pay their fair share of taxes, although around three in 100 said it’s acceptable to cheat “as much as possible.”

Bloomberg

IRS is auditing Uber’s tax bills

Uber has revealed that the IRS is auditing its 2013-14 tax bills. The ride-hailing firm also said a decade’s worth of its taxes remain open across multiple jurisdictions, including the United States, United Kingdom, Brazil, Mexico, Australia, Singapore, Australia, India, and the Netherlands. Those countries have not yet signed off on their tax bills from 2010, when Uber offered its first ride, through 2019. Although Uber says it believes it has sufficient money set aside for any additional tax liability it could face, it acknowledged the timing of the resolution « is highly uncertain. » Uber says it can apply about $5.1bn in losses to offset U.S. federal taxes and $4.4bn for state taxes – but conceded that the investigation may reduce that tax benefit.

Financial Times   Voice of America   Bloomberg

U.S. Senate urged to approve international tax treaties

Over 70 companies in the U.S. have signed a letter to Senate Majority Leader Mitch McConnell (R-KY) and Sen. James Risch, Senate foreign relations committee chairman (R-ID), urging that a myriad of international tax treaties be approved. The Senate is currently considering tax conventions with Chile, Hungary and Poland and four amended tax treaties with Luxembourg, Spain, Switzerland and Japan. The letter, published on behalf of the companies by the U.S. National Foreign Trade Council, emphasizes the role of the treaties in supporting investment in U.S. business through « fostering bilateral trade » and protecting U.S. businesses from double taxation of income earned from business in foreign markets.

International Investment

Mnuchin says no plan to change carried interest tax treatment

There are no plans to eliminate the preferential tax treatment of carried interest profits, Treasury Secretary Steven Mnuchin has said. Carried interest is an investment manager’s share of profits – typically 20% – from a fund, and is taxed at the long-term capital gains rate of 20%, instead of the top ordinary income rate of 37%. Acknowledging it is something President Donald Trump has expressed an interest in doing, Mr Mnuchin told reporters that making the change would require new legislation. « We’ll see, » he said, adding “Maybe during a technical corrections bill, if we ever get something from Congress, we can contemplate it. »

Bloomberg

Canada settles with KPMG clients involved in offshore tax scheme

The Canada Revenue Agency has reached an out-of-court settlement with wealthy KPMG clients who were found to have used what it described as a “grossly negligent” offshore “sham” set up to avoid detection by tax authorities. The scheme enabled clients to dodge tens of millions of dollars in taxes in Canada by making it look as if multimillionaires had given away their fortunes to anonymous overseas shell companies and get their investment income back as tax-free gifts.

CBC News

Sony settles ‘Netflix tax’ tab with Chicago

Sony ’s gaming division has paid $1.2m to Chicago’s Department of Finance to settle unpaid liabilities under the city’s first-in-the-nation “Netflix tax.” In 2015, Chicago extended the city’s 9% amusement tax to online entertainment providers such as Apple and Spotify in the music-streaming sphere, Netflix and Hulu for television and movies, and Sony, Microsoft and Nintendo for gaming.

Bloomberg Tax

EUROPE

EU countries get tough on state aid

The number of notifications to the EU Commission about potentially unlawful tax breaks has leapt over the last five years as countries take a tougher stance on state aid. Figures compiled by law firm Pinsent Masons show the commission was notified about 385 potentially unlawful tax breaks, up from 80 between 2007 and 2013. Jason Collins, head of tax at the firm, said: « Offering favourable tax treatment on a selective basis to multinational businesses has become an important method by which many countries attract inward investment. However, in this era of the war on tax avoidance this has become more controversial. »

City AM

U.K. is the biggest enabler of corporate tax dodging

An index published by the Tax Justice Network shows that the U.K. is the world’s biggest enabler of corporate tax dodging, with four of the top 10 countries allowing multinationals to avoid paying billions in tax on their profits shown to be British overseas territories. Topping the list was the British Virgin Islands, while the U.K. itself comes in thirteenth. Tax haven territories linked to Britain are responsible for around a third of the world’s corporate tax avoidance risk. Alex Cobham, chief executive at the Tax Justice Network, described the U.K., Netherlands, Switzerland and Luxembourg as “the Axis of Avoidance” and warned that “a handful of the richest countries have waged a world tax war so corrosive, they’ve broken down the global corporate tax system beyond repair.”

