RSS FeedThe UK Extents Tax Amnesty
First posted on Commercial Law International December 7, 2009. In a very surprising move HM Revenue & Customs (HMRC) has extended it tax amnesty program – the New Disclosure Opportunity (NDO). The NDO was set to expire on November 30 of this year but has been extended to January 4 of next. Under the program tax payers with undisclosed offshore accounts nestled away in any number of one or more tax havens are given a chance to come clean with UK taxman. The tax payer would pay a relatively small penalty – 10% as compared to a 100% penalty – on any back taxes owed but would also avoid the risk of prosecution. All in all the NDO doesn’t sound like a bad deal or is it? As good a deal as the NDO sounds, it seems that it hasn’t had as many takers as the HMRC would like. This lack of uptake helps to explain the unexpected extension. The NDO after all was designed as a very enticing carrot by HMRC in hopes of boosting its falling tax revenues by allowing tax evaders to avoid the very large stick of a 100% penalty and or prosecution. There are two possible explanations for this lack of uptake. The first and least likely is that there are very little, if any, taxpayers out there holding undisclosed offshore accounts. The second and more likely explanation is that taxpayers a hedging their bets, say to the taxman: catch me if you can. Taxpayers know, even amongst the accounts already disclosed, that it is a very time consuming and more importantly expensive venture to trace funds in offshore accounts.
Immigration and foreign credentials
The federal government announced a plan to help immigrants get their foreign credentials recognized. At the heart of this plan is a deal between Ottawa and the provinces to speed up professional licensing applications filed by foreign-trained immigrants. Of course, the new rules will not force private employers to recognize foreign education or work experience, and even provincial licensing bodies will be free to deny any recognition. All the deal seems to promise is reduce wait times for processing of foreign credentials.
Under the Canadian constitution, immigration is mostly Ottawa’s prerogative, and regulation of professions is up to the provinces. So if you want to move to Canada from India, you have to apply to Citizenship and Immigration Canada. But if, on arrival, you want to work as an architect in Toronto, you have to apply for a license to a provincially-appointed body—the Ontario Association of Architects. In Canada, provinces are sovereign and independent from the federal government within their constitutionally set area of control. That’s why Ottawa cannot order provinces to recognize foreign credentials. And provinces cannot order Ottawa what immigrants to accept. A lack of coordination between the federal and provincial governments can leave immigrant doctors, nurses, or engineers driving cabs in Canadian cities. The latest deal is supposed to address this problem.
But this deal has limitations. Apparently, it covers only admission to regulated professions: architecture, nursing, engineering, etc. It does not guarantee admission to foreign-trained workers. Its purpose is to speed up processing of foreign credentials to see if they meet Canadian standards. Another limitation is that foreign doctors will not qualify for this program for up to three more years. And even if their credentials are recognized, foreign-trained doctors will still need to find internships, which are in short supply. The program doesn’t cover foreign-trained lawyers at all, although they can qualify for a separate arduous accreditation mechanism at least in Ontario.
Any news of fewer professional roadblocks is good news for immigrants. And the public interest certainly requires protection of Canadian standards of professional practice. But the announced program is a narrow step aimed at relatively few new arrivals. It will hardly help hundreds of thousands whose resumes end up in the shredder because of no “Canadian experience” or because their names don’t sound right. That kind of help requires not a government decree but a culture shift.
Federal Securities Regulation
On Oct 22 an anonymous Law is Cool contributor posted a comment about the Federal Government’s intention to submit a reference to the SCC about whether a federal securities regulator is intra vires the Constitution. As expected, Quebec is going to resist any efforts by the federal government to regulate that which has traditionally been regulated by provinces, according to the Globe and Mail. However, there are a number of issues which always get glossed over when the matter is discussed. For example, the SEC is always cited as an example of a federal securities body. Somehow Canada is behind the times because we are not like the U.S. in this respect. However the SEC shares jurisdiction with State regulators, and I doubt that the Canadian government wishes to duplicate this model. The implicit intention of creating a federal regulator is that it be a single national regulator rather than one more regulator in addition to all of the provincial & territorial regulators.
This raises the sticky point about covering the field. It is one thing to ask the SCC if the federal government has the authority to regulate securities (and this is an empty exercise — few legal scholars doubt that the federal government can do so). It is another thing to ask the SCC to hand ALL authority to regulate everything associated with securities over to the federal government. This would be an enormous restructuring of the balance between national concerns and property & civil rights. There are political ramifications to such a ruling and no doubt the Court would prefer that such an invasive move be made through negotiations between governments rather than via a reference to the SCC.
