The Relationship between Offshore Evasion and ‘Aggressive’ Tax Avoidance Arrangements: The HSBC Case
Financial Regulation International (Informa Law), 2016
22 Pages Posted: 3 Apr 2016 Last revised: 14 Apr 2016
Date Written: March 18, 2016
This paper critically analyses the relationship between tax evasion and ‘aggressive’ tax avoidance with a view to arguing their equivalence from a moral perspective. This is supported by factual similarities in the offshore financial sector, notably their mutual employment of confidentiality-bound trusts and other special purpose vehicles (SPVs). Taking the HSBC case as an example, the research is prompted by the recent debate surrounding the ambiguity of tax avoiding practices of major international banks and MNEs. At international level, regulatory response has translated into the OECD’s Base Erosion Profit Shifting (BEPS) Project and the Common Reporting Standard (CRS) for automatic exchange of information (AEOI). In the UK, the introduction of a new ‘offshore tax evasion’ offence is currently being proposed by the HMRC. The paper first considers the taxonomy of tax avoidance, arguing the equivalence of ‘aggressive’ tax avoidance with evasion from a moral and regulatory perspective. The second section compares offshore evasion with aggressive tax avoidance arrangements and discusses the case of HSBC. The final section concludes with a consideration of the effectiveness of anti-evasion and avoidance measures.
Keywords: Offshore evasion, aggressive tax avoidance, taxation, SPVs, financial sector, confidentiality, banking secrecy, HSBC, Google, BEPS, CRS, AEOI
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