Daily Mail   Daily Mirror

Swiss voters back controversial overhaul of corporate taxes

Swiss voters have approved a government plan to eliminate certain tax breaks for multinational companies, a measure aimed at bringing the country in line with international norms while maintaining its status as a low-tax centre. The measure passed by a margin of 66% to 34%. Switzerland had come under pressure from the European Union and other international institutions to reform its system and eliminate the special deals that individual Swiss states, known as Cantons, have been able to strike with multinational corporations.

Wall Street Journal   The Local Switzerland

German authorities raid banks in offshore tax fraud probe

Eleven banks and eight private homes and offices across Germany have been raided by police and tax investigators as part of a wide-ranging investigation into tax evasion. The eight individuals under investigation are alleged to have founded companies in offshore tax havens aided by a former British Virgin Islands branch of Deutsche Bank.

Financial Times   Deutsche Welle  The Guardian

IFS: Tax system helps reduce wealth inequality

The Institute for Fiscal Studies (IFS) says the U.K. tax system helps reduce wealth inequality in the country. Their report shows that the top 20% of earners had an income 12 times that of the bottom 20% before taxes and benefits took effect, with this dipping to five times afterwards. While benefits account for the majority of that narrowing of the inequality gap, the role of taxation was noted. Shadow Chancellor John McDonnell said the study shows the Government is wrong to plan tax cuts, commenting: “The IFS has confirmed the importance of taxation and social security in creating a fairer society.”

The Times   Financial Times   The Times   The Guardian

Wealthy families dominate use of U.K. inheritance tax breaks

Tax Justice has called for a review of inheritance tax after finding the U.K.’s wealthiest families were taking the lion’s share of business and agricultural reliefs designed to help small businesses and landowners. In 2015-16, 234 families with more than £1m in business assets shared £458m in relief, representing almost 80% of the total given in the financial year. The study also found that 261 families owning more than £1m in agricultural property shared £208m in tax relief in 2015-16 – 62% of the year’s total. Tax Justice claims the situation is fuelling property inflation, with investors increasingly seeing opportunities such as agricultural property as a tax-efficient target.

Financial Times   The Guardian

France claims jurisdiction in Hallyday inheritance dispute

The late French singer and actor Johnny Hallyday spent much of his time in Los Angeles and frequently argued with French authorities over his claims to be exempt from French taxes as an expatriate, The Telegraph reports. Hallyday’s will, drafted in English in California, cut out his son and daughter, leaving everything to his wife. However, in France it is illegal for parents to disinherit their children and a court has now agreed with Hallyday’s children that Instagram posts provide enough evidence that the singer’s true home was France. His widow will appeal. The ruling means the French state also gets a slice of the estate. The star told French reporters in 2014, the year when he obtained his green card and made his will, “I’ll come back to live in France if the tax laws are changed.” France had a 75% supertax on annual earnings above €1m at the time.

The Daily Telegraph

Italy may cite Gucci tax deal to avoid EU penalty

Italy’s government may cite a €1.25bn payment by Kering  to end a dispute over Italian subsidiary Gucci’s back taxes as evidence to the EU that it can get its house in order over its debt load. The European Commission is weighing whether to propose a disciplinary procedure that could lead to a multi-billion-euro penalty, but the Kering deal could allow ministers to claim progress in solving its debt problems.

Bloomberg

Hungary to cut payroll tax to boost economy

Hungarian Finance Minister Mihaly Varga has said payroll tax will be reduced by another 2 percentage points to 17.5% as Budapest seeks to boost job creation and help government efforts to keep economic growth 2 percentage points above the European Union average. “If we expect that economic growth will be sustained, then it could also lead to more tax revenue,” added Mr Varga.

Reuters

U.S. funds settle Denmark tax fraud case

Danish Tax Minister Karsten Lauritzen says that 61 pension funds based in the U.S. have agreed to pay a total of DKr1.6bn ($238m) in connection with the Nordic country’s efforts to settle a dividend tax fraud case.