It should be noted that securities regulation in Canada grew up under a provincial head of power. As a result, it is written in the language of property and civil rights. I have no idea if this is significant with respect to “federalizing” the laws, but I wonder. If the SCC decides that some securities transactions are federal and some are not, then the language of the laws could become significant. A ground-up rethinking and rewording might be in order.
The take-home point: The transition to a single Federal securities regulator seems quite simple at first blush, but it is not.
Bill C-300
A single gold ring leaves in its wake, on average, 20 tons of mine waste.
Bill C-300
Purpose
| 3. The purpose of this Act is to ensure that corporations engaged in mining, oil or gas activities and receiving support from the Government of Canada act in a manner consistent with international environmental best practices and with Canada’s commitments to international human rights standards.
Barrick Gold Corporation, the largest Gold Mining Corporation in the world, and Canada’s largest publicly traded company put a lot of heat on the Canadian Government in the last year when Norway’s Ministry of Finance back in January of this year, sold shares of Barrick Gold from Norway’s pension fund for ethical reasons. Norway is the best place to live. They must be doing something right. Norway’s Council on Ethics conducted a fairly comprehensive investigation spanning four years regarding the use of a natural river system to transport and dispose of mine waste in Papua New Guinea. The council established “the mining operation at Porgera entail[ed] considerable pollution.” The 2008 report went on to condemn the heavy metals contamination, particularly mercury, produced by the tailings. It concluded that severe and long-term environmental damage is likely to continue, and that it represents a serious health hazard for residents of the mining area and for the indigenous peoples living downstream from the mine. As Marie-Claude Poirier of CCODP writes, in 2008 Canada was a base for 75% of the world’s exploration and mining companies. And Canadian mining companies accounted for 43% of all global exploration spending. And at most, the Canadian government promotes mining companies to voluntarily conduct their activities in a socially and environmentally responsible manner that companies have failed to undertake. The Canadian government does nothing more than endorse current CSR standards and create administrative mechanisms, rather than legal ones, within the Department of Foreign Affairs and International Trade and at Canadian offices abroad. This is where Bill C-300 comes in. On April 22, 2009 Bill C-300, sponsored by Hon. John McKay PC, MP, passed second reading in the House of Commons with a vote sending it to the Standing Committee on Foreign Affairs and International Development for further study. C-300 passed by a close margin – Yeas: 137; Nays: 133. http://www.johnmckaymp.on.ca/newsshow.asp?int_id=80507 Marie-Claude Poirier, notes that Bill C-300 doesn’t include provisions for an ombudsperson and independent investigation into complaints from overseas, since private member’s bills cannot require the support of a budget. However, what the Bill does do is directly forward complaints to the Minister of International Trade and Foreign Affairs. Investigation ensues as to the alleged violations of the CSR standards. If any evidence of violations is found, then the stick of bad PR for those that are caught. The companies would be required to submit annual reports, which would fall under scrutiny of the House of Commons and Senate for review. Bill C-300 has baby teeth, but it’s better than no teeth. Even baby teeth are sharp. |
The Competition Bureau is Watching
As a Leaf’s fan, I wouldn’t mind another team in Ontario. It would add to a new rivalry. But understandably, I wouldn’t want a new kid buying out my candy from the candy store either. So are the Leafs allowed to veto against the new kid?
Purpose of the Competition Act:
1.1 The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices.
Relevant Provision?
45. (1) Every one who conspires, combines, agrees or arranges with another person
(a) to limit unduly the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any product,
(b) to prevent, limit or lessen, unduly, the manufacture or production of a product or to enhance unreasonably the price thereof,
(c) to prevent or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or
(d) to otherwise restrain or injure competition unduly,
is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million dollars or to both
Ontario Ombudsman on the offensive
Ombudsman slams Ont. government for not keeping closer eye on colleges
Ontario’s ombudsman slammed the provincial government Tuesday for failing to keep closer tabs on publicly funded colleges in a report that found a northern Ontario school left some of its graduates unqualified for jobs.
After a months-long investigation into Cambrian College’s two-year Health Information Management program, Andre Marin concluded it was not formally recognized by the Canadian Health Information Management Association, which controls entry into the profession.
Does The Future Of The Revised US-Swiss Double Taxation Treaty Depend On The Outcome Of The UBS Case?
First posted on Commercial Law International on July 13, 2009.
UBS, the world´s largest wealth manager, has found itself embroiled in a diplomatic row between Washington and Bern. At issue is the interpretation of the current US-Swiss double taxation treaty and at stake is the newly inked, yet to be ratified, revised US-Swiss double taxation treaty.
