Global Tax Chaos coming

The OECD has stated in a report commissioned by the G20 that there will be “global tax chaos” in the next few years due to falling tax revenues from multinational companies around the world. Perhaps we could have saved a few thousand dollars by not commissioning the OECD report, since we could have all told them that was going to happen. It really does come to something when we waste the money that we don’t have on reports that we don’t need.  Sometimes people get money for old rope it seems. But one other adage is also true: you can’t teach old dog new tricks; the old dog being the multinationals. They are hardly likely to suddenly start paying more tax, are they? Although, maybe someone somewhere will commission a report to see if they will and then discover that they won’t after all. Oh well!

G20 Meeting: Tax!

G20 Meeting: Tax!

It’s not just that the report has been commissioned when it was probably needless to say more than common knowledge around the world, but also that it has been hailed as a ‘long-awaited’ report that will be used this weekend as the G20 Finance Ministers continue to meet in Moscow along with Central Bank Deputies. They met yesterday and the meetings will continue throughout the day, ending in a Finance-Ministers’ and Central-Bank Governor s’ Meeting onSaturday July 20th.

The report by the OECD states that there needs to be increased clamping down in corporate tax practices and says that this will be “a turning –point in the history of international co-operation on tax”In the G8 summit in June 2013, Prime Minister of the UK David Cameron had said that he wanted to crack down on tax havens and bring them into line with other countries, eradicating tax avoidance.

Although the report by the OECD is rather more an analysis of the situation than a solution-finding aid (there are very few actual, concrete proposals that are made), it does state the following:

  • Companies should be made to publish tax-avoidance plans so that they can be looked into by authorities who should determine whether they are acceptable or not. Although, that seems rather strange since companies such as Amazon and Google that are writing off their tax are doing so through the exploiting of loopholes that we have allowed to exist still today in an antiquated system.
  • Tax havens need to be reformed as they provide for unfair situations for some multinationals (with no suggestion as to how to reform the situation. Any ideas?).
  • Economic activity must be in line with generation of income. At the moment, through subsidiaries, multinationalsare able to disassociate income from economic activity by using low-tax countries. On-line companies would be forced to pay tax in countries where the sales are generated and not where they are headquartered.
  • Multinationals must be requested to publish all costs (including license expenses, interest, administrative costs and salaries).
  • International rules allow companies today to have a digital presence in a country but not pay tax there due to a lack of both a legal framework encompassing that and also lack of legal binding to that country’s economy. This must be changed. 

    No Tax

    No Tax

The OECD report has stated that there is a need for “urgent reform”, but also that bilateral agreements between countries must be made into multilateral frameworks that will solve the tax avoidance problem in the world. It also states that “the way in which multinationals have greatly minimised their tax burden has led to a tense situation in which citizens have become more sensitive to tax fairness issues.”



Reports from the meeting in Moscow have said that the Finance Ministers of the G20 and the Governors of the Central Banks believe that there will be some breakthroughs in dealing with tax evasion in the years to come, although without actually stating how, when or where. But, it also states that eradicating tax evasion will take a long time. But, thereby hangs the whole crux of the matter. The downfall of administration is that it is exceedingly long and procrastinated. It doesn’t live in the real world in which people communicate and take decisions at a million miles a second across the planet. The administration we are engulfed in is drawn-out and exceedingly slow. The hare and the snail. But, admittedly, the snail won the race in the end. We shall see if that happens this time. There are many that believe that by the time the Finance Ministers of the G20 and the Governors of the Central Banks have come to any sort of agreement it will be a few years down the road. Then we shall have to wait for those plans to be implemented and show results. That will be another couple of years. By that time, the companies that are doing the diddling and the tax dodgers will have dodged their way into another cushy number that will be a loophole that the admin guys failed to see. But, one saving grace is that the admin guys that are in Moscow today will not be the admin guys of times to come, so the new guys will be able to point the figure and say “I told you so”.

The US administration stated that it would not allow for anything to stand in the way of development of fast-growing US multinationals such as Google and Amazon, for instance. The US agreed that there was a need to bring tax regulations into the 21st century and update antiquated 1920s international tax agreements. But, moderate change was requested in the days before the G20 summit opened.

We shall see after Saturday’s meeting in Moscow if the Finance Ministers of the G20 and the Governors of the Central Banks are able or even willing to come to some sort of agreement and find common ground that will be beneficial to the average people in their countries, or if, on the other hand, they are going to be guided by competitive self-interest in maintaining the system as it is.

Originally posted: Global Tax Chaos Coming

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We've been closely watching the Crypto Currency Market if you can call it that, with all the fake data, fraud, and related problems.  One thing stands out - it's not so different than FX, commodities, futures, or stocks.  Market dyn...

