September 27, 2020

Brazil says no exchange of information agreement exists with Cayman Islands: calls to put an end to tax havens


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Brazilian society and parliament press for concrete measures to put an end to tax havens.

One of the reasons for checking on tax havens is the reality of tax evasion, which generates losses to the society. “Brazil and other developing countries are missing the collection of taxes that could be used to fund policies to promote rights such as education, health and nutrition”, in the words of Lucídio Bicalho, political advisor of INESC.

“With the aim of clarifying to the citizens how the tax havens interfere in the life of the society, a group of civil society organisations and representatives of the Parliament, of the Ministry of Foreign Relations, and of the National Treasury Attorney’s Office have discussed the theme in the morning of May 24, during an event at the House of Representatives. The Round of Dialogues was a partnership between the organised civil society and Representative Paulo Rubem Santiago (PDT-PE) in the context of the Campaign “Ending the Tax Havens 2012”, recently launched in Brazil with the slogan: “Dilma, take up the lead!” (“Lidera, Dilma!”).

Over 50 organisations around the world are mobilised to demand that the G20 leaders adopt effective measures to put an end to the unconditional tax secrecy of a group of jurisdictions. To ask President Dilma Rousseff to lead the initiative, any citizen can visit the website and send a message, which will be forwarded to the Presidency of the Republic. The Campaign has the goal of collecting and sending as many signatures as possible to the Heads of State of the G20 until the Mexico Summit, which will take place in June.

One of the reasons for checking on tax havens is tax evasion, and this evasion generates losses to the society. “Brazil and other developing countries are missing the collection of taxes that could be used to fund policies to promote rights such as education, health and nutrition”, in the words of Lucídio Bicalho, political advisor of INESC.

For Pedro Gontijo, executive secretary of the Brazilian Commission of Justice and Peace (CBJP), an organization linked to the National Conference of the Bishops of Brazil (CNBB), “the big hook of the Campaign is finding out how we can manage so that each person of the society may perceive how the issue of the tax havens interferes in the lives of his or her family”.

Heráclio Camargo, Attorney of the National Treasury and co-director of the SINPROFAZ, believes that the best way for the society to understand and become interested in the theme is to explain the two types of tax payers in Brazil: “those who identify and pay their taxes, and the invisible ones who are not identified and do not pay taxes, because they know that they won’t be punished for that”, in reference to the foreign companies, especially those with central offices located in tax havens, which do not disclose the names of their owners and final beneficiaries.

Representative Paulo Rubem Santiago (PDT-PE) believes that the problem can be solved by enhancing the legislation of the countries. “This will serve to thwart and prevent this dirty money from arriving in Brazil, and from being received as an important investment for the development of the national economy”, he affirmed.

Heráclio believes that to fight money laundering and tax evasion, it is necessary to approve Act Project 5996/09, which is currently in analysis at the House of Representatives. The document was drafted by Representative Paulo Rubem Santiago himself, and makes it mandatory to reveal the names of the Board of Members and Administrations in order to register, suspend or extinguish a juridical organization with its central office abroad, in the National Registry of Juridical Entities (CNJ). In short, with the approval of the Act Project, it will be possible to supervise the final beneficiaries of the activities of foreign companies in Brazil. The Campaign to End the Tax Havens clearly affirmed its unconditional support to the Act Project.

According to Celso Arruda França, Chief of the Division of Cooperation on Finances and Tax Issues (DFC) of the Itamaraty, in the past two years, Brazil has advanced in relation to the fight against tax havens. According to the Itamaraty official, this was one of the themes that most advanced under the scope of the G20. He pointed out that Brazil has signed treaties and agreements, which are currently used as mechanisms of information exchange. “There is a far-reaching mobilization in this area. I believe that what is missing is an adjustment in terms of timing; the timing of the civil society is different from the timing of the government”, he affirmed. Celso also reminded that the Minister of the Treasury Guido Mantega signed in November 2011 an important Multilateral Convention on tax issues, as well as other countries, and that it will enable cooperation.

Lucídio Bicalho highlighted that the analysis of the reports of the Global Forum on Transparency and Exchange of Information of the OECD shows that there are still gaps in the treaties and agreements signed with several countries. Specifically in regard to Brazil, there are treaties signed with other countries that need to be either updated or ratified. “Yet, we have not found, among the 33 conventions and one agreement signed between Brazil and other countries, as listed by the Global Forum, the existence of a mechanism for the exchange of information with the Cayman Islands, the Virgin Islands, and the Bahamas, among other jurisdictions”.

In 2011, in the modality of Brazilian direct investment in the form of equity capital, there was a stock of US$ 32.1 billion at the Cayman Islands, US$ 16.2 billion at the British Virgin Islands, and US$ 12.9 billion in the Bahamas.

The proceedings of the event were directed by Adhemar Mineiro, member of the Brazilian Network for the Peoples’ Integration (REBRIP) and advisor of the Inter-Union Department of Statistics and Socioeconomic Studies (DIEESE). Attendees included the Christian Aid, supporter of the Campaign in Brazil, along with the Movement Fé e Alegria, Representative Chico Alencar (PSOL-RJ) and other important national organizations, such as the National Union of the Tax Auditors of Brazil’s Federal Revenue Office (SINDIFISCO). The Movement of the Landless Workers (MST) and the Institute of Tax Justice also supported the event.

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