Page 19 - MONTT GROUP MAGAZINE, ENERO 2018 (ENGLISH)

Bolivia Announces Law to Punish Evasion in Tax Havens
The Plurinational Legislative Assembly welcomed a report which proposes to sanction, up to 10 years in prison, companies that evade tributes in the country and place their money in tax havens.
Bolivia will have a law to punish organizations and people that resort to so-called tax havens to evade their fiscal obligations. The Legislative Assembly approved the report of a Parliamentary Commission that investigated the so-called Panama Papers, the largest leak of documents in history, until now secrets, to which the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists had access, obtained from the Mossack Fonseca law firm, considered to be the fourth largest supplier of tax havens in the world.
After the disclosure, the Bolivian authorities raised the need to present a bill that organizes a regulatory framework that norms the use of offshore companies by people or corporations established in the country and applies punishments for that activity.
The initiative proposes penalties of up to 10 years in prison for crimes of legitimization of profits through those places. It also provides for the disqualification for the exercise of public office or for elected officials for those who commit this crime.
Justification of Organizations of the State
The Investigative Commission identified about a hundred Bolivian companies that did business in tax havens and that transferred from Bolivia about one billion dollars a year.
In this context, the legislator of the Movement to Socialism (MAS), the deputy Manuel Canelas, who investigated the issue, explained that the transfers
had no being controled by the entities of national financial supervision. He strongly criticized the Financial Investigations Unit, a public organization specializing in the fight against money laundering and terrorism, created by Law No 1,768 in March 1997. The officials justified this attitude in that “tax havens are a expansion of the international financial system”.
After evaluating the procedures adopted by the Central Bank of Bolivia (BCB); the Supervision Authority of the Financial System (ASFI) and the National Tax System (SIN), Canelas expressed its discouragement, because the Commission noted the lack of coordination between these entities.
360 Companies Linked to Tax Havens
“The ASFI does not carry out an additional control when there are transfer actions to offshore companies, these cases are not reported, again we see the lack of interaction, the lack of coordination between the state institutions that work giving their backs to each other,” he insisted. Only in 2016 were transferred from Bolivia to tax havens the equivalent of 2.9 percent of the Gross Domestic Product of that year.
This Commission was requested by the Bolivian Government, after knowing that 95 companies and people of the country appear in the Panama Papers. From these 95 cases, the entity established in the course of its investigation the alleged link with tax havens of 360 organizations and 198 people in Bolivia.
Money Transfer
According to the international organization Oxfam, between 2001 and 2014, flows to countries with less or no tax obligations multiplied by 15 in the global economy, twice the speed of the global Gross Domestic Product, and almost five in Latin America and the Caribbean. Bolivia was not immune to this phenomenon, since between 2001 and 2016 the transfer of
money to tax havens grew almost 20 times. From 2010 to 2014, the destinations were mostly directed to Holland, Switzerland, Panama and Luxembourg. During that period, the flows increased 18 times to the first country, 7.5 times to the second, 5.6 times to the third and 3.15 times to the last one. This money outflow has a direct impact on economies such as Bolivian that depend on the
exploitation of natural resources, since the budgets of these nations are largely in need of the taxes generated in the sector.
In Latin America, Trinidad and Tobago has the highest fiscal dependence (45.8%); then comes Venezuela (40%); Ecuador (34.5%); Mexico (32.5%), Bolivia (29.9%); Chile (17.3%) and Colombia (16.2%).
Montt Latin American Magazine p19