Bitcoin and other cryptocurrencies flash-crashed Saturday night, one day after the US Commodity Future Trading Commission (CFTC) sent subpoenas four cryptocurrency exchanges in an ongoing probe into bitcoin manipulation that began in late July - following the launch of bitcoin futures on the CME, according to the Wall Street Journal
CME’s bitcoin futures derive their final value from prices at four bitcoin exchangesBitstamp, Coinbase, itBit and KrakenManipulative trading in those markets could skew the price of bitcoin futures that the government directly regulates.
In delay reaction, Bitcoin fell as much as $433 or 5.6% in Saturday night trading, with some noting that the flash crash happened shortly after a 90th ranked crypto exchange, Coinrail, had suffered a "cyber intrusion", and was likely the more relevant catalyst for the crypto price drop.
While major Cryptocurrencies were down from 4.5 - 5.5%, Bitcoin Cash dropped over 8.4%. 
The CTFC subpoenas were issued after several of the exchanges refused to voluntarily share trading data with the CME after being asked last December. Of note, the CFTC regulates the CTC. 
According to the WSJ, the CME, which launched bitcoin futures in December, asked the four exchanges to share reams of trading data after its first contract settled in January, people familiar with the matter said. But several of the exchanges declined to comply, arguing the request was intrusive. The exchanges ultimately provided some data, but only after CME limited its request to a few hours of activity, instead of a full day, and restricted to a few market participants, the people added.
What is curious, is that if there was indeed manipulation since the launch of bitcoin futures, it was to the downside, as the price of cryptos peaked around the time the crypto futures were launched, and are down well over 50% in the 6 months since.
Coinbase in particular has been under the watch government regulators. On February 23, Coinbase sent an official notice to around 13,000 customers to notify them they were legally required to turn over their information to the IRS
The IRS had initially asked Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes. However, another court order in Nov. 2017 reduced this number to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”
Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days. Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ. The ongoing legal battle between Coinbase and the US government dates back to November, 2016, when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.
On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers had reported cryptocurrencies on their federal tax returns. 
And in April, former New York Attorney General, Eric "we could rarely have sex without him beating me" Schneiderman, launched a probe of 13 major cryptocurrency exchanges according to the Wall Street Journal - claiming that investors dealing in the fast-growing markets often don’t have the basic facts needed to protect themselves.
Former AG Schneiderman’s office said the program, called Virtual Markets Integrity Initiative,  is part of its responsibility to protect consumers and ensure the integrity of financial markets, and its goal is to ensure that investors can have a better understanding of the risks and protections afforded them on these sites.
CFTC Commissioner: Crypto is a "modern miracle"
While the CFTC, IRS and New York Attorney General's office are all cracking down on cryptocurrency exchanges, it seems to all be part of the government's embrace of virtual currencies.  Last week CFTC Commissioner Rostin Benham called cryptocurrencies a "modern miracleat the Blockchain For Impact Summit held at the UN in New York last week. 
But virtual currencies may – will – become part of the economic practices of any country, anywhere.  Let me repeat that:  these currencies are not going away and they will proliferate to every economy and every part of the planet.  Some places, small economies, may become dependent on virtual assets for survival.  And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations.
We are witnessing a technological revolution.  Perhaps we are witnessing a modern miracle. -Rostin Benham
Rostin hinted at the upcoming legal action against the exchanges during his speech:
Under the CEA and Commission regulations and related guidance, exchanges have the responsibility to ensure that their Bitcoin futures products and their cash-settlement process are not readily susceptible to manipulation and the entity has sufficient capital to protect itself.  The CFTC has the authority to ensure compliance. In addition, the CFTC has legal authority over virtual currency derivatives in support of anti-fraud and manipulation including enforcement authority in the underlying markets.

Meanwhile, the official Bitcoin website removed references to Coinbase, and Bitpay, according to Crypto News - only one of which, Coinbase, was subpoenaed.  just removed/censored the 2 largest US Bitcoin companies (@BitPay Payment processing and @coinbase Bitcoin Exchange). It’s a good move: Bitcoin Core is obviously no longer Bitcoin, and should ideally be removed from both @BitPay and @coinbase too.

The CFTC officially recognized bitcoin as a commodity in September of 2015 when it went after Coinflip for operating a platform for trading bitcoin options without the proper authorization. Since the agency effectively asserted its dominance over the bitcoin market with that decision, this is the first time it has given its blessing to an bitcoin options trading platform. Expect a burst of institutional trading activity to follow - especially since they approved institutional options trading in July
This post sponsored by Total Cryptos @  


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