Bloomberg Tax

AFRICA

Ghana overhauls tax agency

Ghana is revamping its tax agency after missing its collection forecast by 9.7% in the first quarter, according to finance ministry data. Senior executives are to be replaced and more than one thousand staff rotated in an attempt to improve collections. The ministry said in a statement that the changes are necessary to make the agency “a much better performing institution.”

Bloomberg

South African carbon tax becomes law

South Africa’s President Cyril Ramaphosa has signed into law a long delayed carbon tax which aims to lower emissions in an effort to meet agreements on global climate change. A tax of around $8 per tonne of carbon dioxide is to be levied, although due to tax breaks the amount of money paid will often be far less.

BBC Africa   Reuters Africa

MIDDLE EAST

VAT collections in UAE exceed expectations

UAE residents paid Dh27bn in value added tax (VAT) last year, or 1.7% of 2018 nominal GDP, beating the government’s target of Dh12bn. Analysts expect revenues to increase further in a boost to government spending plans for infrastructure and public welfare programmes. Surandar Jesrani, managing partner and chief executive of MMJS Consulting, said the robust revenues in the levy’s first year can be seen as a consequence of the Federal Tax Authority’s promotion of the importance of compliance.

Khaleej Times

Supermodel ordered to pay back £1.7m in tax

Supermodel Bar Refaeli has been ordered to pay £1.7m to the Israeli tax authorities after medical receipts showed that she spent months in Israel while claiming to live abroad. Key to the case was whether Israel had been one of Ms Refaeli’s main residences during a period in which she was earning millions from working in fashion campaigns around the world.

The Times   Jerusalem Post

Saudi tax on e-cigarettes and sugary drinks

Saudi authorities have imposed a 50% selective tax on sugary drinks and a 100% « sin tax » is to be levied on electronic smoking devices and tools. There is already a tax on three commodities – 100% for tobacco and its derivatives, 100% for energy drinks, and 50% for soft drinks.

Gulf Daily News

LATIN AMERICA

Mexico aims for $7.3bn tax relief for troubled state oil firm

Mexico’s government aims to give tax relief for heavily-indebted state oil firm Pemex of 138.7bn pesos ($7.28bn) in 2020-2021, according to a document seen by Reuters. The reductions would be achieved by lowering a profit sharing tax to 54% by 2021 from a current 65%. Meanwhile, Mexican President Andres Manuel Lopez Obrador has announced he is to issue a decree to eliminate tax forgiveness for large companies. « This mechanism has been abused and it will be eliminated. During the last two governments large tax contributors had taxes of some 400bn pesos ($20.9bn) forgiven, » he said.

Reuters

Argentina waives import tax on machinery and soy

Argentina’s Treasury Minister Nicolas Dujovne has said an import tax on goods that are used in the production of exports, such as soybeans and machinery to develop unconventional hydrocarbons in the Vaca Muerta shale play, is to be waived. “So as not to hinder this process (of exporting) and not to damage the competitiveness of companies, we are exempting those products,” the minister said in an interview with Argentina’s Radio Mitre. Argentina is the world’s top soymeal exporter.

Reuters

ASIA-PACIFIC

China’s five-year tax breaks for chip makers and software developers

China’s semiconductor makers and software developers are to get a five-year tax break as Beijing seeks to boost its homegrown industries as the trade war with the U.S. shifts to the tech sector. Manufacturers of integrated circuit makers and software companies will be exempt from paying corporate taxes for two years, starting in 2019, and their tax payments will be halved from the 25% universal rate levied on Chinese companies in the following three years, the finance ministry said. “The government is acting very quickly this time to support the domestic high-technology industry after Huawei was targeted in the rising trade tension,” said Wu Kan, an investment manager at Soochow Securities in Shanghai.

South China Morning Post

Indian industry wants tax rate cut

The Indian government is being urged by the Confederation of Indian Industry (CII) to cut the corporate tax rate to 25% from the current range above 30% when its budget for the financial year 2019/20 is presented next month. Uday Kotak, president-designate of the CII and head of Kotak Mahidra Bank, said substantive tax rates were one of the challenges facing local industry. Industrialists have noted that India’s corporate tax rates, which range from 32%-35% depending on the size of a company’s sales, compare unfavourably with those of other major economies, including the United States and several other Asian countries.

