Bolivia proposes new law against tax havens

Bolivia’s lawmakers have draw up fresh legislation they say is aimed at targeting tax evasion.  

The legislation, entitled “Bill to Combat the Use of Tax Havens”,  is designed to stop the use of so-called tax havens by Bolivia’s wealthiest citizens, particularly the use of those jurisdictions that featured prominently in last year’s Panama Papers  scandal, according to media reports out of the South American country.

The new bill will be sent to Bolivia’s legislative body, the Asamblea Legislativa Plurinacional, for approval. If it’s approved, the government will have new powers for combating the use of offshore centres to avoid Bolivian taxes, although details as to exactly what has been proposed wasn’t immediately clear.

The president of Bolivia’s Legislative Committee of the Plurinational Assembly, Manuel Canelas, was quoted by the TeleSUR media organisation as saying that once the proposed bill has been approved by the legislature the  government would “take necessary measures to ensure the law is enacted”.

News of Bolivia’s decision to target tax evaders follows the headline-making efforts of one of that country’s neighbours, Ecuador, to achieve a similar goal, but through the unusual strategy of drafting legislation to prohibit elected officials and other public servants in the country from being allowed to keep their personal assets, including companies and capital, in overseas tax havens. Ecuador’s National Assembly approved that legislation in July, five months after the country’s voters went to the polls to express their thoughts on the plan.(Just over 55% voted in favour of the plan and 44.88% had opposed to it, thus giving the country’s elected officials a mandate to go ahead with it.)

The Ecuadorean legislation was also said to have had its origins in the furore that arose around the world, including across South America, by the Panama Papers after they first appeared over one weekend early in April 2016. As reported, the Panama Papers was a cache of more than 11 million leaked documents obtained from a Panamanian law firm by the US-based International Consortium of Investigative Journalists, which made much of the data public.

Almost immediately, a number of wealthy individuals and government ministers from around the world, as well as companies that had been using both legal and illegal means to evade taxes, such as through the use of offshore shell companies, found themselves implicated and were placed in the position of having to explain how their names came to be included in the Panamanian law firm’s files.

 360 registered companies  

In a report on the proposed new Bolivian tax haven law yesterday, TeleSUR, the state-funded, pan-Latin American television network, noted that the proposed legislation came about in direct response to a report that looked specifically at “Panama Paper cases in Bolivia”, which had found, among other things, that “of the 360 companies registered in Bolivia under investigation, 198 people have opened fresh cases against 76 of them”.

The report also noted that leaders of Ecuador and Bolivia had agreed towards the end of last year to work together in cracking down on tax evasion and avoidance, through the use of offshore jurisdictions.

Anti-tax haven campaigners in such countries argue that millions of people in Latin America could be lifted out of poverty if the tax that people legitimately owed their governments were paid, rather than avoided through the use of offshore accounts.

For the first time in history such campaigners should be beginning to find the wealthy individuals they target are running out of places to hide their assets, since the OECD’s Common Reporting Standard will soon see most nations automatically exchanging tax-relevant information with all the other almost 100 countries that have also signed up.

That said, neither Bolivia nor Ecuador has yet signed up to participate in the CRS, according to the most-recently published list of countries that have agreed to.

Another non-signatory is the United States, although it says it is not participating because it has its own information-exchange agreement, FATCA, which it implemented in 2012.

Ridhima Sharma
Ridhima Sharma is Correspondent for InternationaInvestment. She speaks German and is also DACH Correspondent for InvestmentEurope. She has more than 8 years of experience in the media industry. Before joining us, she was working in India and covering automotive and lifestyle sectors. Over the years many of her stories have been published in various magazines across India.

Read more from Ridhima Sharma

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