Does the future of the revised US-Swiss double taxation treaty depend on the outcome of the UBS case?
As much was indicated by Doris Leuthard, the Swiss Economy Minister, as she called for a speedy resolution of the case. What the Minister is expressing in her pronouncements is simply the reality of the situation. Swiss maintain that the issues in the case are diplomatic and ought to be resolved in forum more appropriate to friendly relations between nations – face-to-face closed door negotiations – rather an the public spectacle of a courtroom. Secondly, while the treaty has been finalized it has yet to be ratified by the Swiss Parliament, a parliament that will be slow to give its blessing if it is dissatisfied with the outcome of the case.
So what exactly is going on in this case? This is a very good question for I myself was a bit confused for two reasons. The first is that UBS already plead guilty to assisting thousands of Americans to evade US taxes in a case brought by the Department of Justice (DOJ) in February of this year. In the same case it also paid fines of $750 million and disclosed 250 names of its US clients. So the case ought to be over, right? Well, yes and no. This was the criminal leg of the – and I am going to substitute strategy here for case to avoid any legal confusion – US authorities strategy to gain the names of as many as 52,000 believed to be evading US taxes.
The current case before the courts is the civil leg of the strategy brought by the Internal Revenue Service (IRS). They have served on UBS a John Doe subpoena in an effort to force UBS to reveal the names, so those people can in turn answer to the authorities.
While I know that criminal and civil matters are wholly different creatures, this smacks of double prosecution – persecution if you will. Or is it?
The second thing that was puzzling me was this IRS case seems to have stepped outside the four corners of the existing double taxation treaty. The treaty only requires UBS, through Swiss authorities, to co-operate with US tax evasion investigations if the IRS can provide the specific names of the holders of secret offshore accounts. It is clear from the IRS´s actions, issuing a John Doe subpoena, that it clearly does not know the names of the suspected tax evaders. So that should be the end of it, right. Well, clearly not.
Now, what the IRS is doing is clearly is not only not double prosecution/persecution, it is well within, I believe, the scope of the treaty. In fact I would go as far as saying that it is share genius. This was revealed to me in a brief filed by the IRS in response to one filed by UBS. To see what I mean just take a look at section 2 of the brief, the head tells it all: ¨Nothing in the Tax Treaty Limits the IRS´s Authority to Enforce a Duly Authorized Summons Issued to a Third-Third Party Witness within the United States, or Requires the IRS to Exhaust its Treaty Rights With a Foreign Government Before Seeking to that Summons.¨
Unfortunate for UBS, and as rightly pointed out by the IRS ¨the existence of a treaty….does not limit the rights granted to the United States under the laws of this country¨ (the bold being original). Well, that is in part, it should read doesn’t limit those laws so limited by treaty obligation.
What the IRS has done is not too circumvent the treaty but simply not to bring it into the equation at all. It has kept the issue entirely domestic. As I said, share genius.
In any event the prospects are dim for UBS if a negotiated settlement is not reach soon. If UBS loses, which it looks increasingly probable, it will be faced with either defying US law by refusing to reveal the names or reveal the names and be in violation of Swiss banking law which carries with criminal sanction.
Now that a Floridia judge has agreed to postone the case the excutives at UBS will surely be working over time to reach an amecible resolution of the case.
More on Ontario Ombudsman
Ombudsman urges career college crackdown
The press-release.
Our previous post on Ontario Ombudsman is here.
Australian Securities Regulators In Policy Quandary
First posted on Commercial Law international on July 1, 2009.
The question that faces Australian securities regulators is what to do about two or more Chinese state owned enterprises together owing substantial shareholdings in an Australian company?
At first blush it would appear that this is a case of China take over fear, however there is much more to the story than this. Indeed, there is a legal/regulatory story here as well. Now I am not trying to say there is or isn’t a China phobia here, it is a given that all nations have their own xenophobic tendency, however I cannot speak on this as I know very little about Australia and what I do know comes from watching Rugby, Crocodile Dundee and Steve Irwin (may he rest in peace). Moreover, while I am not versed in Australian law, I believe that my legal training and experience thus far permits me an insightful comment or two.
This question has come to the fore because of the increased interest of Chinese companies in Australia´s mineral wealth – this is in fact a global trend and not one peculiar to Australia – just take a look at the recent attempt by Chinalco to increase its stake in Rio Tinto to see my point.
In Australia it isn’t that two or more state entities is per say barred from investing in the same company, as the law currently is, not at all. Then what is the problem, you might ask? The issues here are the concepts of associated entities and substantial shareholdings.