Reuters India

Indonesia seeks foreign companies with tax breaks

New tax incentives are on offer from the Indonesian government to attract more foreign manufacturers as Southeast Asia’s largest economy seeks to profit amid the nascent U.S.-China trade war. From this month, Indonesia will offer a deductible tax of up to 200% to both domestic and foreign companies for research and development, said Industry Minister Airlangga Hartarto, noting that for every $100m a company invests in R&D, it will receive a tax allowance of $200m.

Nikkei Asian Review

Japan could be derailed by sales tax hike, says policymaker

A member of the board of Japan’s central bank says a sales tax hike scheduled for later this year could derail Japan’s economic recovery. Newly-appointed Bank of Japan (BoJ) board member Yutaka Harada said more monetary stimulus would be needed if a slowdown hindered attempts to boost prices. “By raising the sales tax when the economy is at such a critical juncture, Japan risks sliding into recession,” he said.

Reuters

GLOBAL

AICPA sets out principles for global digital taxes

Following a request from the Organization for Economic Co-operation and Development for ideas on how to tax a global digital economy, AICPA has put forward a number of suggestions that could lead to “a consensus-based, equitable, and successfully durable rebalancing of multi-jurisdictional taxing rights.” Ideas include: nexus rules for businesses that don’t have a physical presence in a jurisdiction should be “clear, measurable, predictable and applied consistently and neutrally across all industries, business models and jurisdictions”; and having all jurisdictions introduce meaningful mechanisms for resolving controversies over taxing rights.

Accounting Today

Global Legal News – May 2019

Global Legal News : a monthly media round-up of news, views and comment pertaining to global law

Tuesday 28th May 2019

NORTH AMERICA

Top opioid company execs are found guilty of racketeering
The top executives of a company that sold a fentanyl-based painkiller have been found guilty of racketeering charges. The federal jury, which had deliberated for more than two weeks, handed down guilty verdicts against Insys founder John Kapoor and four former executives. The jury found the executives had conspired to bribe doctors to prescribe addictive painkillers – often to patients who didn’t need them – and also misled insurers. The New York Times notes the case is « a rare criminal prosecution that blamed corporate officials for contributing to the nation’s opioid epidemic. »  Andrew E. Lelling, the United States attorney in Massachusetts who pursued the case, said: “Just as we would street-level drug dealers, we will hold pharmaceutical executives responsible for fuelling the opioid epidemic by recklessly and illegally distributing these drugs, especially while conspiring to commit racketeering along the way.”
New York Times   Reuters   Financial Times

Unions struggle with competing interests in #MeToo cases
The New York Times’ Michael Cooper reports on how labour unions – which work to protect members from harassment but also have a duty to protect the rights of members accused of misconduct – are struggling to balance these competing interests in the growing number of #MeToo-related cases they are having to deal with. Ana Avendaño, a consultant and former AFL-CIO official, said women who filed harassment complaints against fellow union members had often been labeled traitors. “Lots of women have tried to use the collective bargaining process in male-dominated industries, and found that when they tried to grieve the conduct of a fellow union member they were labeled . . . as betraying the union or solidarity,” she says. Some unions are now reconsidering a traditional structure that can position women complaining of misconduct against the organizations that are meant to protect them.
New York Times

Supreme Court to decide three key cases concerning LGBT rights
The Economist looks ahead to three cases concerning LGBT rights that come before the Supreme Court in the middle of the 2020 presidential campaign, Two of the cases – Altitude Express, Inc. v Zarda and Bostock v Clayton County, Georgia – involve gay men, and R.G. & G.R. Harris Funeral Homes Inc. v Equal Employment Opportunity Commission, the third case, poses questions about a transgender woman’s employment rights. The main issue in the cases will be the interpretation of “because of sex” in the Civil Rights Act of 1964’s protection against employment discrimination. Title VII of the Act bars employers from discriminating against a worker “because of such individual’s race, colour, religion, sex, or national origin” – but The Economist notes that « none of the lawmakers in Congress in 1964 believed they were barring LGBT discrimination when they included ‘sex’ among the prohibited bases of differential treatment in the workplace. »
The Economist

