AABA

Corporate Tax Avoidance and Global Economic Development
SPEAKER: Professor Prem Sikka, University of Essex
House of Commons, Room W1 6.30 p.m. on 17th January
(To attend e-mail to suhas.khale@blueyonder.co.uk)
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Brief Details of the Seminar
(click here to see summary of the talk)

Organised tax avoidance has become a major global issue. Armies of accountants, lawyers, bankers and business advisers devise tax avoidance schemes by placing novel interpretations on concepts of jurisdiction, transactions, transfer pricing, income, expense, profits, residence, domicile and other concepts. Many companies have set up token operations in tax havens to enable them to reduce taxes in other countries. As a result, democratically elected governments are unable to make the much needed investment in social infrastructure or redistribute wealth to reduce social inequalities.

Companies from almost every sector of the economy are engaged in aggressive tax avoidance. Their audited accounts provide little information about such activities. Developing countries are losing more than $50 billion each year, large enough to make a huge difference to the much needed investment in education, healthcare, clean water, sanitation, transport and other facilities in the Developing countries.

Under pressure from the highly organised business lobby, governments have been unwilling or unable to tackle tax avoidance. Instead, they have shifted tax burdens on to individuals by raising income taxes and/or indirect taxes. Such policies have further exacerbated social inequalities. Governments now are finding it difficult to raise further revenues and provide social welfare rights (e.g. healthcare, education, pensions) to the citizens. Tax avoidance also leads to unfair economic competition. Those avoiding taxes are effectively receiving a hidden subsidy i.e. they use social infrastructure financed by others. No international body (e.g. WTO, World Bank, IMF) is looking at tax avoidance.

Tax avoidance poses fundamental challenges to any notion of democracy. For example, citizens may elect governments with a mandate to make higher investment in healthcare, education, pensions and public services by increasing taxes on corporations and wealthy citizens. Such parties, whilst continuing to enjoy the social infrastructure, markets and profit making opportunities, can scupper democratically agreed policies by seeking shelter in the fictional spaces provided by tax havens or by inventing novel tax avoidance schemes.

The seminar will look at the above themes. It will provide evidence and consider possible reforms. There will be time for discussion.

Background to the International Trade & Law Institute
(Registered under Societies Registration Act XXI of 1860 in India)
Specialised Research & Training Centre on WTO & Allied Issues

International Trade & Law Institute for Training & Research on WTO and related issues has started functioning in New Delhi. The main activities of the institute would be training personnel in India as well as from the other developing countries of Africa, Asia & Latin America. The institute will network with similar institutions / organisations for Training their personnel as well as undertake Research & Documentation on problems faced by the developing nations so that a common strategy could be evolved and taken up as a common agenda during deliberations in WTO and other international Fora, so as to persuade the developed countries to engage in fair trade with the developing world, keeping in view the concerns and needs of these developing world. We have already established preliminary contacts with representatives of some Institutions and organisations from the countries of Africa, Asia & Latin America, during the conference recently held in New Delhi.

The affairs of the Institute will be managed by a Government Council and Advisory Board under the overall guidance of a trust being set up to guide all activities of the institute. The institute will function on a no-profit and no-loss basis to serve the interests of the community and developing world.

2. Reason for establishment of the Institute?

The failure of the WTO meeting if international representatives at Cacon has only thrown up long pending issues of equity in International trade transactions to the fore. The world has witnessed a situation where the developed nations want a high moral ground of free trade but doing exactly the opposite in practice. Especially in the form of high subsidies to their own agricultural and animal husbandry etc. products. It is generally felt that WTO has become an unfair instrument in the hands of the Developed countries against the trade interests of the developing countries. Despite these handicaps it was heartening to note that developing countries (G20) led by China, India, Brazil and South Africa frustrated the attempts of USA, Europe & Canada relating to trade in Agricultural goods during the recent Cacon conference. After the failure of this conference the developed countries are moving towards regional/bilateral negotiations with some developing countries to ensure that they control levers of International trade and business as well as to circumvent the multi- lateral solidarity at the WTO fora.

There is a need to challenge hegemony of the W8 countries, not only at the political level but also during the various levels of negotiations. Participant at these negotiations should not only be aware of the intricacies of the international trade negotiations but also be equipped with the appropriate knowledge and skills of the subject areas of the negotiations. The best way to meet these challenges of international competition is to build expertise in the Developing countries on the nature of trade flows, trade in services, IPRs and other issues arising from different agreements under the WTO as well as international laws including Environmental treaties. This is to ensure equitable flow of goods ,services, investments and technology etc, amongst developed and developing countries.

3. London meetings

The issue of justice and fairness in the international trade is global and affects everyone irrespective of where we are from. UK is one of the influential members of the G8 countries. Any decisions made by the UK Government not only affect British trade with the developing countries but also have a considerable impact on the G8 decisions at the WTO meetings. A number of academic experts on the trade related subjects and UK politicians are likely to be available for their comments, views & opinions on the different sub-topics. It is expected that holding such discussions and debates will increase awareness and understanding of the international trade issues and in the longer run help to generate better dialogue between the representatives of the Developing and Developed countries at the various WTO meetings.

Dr.Nitesh K. Sengupta                                                Chairman
Dir. General of International Management Institut

H.S. Mejie                                                                   Vice-chairman
Chairman PCP International Ltd

Chandra Verma                                                           Vice-chairman
Managing Director Continental Construction Ltd.

S.N.Yadav                                                                   Treasurer
Economist

M.C.Verma                                                                  Director
Rtd. IAS,Economist

I.S.Gupta                                                                      Secretary
Economist

Suhas Khale                                                                 Overseas Co-ordinator
IT Consultant

Board of Advisors

Mr. Justice P.N. Bhagwati Chairman Board of Advisors
Former Chief Justice Supreme Court of India

Michael Walsh Advisor
Trade Union Leader

Prem Sikka Advisor ( Visiting Faculty)
Professor of Accounting, University of Essex, UK.

Julius Sen Advisor ( Visiting Faculty)
Associate Director & Sr. Programme Advisor, LSE, UK.

V.N. Balasubramanyam Advisor ( Visiting Faculty)
Professor Development Economics , Lancaster University, UK.