You see in Australia, under their securities regime, two or more entities that are associated – related in some way, namely through ownership and control – that combined own more than 5% of a listed company must declare a substantial shareholding. However, due to a lack of clarity in the law and the absence of a clear policy position the question remains open if two or more Chinese state owned companies would be considered associated and required to declare a substantial shareholding?
The securities regulators face several related sub-problems and they must approach this issue with some degree of sensitively to the political nature of dealing with entities belong to another state. With that in mind regulators have to be cognizant of the fact that they are not dealing with subsidiaries here but foreign state owed companies; state ownership is not equal in all these enterprises; state control is not equal in all these enterprises; and these enterprises while having the same state owner might indeed be fierce competitors with opposing interests.
I do not envy the regulators their task but it will be interesting to watch what if any policy position is developed or if the law is changed to address this issue.
The Swiss Banking Business Model Faces Realignment
First posted on Commercial Law International on June 29, 2009.
The world economic down turn has had many knock on effects, many of which unexpected. It seems that bad times has the uncanny effect of making the once unthinkable, unsayable and undoable all very much possible.
The Swiss banking model can be best characterized with one word: Secrecy.
This don’t ask, don’t tell attitude is more than just a business model – it is enshrined in Swiss law. The high protection that client confidentiality receives in Switzerland has made it a favorable destination for the money of my high net worth individuals wishing to shield their money. Also it doesn’t hurt that it also has a very favorable tax policy as well.
This Swiss shield unfortunately is not very discriminating – it basically protects all comers. It makes no distinction between those who wish to shield their money for legitimate or illegitimate purposes. Moreover, it doesn’t even a make a distinction between rightfully and ill gotten gains. This hands off approach while very profitable has lead to some very tragic and embarrassing incidents for Switzerland. Specifically, I am mainly speaking of Nazi accounts filled with plunder during their rise and fall but generally I am also referring to Swiss banks being the preferred destination for the money of certain criminal elements and many a dictator.
Please don’t get me wrong, I am not trying to say that the Swiss actively seek out ill gotten gains – to my knowledge they do not – nor am I saying that they have done nothing to try and rectify ill gotten gains ending up in their banks, I am not trying to say that at all. Then what am I trying to say?
What I am trying to say is simply this: any system predicated on secrecy will have its limits on how well it can tackle the twin issues of legitimacy and source of funds.
However, times they are a changing.
This change is evidenced by four things. The first is a long and as yet to be resolved battle between UBS and US authorities over the names and identities of some of the banks US clients and with it opposing interpretations of the US-Swiss Tax Treaty. The second is the OECD´s tax haven black list, talk of G20 nations developing a sanctions regime aimed at tax heavens and the drive by OECD countries and in particular the US to conclude double taxation agreements. The third is the revised US-Swiss double taxation treaty. And lastly is the current economic climate.
All of this has forced the Swiss into re-think mode. As reported in the Financial Times: leading members of the Swiss Private Bankers Association have recognized they may have to raise tax compliance with clients and, if necessary encourage them to declare previously hidden assets.
Does this mean an end to secrecy as the cornerstone of the Swiss banking model?
Highly unlikely. However, it does mean a few rays of light into the otherwise dark room of secrecy called the Swiss banking model.
Privy Council In Bank Ruling Wraps Jamaican Judiciary On the Knuckles, Part II
By: Ainsley Brown
The claims advanced by Olint, though ultimately would proven to be groundless is very important because it, gave us a brief glimpse into the subtleties of judicial politics. Before I go any further some context by way of an example I believe would be useful. The words with all due respect, seem quite mundane or you could even say respectful, however, not so in a court room – it is quite disrespectful. The respect for a judge and his or her court room flow naturally from their position and there is no need to remind the judge that you are being respectful. This is something that lawyers and judges know alike, so whenever such words are uttered it is code for hey, judge I am right and you are just full of it – like I said disrespectful.
Though totally unrelated to the case, this example illustrate the point nicely, that words matter and that in the politics of the courtroom they often have much greater meaning than they seem at first glance. Now back to the case.
Olint´s first argument would provide the ground for strongest rebuke by their Lordships of the Jamaican Court of Appeal. Lord Hoffmann even went as far as calling out the reasoning or better yet lack thereof of one of the judges of the Court of Appeal – a one Morrison JA. In the Court of Appeal Morrison JA criticized Mr. Justice Jones, at first instance for disposing of the matter by way of mini-rail, holding that the matter gave rise to a serious issue and ought to be tried. However, Lord Hoffmann goes on to point out, saying of Morrison JA that ¨ he did not explain what the issue would be and their Lordships consider that one has only to read section 4(3) (c) to see that it is irrelevant to any issue in this case.¨
This is Lord Hoffmann´s way of saying: your work is sloppy and you don’t know what you are talking about. Like I said a strong rebuke.