Morgan Stanley pays out $150m over crisis-era claims
Morgan Stanley is paying the State of California $150m to settle financial crisis-era claims that it misled investors about the risks of mortgage-backed securities sold to two state pension funds for teachers and public employees. Morgan Stanley spokesman Mark Lake said the case was the last remaining government lawsuit facing the bank over issues related to the financial crisis. The bank’s agreement with the state included no admission of wrongdoing. California attorney general Xavier Becerra said: “Morgan Stanley lied about the risk of its products . . . [The] settlement holds Morgan Stanley accountable for misleading Californians who were unfairly blindsided.”
New York Times

Uber drivers are contractors, Labor Board says
The National Labor Relations Board has ruled that Uber’s drivers are contractors, not employees. The recommendation by the board’s office of general counsel Peter Robb said that Uber drivers set their hours, own their cars and are free to work for rivals, so they cannot be considered employees under federal labour law. The move from the board follows an opinion last month from the Labor Department which said that workers for an unnamed gig company are contractors rather than employees. The ruling applied only to that company but legal experts at the time expected the decision to likely have a broader impact. The latest memo won’t  have an effect on ongoing lawsuits claiming Uber drivers should be treated as employees under federal and state wage laws.
Reuters   SFGate   Business Insider

Qualcomm violated antitrust law
Semiconductor and telecommunications equipment company Qualcomm violated antitrust law by suppressing competition in the smartphone chip market and then charging excessive licensing fees, a federal judge has ruled. District Judge Lucy Koh, who sided with the Federal Trade Commission in its antitrust suit against Qualcomm, said the San Diego-headquartered company’s licensing practices « have strangled competition » in key parts of the modem chip market for years. The Wall Street Journal says the judge’s ruling is « a major blow to a company that has been held up by the Trump administration as a keystone in U.S. technological competition with China. » Qualcomm plans to seek an expedited appeal.
Wall Street Journal

Judge approves deal on oversight of Elon Musk’s tweets
U.S. District Judge Alison Nathan has approved a new deal clarifying how Tesla must oversee chief executive Elon Musk’s use of Twitter. The modified order is more specific than Mr. Musk’s original deal with the Securities and Exchange Commission and details financial milestones and other events that Mr. Musk can’t tweet about without first having approval from lawyers. The federal judge’s signing off of the revised deal stems from an investigation last year that claimed Mr. Musk misled investors by tweeting about Tesla’s potential buyout.
Wall Street Journal

U.S. court orders Bayer to pay $2bn in Roundup cancer case
A jury in California has ordered Bayer-owned Monsanto to pay more than $2bn in damages to a couple that sued on grounds the weed killer Roundup caused their cancer. Bayer said in a statement that it was “disappointed with the jury’s decision” and promised to appeal against the verdict. “The consensus among leading health regulators worldwide [is] that glyphosate-based products can be used safely and that glyphosate is not carcinogenic,” the group said.
Seattle Times   U.S. News & World Report   Financial Times    Daily Mail

San Francisco wants ban on face recognition
San Francisco is poised to become the first US city to ban police and other agencies from deploying facial recognition software. The San Francisco Board of Supervisors is expected to vote in favour of an order that would forbid city departments from using the technology except at federally regulated facilities such as the port and airport. “If we don’t put responsible safeguards in place now and the technology continues to advance in ways the law isn’t able to keep up with, existing disparities and existing biases will run the risk of only being further exacerbated,” said Nathan Sheard, an organizer at the San Francisco privacy-promotion group the Electronic Frontier Foundation.
Wall Street Journal

New bill bans discrimination against staff with natural hairstyles
California’s Senate has passed a bill banning racial discrimination against employees with natural hairstyles. The CROWN Act (Create a Respectful and Open Workplace for Natural Hair) will ban discrimination against people sporting styles including braids, twists, and afros.
ABC News

EUROPE

London can hold off Paris as top dispute resolution destination
With Brexit prompting the launch of English language common law commercial courts in Paris and Amsterdam, British judges forced to retire at 70 could soon be launching new careers in commercial dispute resolution across the Channel, says the Times’ Jonathan Ames. But Jonathan Wood, a partner at the City firm RPC, says London’s position as a litigation centre is unlikely to be under immediate threat. Eleni Polycarpou, co-head of arbitration at Withers, agrees, stating that “the decades-long experience and the quality of international cases currently still coming here will take a long time to match.” Elsewhere, Mr Ames reports on the record number of commercial litigants from the former Soviet Union heading for London to settle disputes. But Shantanu Majumdar at Radcliffe Chambers says litigation from the former Soviet countries is in « its own bubble » and « the real test will be how many contracts made since [Brexit] have chosen courts in other countries to resolve future disputes because of concerns about difficulties of enforcement in the EU ».
The Times   The Times

