CSO letter to IFC calls for immediate review of policy on tax havens

Added 08 May 2014
As a response to a recently published World Bank report on the first year of implementation of its policy on the use of offshore financial centres, several civil society organisations, including Eurodad, have sent a letter to IFC Executive Vice President Jin-Yong Cai to call for far greater transparency and an immediate and fundamental review of its policy on tax havens.

Signatories of this letter believe that the report, which is only one-page long, is highly inadequate, as it fails to include the necessary information to make a proper assessment of the World Bank Group’s efforts to implement its policy and fight tax injustice. In addition, the letter urges the World Bank Group to launch a meaningful policy review which results in a policy that ensures that IFC-supported projects are not based in jurisdictions where no meaningful economic activities by its clients take place. 

Signatories call on the IFC to take into account the following recommendations: 
  • The IFC should promote developing countries’ right to mobilise domestic resources and fully endorse Article 7 of the UN Model Convention dealing with business profits, which allows for taxation of certain profits in the source country instead of the residence country. 
  • The IFC should move beyond the existing OECD Global Forum process and take concrete steps towards an alternative approach which focuses on enhanced transparency about the users of tax havens and not only on states requesting information. Therefore, the IFC must pressure financial intermediaries and multinational companies to provide relevant and necessary information about their identity, beneficial ownership, activities, economic performance and taxes paid in each country.
  • The IFC needs to require implementation of country-by-country reporting requirements by all companies it engages with to ensure that companies follow domestic rules and are in no way involved in transfer pricing practices which result in a misallocation of profit out of the relevant jurisdictions.  
Click here to read the letter.