Update:Original Post:
In the aftermath of the $1 trillion deal reached by G20 leaders yesterday, the Organization for Economic Cooperation and Development (OECD) placed Costa Rica and Uruguay on its tax haven blacklist.Along with Malaysia and the Philippines, these four countries have been targeted by the OECD for not doing enough to aoid being tax havens. According to an OECD statement, Costa Rica and Uruguay are two “jurisdictions that have not committed to implement the internationally agreed tax standard(s).”
Uruguay’s president denied being blacklisted by the OECD:
"In Uruguay, we are not a tax haven," President Tabare Vazquez said.Chile, meanwhile, was placed in a separate "grey list" of countries that have partially improved their tax standards.
"Uruguay may not be a monastery, but it is not a casino," he added.
These classifications along with a third "white list" were completed after the G20 agreed to crackdown on international tax havens. "The time of banking secrecy has passed," French President Nicholas Sarkozy said after him and Germany’s Andrea Merkel campaigned hard against tax havens during the G20 summit.
Image- travelcostaricaonline.com (Costa Rican currency)
Online Sources- BBC News, AFP, Reuters, Los Angeles Times, Foreign Policy Passport, the Latin Americanist, OECD
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President Lula and the Tax Havens
"Our proposals include the end of tax havens. They represent the key ally of international organized crime, drug trafficking, corruption and terrorism. It is not possible to effectively fight these evil manifestations, without attacking the financial rear that never failed them.", said President Luiz Inácio Lula da Silva at a recent event sponsored by "Valor Econômico" and "The Wall Street Journal".
In the last summit of the G20, group of the 20 largest economies in the world, president Lula's main proposal was the extinction of tax havens. Thus, to materialize the will of the president, domestically, we must simply amend the Normative Instruction RFB Nº 748 of June 28, 2007, issued by the Brazilian Internal Revenue Service, which governs the obligatory registration in the Cadastro Nacional da Pessoa Jurídica (CNPJ) of companies domiciled abroad.
Unlike Brazilian companies, that must identify all members and administrators, there is the secrecy sponsored by the Brazilian state on the composition of companies domiciled abroad. In fact, Article 15 of the Normative Instruction RFB Nº 748 enshrines a derogation for non-submission of names of members and administrators from companies domiciled abroad. Hence, they obtain the obligatory registration in the CNPJ and start doing business in Brazil without identifying its members and administrators. All they need is an assignee, often just a puppet without any professional or commercial relationship with the company domiciled abroad.
In Brazil, the establishment of domestic companies must meet minimum legal requirements, such as the presentation of certificates of incorporations and by-laws. Hence, with much greater reason, we should require the same documents from companies domiciled abroad.
The general principles of economic activity under Article 170 of the Brazilian Constitution, notably those regarding national sovereignty and free competition, are flagrantly violated by the secrecy opportunity given to companies domiciled abroad. National sovereignty is violated when secrecy prevents the identification of the authors of crimes committed under the cloak of "ghost" companies created in well-known tax havens. Beside, free competition is wiped out when tax evasion is hidden by anonymity and the liability of partners and administrators over the collection of taxes becomes impossible.
In conclusion, it is necessary to amend the Normative Instruction RFB Nº 748, to require the identification of individual members and administrators, as well as the deposit of all certificates of incorporation and by-laws from companies domiciled abroad. Subject to the declaration of inability to obtain new registration in the CNPJ and for the adjustment of existing entries. Similarly, a complete scan in all other non-statutory acts on the subject is necessary. Therefore, it is imperative not to waste president Lula's leadership and word, subdued by inertia in the making of our own homework with clear damages for Brazil's role in the building a new economic world order without tax havens.
Heráclio Mendes de Camargo Neto and Filemon Rose de Oliveira are Attorneys for the National Treasury in Brazil.
http://www.sinprofaz.org.br/sf/site/web/noticia_detalhe.php?idNoticia=RDQ2MjAwODcxMTI
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