EU fines five banks over $1bn in foreign exchange cartel probe
The European Union’s competition watchdog has fined Citigroup, JPMorgan, Barclays, Royal Bank of Scotland and Japan’s MUFG more than €1bn ($1.12bn), having identified cartels of traders who rigged the foreign exchange market. A sixth bank, UBS, was excused financial penalties for revealing the cartel’s existence. Competition Commissioner Margrethe Vestager said: “Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day . . . The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”  JPMorgan and the Royal Bank of Scotland both said they were pleased to have reached settlements. Citigroup and Barclays declined to comment.
New York Times    Financial Times    BBC News    The Times

NCA chief reveals ‘staggering’ scale of organised crime in UK
National Crime Agency chief Lynne Owens has warned that organised crime in Britain is now the « deadliest threat facing the nation » with violent career gangsters costing the UK an estimated £37bn a year. More than 180,000 offenders are linked to organised crime – a number more than twice the size of the army – Ms Owens said as she called for an extra £2.7bn from the government to help tackle the problem. The agency has identified a series of new threats, including the increasing prevalence of « professional enablers » such as accountants, solicitors and financial services employees using their expertise to help crime gangs, as well as the growing problem of using cryptocurrencies to launder money. « Serious and organised crime in the UK is chronic and corrosive, its scale is truly staggering, » Ms Owens said.
Financial Times   Daily Express    Daily Mail

Nordic and Baltic regulators will share information on threats
More information is to be shared by financial regulators in eight Nordic and Baltic countries as they seek to fight money laundering. The regulators say a formal agreement is being drafted to facilitate a coordinated process for exchanging information across Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden.  A Swedbank spokeswoman said: “Money laundering has become a race between criminals and legislators, authorities, financial institutions and financial intelligence units . . . This step will strengthen the anti-money laundering work and our collaboration with the authorities.”
Wall Street Journal

EU’s money-laundering safeguards inadequate, says Dombrovskis
Valdis Dombrovskis, the vice president of the European Commission and head of financial regulation, has called on the EU to overhaul the way it investigates money-laundering cases after the European Banking Authority (EBA) dropped a probe into scandal-hit Danske Bank. “It is disappointing that the board of supervisors of the EBA did not act on one of the biggest money-laundering scandals in Europe,” Mr Dombrovskis said. In a letter to the European Commission, the EBA said its board of supervisors had acknowledged “failings in the supervision” by the Danish and Estonian financial authorities but “did not consider that those failings amounted to a breach of union law.”
City AM   EuropeanCEO

Plan to secure Internet of Things with new UK law
‘Internet of Things’ (IoT) gadgets would have to be made more secure under new laws. Under the proposals, internet-connected products could be banned in the UK if they fail to tell consumers whether they meet basic security standards. The new « secure by design » code regulations will cover all internet-connected household devices from toys and baby monitors to smart watches, TVs and home assistants, and stipulate that devices must adhere to three basic standards: not using standard identical passwords; informing consumers on software updates; and providing a point of contact where people can report vulnerabilities they find. The proposed legislation, launched by Digital Minister Margot James, would also introduce a new labelling system to tell customers how secure an IoT product is.
BBC News   The Daily Telegraph

Jail time sought for ex-Deutsche, Nomura staff over Monte Paschi scandal
Prosecutors in Milan are seeking jail sentences for former Deutsche Bank and Nomura bankers who were involved in the Monte dei Paschi di Siena scandal. The three banks and a total of 13 former employees face trial in the Italian city for alleged false accounting, market manipulation and misleading regulators in relation to two controversial derivative transactions between 2008 and 2012.
Reuters   Financial Times

