September 26, 2020

China’s tax officials vow ‘shock and awe’ campaign in war against cross-border tax cheats [$4.3B in Cayman Islands]

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swiss_hsbc_bank_By Toh Han Shih From South China Morning Post

Officials may mine leaked details on clients at HSBC’s Swiss unit in ‘shock and awe’ campaign

Mainland tax officials are vowing to unleash a “shock and awe” campaign in their battle against cross-border tax evasion, with some analysts suggesting the tax sleuths may mine leaked details on account holders at HSBC Holdings’ Swiss private banking arm.

“We will strengthen our combined investigation of major industries across borders, focusing on a series of major tax evasion cases, for the purpose of creating shock and awe in our anti-tax-avoidance efforts,” the State Administration of Taxation said in a statement.

The agency would continue to add new laws as part of efforts to build up a comprehensive system of anti-tax-avoidance laws, the statement said. “We will raise the bar on our management of cross-border taxation to lay the foundation of our work in fighting tax avoidance,” it said.

Last year, officials investigated 272 cases of tax evasion, 257 of which led to action, said the agency, adding that 20 cases each involved more than 100 million yuan (HK$125.8 million).

Based on the leaks of information on HSBC’s Swiss bank accounts by the International Consortium of Investigative Journalists, Beijing would probably conduct its own investigations to ferret out potential mainland tax dodgers, said Bill Majcher, a financial crime analyst in Hong Kong.

“There is a very high probability that the Chinese government will investigate HSBC, for the simple reason HSBC has been the largest and most active foreign bank in China, so the law of averages would suggest that some of the accounts in Switzerland probably belong to mainland clients,” Majcher said.

“It is largely understood that billions of dollars have been secreted from China by corrupt officials, so it would be a major concern for the Chinese leadership if HSBC was facilitating the hiding of monies from China.”

Included in the leaked files are 246 of HSBC’s mainland clients with US$517 million in bank accounts. The data also includes 984 Hong Kong clients with US$1.8 billion in their accounts, 677 in the British Virgin Islands with US$4 billion and 212 in the Cayman Islands with US$4.3 billion. Mainland nationals are suspected to be among those clients in Hong Kong, the British Virgin Islands and the Cayman Islands.

A British risk consultant agreed the likelihood that Beijing would investigate the leaked HSBC data was “extremely high”.

“Anti-corruption is high on the agenda in China and this is a clear opportunity for Chinese authorities to investigate tax evasion, money laundering and secret accounts. I would be extremely surprised if they didn’t.”

IMAGE: Mainland tax officials may mine leaked details on account holders at HSBC Holdings’ Swiss private banking arm in bid to tackle cross-border tax evasion. Photo: Bloomberg

For more on this story go to: http://www.scmp.com/business/china-business/article/1731364/chinas-tax-officials-vow-shock-and-awe-campaign-war-against

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