The claim, by the way, was that s. 4(3)(c) of the Banking Act had modified the bank´s contractual right to terminate the banking relationship by giving reasonable notice. Unfortunate for Olint s. 4(3)(c) of the Banking Act is part of the general fit and proper licensing provisions of s.4, under which the Bank of Jamaica grants licenses. It therefore does not take a legally trained mind to see that Olint is simply fishing and that there is not only no serious issue here but no issue at all – no wonder the strong rebuke.
The second argument advanced by Olint was that NCB by closing its accounts was abusing its market position. As I like to call it, and to put it in the Jamaican vernacular: dem a fight gainst man (translated: they are opposed to us) argument. This argument while it has great cultural resonance, and it could be argued reflects a commercial reality; it however has no basis in law.
Firstly, no evidence was furnished that NCB did indeed have a dominant position in the commercial banking sector in Jamaica. However, their Lordships did take judicial notice that NCB was ¨the second largest in Jamaica, with 34-37% of total loans and 30-35% of total deposits, but the Bank of Nova Scotia is larger and there are four other commercial banks in Jamaica, to say nothing of the foreign banks. They are all in competition with each other. It is not easy to acquire dominant position in the banking market.¨ Secondly, even if NCB had a dominant market position the refusal to continue be Olint´s banker does not procure for NCB some market advantage. If anything it does quite the opposite by enabling ¨competitors to pick up another customer if they felt inclined to do so.¨
The third claim by Olint, was that NCB was attempting to induce breaches of contract between itself and its club members. Inducement of breaches of contract is a tort (a civil wrong) that would require not only that NCB knew that it would cause the breach of contract but that it intended to so ( OBG Ltd v Allan 2008). This by far was Olint´s strongest argument I think. However, their Lordships described it as a ¨hopeless proposition.¨ It will be remember from Part I that it was the refusal of Olint to furnish its audited books that kicked off this sequence of events. NCB could not without proper knowledge of the relationship of Olint and its members know or set out to cause breaches of contracts. What Olint was in fact saying was that NCB knew its actions would cause the breach and with this certain knowledge set out to cause the said breach of contractual arrangements. But how can you set out to cause or much less know that a breach would be caused in a contract that you haven’t even seen?
Stay tuned for Part III as it will deal with the injunction issue.
Don’t Let Cybersquatters Steal Your Name
It would be an embarrassing surprise if you woke up one day to find that your personal website was now a dating service, or worse, selling porn or prescription drugs. Well that’s precisely what has happened to two Canadian MPs, and it highlights the importance of preemptively guarding your online identity in a situation where legal recourse will prove difficult if not futile.
As reported by the blogs Michael Geist and Canadian Trademark Blog, and now even The Sun, the domain names of two MPs have been snatched up by cybersquatters after the politicians failed to re-register them. Liberal whip Rodger Cuzner, Member of Parliament for Cape Breton-Canso, had his domain www.rodgercuzner.ca taken over by a bizarre dating-based entity. And at www.keithashfield.ca – former web home of Keith Ashfield, Conservative MP for Fredericton – one can order drugs such as the highly addictive oxycontin.
Cybersquatting, also known as domain squatting, refers to “bad faith registration of a domain name containing another person’s brand or trademark in a domain name.” Benefits for the cybersquatter come in the form of per-click revenue from ads on the repossessed site. Since 25% of all Internet traffic comes from direct navigation – i.e. people directly typing the domain name into the browser – cybersquatting can seriously damage the business and/or reputation of companies and individuals.
So what do you do when someone snags your domain? In Canada, notes Canadian Trademark Blog, one possible recourse is to try to take the name back through the Canadian Internet Registration Authority Dispute Resolution Policy. The problem for Mr. Ashfield and Mr. Cuzner, however, is that the complainant in this case must prove that his/her name qualifies as a “Mark,” and the definitions of “Mark” generally pertain to businesses and institutions, not individuals.
Another avenue of action is to go to the Uniform Domain Name Resolution Policy (UDRP) process administered by the Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit organization that oversees domain name registration. This process is cheaper than legal action against the cybersquatter, but unlike legal action it cannot grant recovery of damages to the complainant. And there is the chance that the domain name in question will not be within the category of UDRP-affected top-level domain names (such as .com, .org, and some country codes).
The obvious solution to cybersquatting is to not let it happen in the first place. The plight of Mr. Ashfield and Mr. Cuzner is a reminder to regularly re-register your domain name before it’s seized by Cialis-peddling opportunists.
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