Azerbaijan ranked most restrictive of LGBT+ rights in Europe
Azerbaijan, Turkey and Armenia have the most restrictive LGBT+ equality laws and policies in Europe, campaign group ILGA-Europe said. Azerbaijan scored just 3% on a scale where zero indicates gross human rights violations and 100% represents the greatest degree of equality under the law. Turkey and Armenia were awarded 5% and 7% respectively. Last year, Britain scored 73% and was ranked equal with Finland and France at fourth, but according to the Rainbow Europe 2019 index, this year fell to 66%, tied at seventh with Portugal.
Daily Mail   Euronews

Salvini proposes fine for refugee pick-ups
Italian deputy prime minister Matteo Salvini has proposed a bill to fine vessels that pick up refugees at sea up to €5,500 for every « foreigner » they deposit on Italian ground. « It’s like fining ambulances for bringing patients to hospital, » said Claudia Lodesani, president of Medecins Sans Frontieres (MSF) Italy, adding « The new decree from the Italian government is threatening legal principles and the duty of saving lives at sea. »
The Independent   Deutsche Welle   EurActiv

Hundreds of men in France fined in bid to halt sexist attacks
More than 400 people have been fined by French authorities over the past eight months in a new crackdown over women being harassed. On-the-spot fines of up to €750 (£650) have been issued on 447 occasions, authorities said, following the introduction of the so-called « outrages sexistes » law in August last year.
The Herald   Eurasia Times

MIDDLE EAST

UN urges Qatar to reform worker rights
United Nations member states want Qatar to reform its domestic workers’ rights policy. In 2017, Qatar signed a three-year cooperation agreement with the International Labor Organization which will provide advice on improving the system of wage protection, inspection, and the abolition of the kafala system. However, there are concerns that amendments to the labour code allow kafala to remain in practice.
Aljazeera

Israeli movie highlights workplace abuse
The Washington Post reviews « Working Woman, » an Israel film set in Tel Aviv with a #MeToo theme. Reviewer Vanessa H. Larson says the movie portrays « in a particularly clear-eyed and realistic way, the predicament that far too many women find themselves in, through no fault of their own. It also shows how both subtle and coercive sexual harassment can be. »
Washington Post

Egyptian officials arrested on suspicion of taking bribes
Four Egyptian officials have been arrested on suspicion of taking bribes from commodities trading firms. State news agency MENA said the four individuals, including the chairman of the state Food Industries Holding Company (FIHC), would be sent to the public prosecutor.
Reuters

ASIA-PACIFIC

Bangladesh factory safety monitors given court extension
Global clothing brands including H&M, Primark and Tesco won a Bangladesh Supreme Court case Sunday, allowing international factory safety monitors to continue operating in the country for one more year. The Accord on Fire and Building Safety was signed in the immediate aftermath to the Rana Plaza building collapse in 2013, which killed 1,133 workers and critically injured thousands more. The country’s factory owners had been lobbying for the Accord monitors to leave, however, arguing that the program’s five-year mandate had expired. Now, the Supreme Court said the Accord could keep operating for 281 more working days, around 13-14 months, after it made a deal with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) lobbying group. The deal will lead to the establishment of a national safety entity, the Ready-made Garment Sustainability Council, which will take over the monitoring.
South China Morning Post   BD News24

Japanese prosecutors revise Ghosn indictment
Prosecutors in Tokyo have amended one of their indictments against former Nissan chairman Carlos Ghosn to say he received $20m from a Saudi Arabian businessman and friend. In a court filing, prosecutors made a new allegation that a company owned by Saudi Arabian businessman Khaled Al Juffali sent the sum in October 2008 to a brokerage account held by a company managing Mr. Ghosn’s personal assets. The amendment is further to a charge laid out in December whereby prosecutors claimed Mr Ghosn tapped Mr Juffali for financial support and also alleged he arranged for Nissan to pay Mr. Juffali’s company $14.7m “with the aim of pursuing profit” for himself and Mr. Juffali. The move came on the same day the company reported a weak performance for the year that ended March 31st, 2019. Earnings were down by more than half to 319.1bn yen, or $2.9bn, from 746.9bn yen last time.
Japan Times   Wall Street Journal   CNBC

Uber faces class-action lawsuit in Australia
More than 6,000 taxi drivers and license holders in Australia say in a lawsuit that Uber operated illegally and cost livelihoods. The suit filed in the Supreme Court of Australia in the southern state of Victoria claims lost income and loss of taxi license values for the drivers. A spokeswoman for Uber denied claims it operated illegally in Australia. The suit filed by law firm Maurice Blackburn comes ahead of one of the biggest initial public offerings this year; Uber seeks to raise between $7.9bn and $9bn.
Wall Street Journal

Brunei will not enforce death penalty for sex between man
Brunei has backtracked on laws that would have made sex between men, and adultery, punishable by stoning to death. The Syariah Penal Code Order has drawn widespread criticism and is deemed to contravene international human rights standards by the UN. Sultan Hassanal Bolkiah has extended a moratorium on the death penalty to cover the new legislation, saying he was aware there had been « many questions and misperceptions » regarding its implementation.
The Guardian   The Times    BBC News

Free speech fears after Singapore passes fake news law
Singapore’s parliament has passed legislation requiring online media platforms to correct or remove media content the government considers to be false. Phil Robertson, deputy Asia director at Human Rights Watch, said the law was a « disaster for online expression by ordinary Singaporeans, and a hammer blow against the independence of many online news portals. »
AsiaOne   The Guardian   Financial Times

Asia Pacific Innovative Lawyers
The FT carries an Asia Pacific Innovative Lawyers supplement, looking at issues including the role of innovation; how law firms are using tech to improve services; and work to improve protection for journalists, whistleblowers and activists. It also details the winners of the FT Asia-Pacific Innovative Lawyer Awards 2019, with Herbert Smith Freehills topping the Innovative Lawyers ranking of internationally headquartered firms for the second time in five years.
Financial Times, Asia Pacific Innovative Lawyers   Financial Times, Asia Pacific Innovative Lawyers   Financial Times, Asia Pacific Innovative Lawyers

LATIN AMERICA

Telefonica Brasil pays $4.1m to settle World Cup ticket case
The Brazilian subsidiary of Spanish telecommunications firm Telefonica has agreed to pay a $4.1m fine to settle charges related to how it accounted for ticket purchases and a hospitality program it hosted at major international soccer tournaments. The Securities and Exchange Commission said the unit gave 2014 World Cup and 2013 Confederations Cup tickets to Brazilian officials who were involved with, or in a position to influence, legislation, regulatory approvals and business dealings involving the company. It then didn’t accurately characterize payments for tickets in its books and failed to adequately enforce corporate antibribery and anticorruption policies. The company agreed to improve its Foreign Corrupt Practices Act compliance, including enhancing its internal accounting controls and adopting a new anticorruption policy and compliance structure.
Wall Street Journal   Reuters   CNA

Vale wants inspection firm documents on burst dam
Brazilian mining giant Vale has taken legal action to force German inspection firm TÜV SÜD to provide documents on its audit services for the Brumadinho tailings dam that could help to establish who was responsible for the burst in January that killed at least 300 people.  Vale, arguing that if the German company had not fulfilled its contract it could be held responsible, has called on a court to allow access to all the documents related to the audit.
Reuters

GLOBAL

Ethical lapses hit chief executives
A PwC study has found that ethical lapses cost more CEOs their position than financial performance or boardroom struggles last year, with 39% forced out due to allegations of unethical behaviour, such as fraud, bribery and sexual misdemeanours. “The rise in these kinds of dismissals reflects several societal and governance trends, including more aggressive intervention by regulatory and law enforcement authorities, new pressures for accountability about sexual harassment and sexual assault brought about by the rise of the ‘Me Too’ movement, and the increasing propensity of boards of directors to adopt a zero-tolerance stance toward executive misconduct,” the study states. The survey of the 2,500 biggest global firms found 17.5%, or around 440, got a new boss in 2018, marking an all-time high. Just 4.9% of the new bosses were female, down from the record 6% seen in 2017.
CNBC    Daily Mail   Financial Times   City AM

Global Tax News – May 2019

RUSSELL BEDFORD NEWS

Russell Bedford appoints joint members in Cali, Colombia

Russell Bedford’s appointment of MC Montes S.A.S. and Ascendis S.A. as its joint members in Cali completes the national network in Colombia along with members in Bogotá, Cartagena and Medellín. Stephen Hamlet said: “Russell Bedford has held a dominant position in Latin America for many years; the addition of this new group, completing our coverage in all four major Colombian cities, is evidence that this position is continuing to grow. »

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