Analysis: How rich oil firms are using a secretive court to fight capital gains tax in developing world

By George Turner from Finance Uncovered.

At a little known but powerful international court of arbitration, so secretive that senior officials decline to disclose even the dates of hearings, a new case has been filed that will pitch a mighty US oil major from Houston, Texas, against one of the world’s last Communist-run countries.

On the face of it, this battle between ConocoPhillips and the Socialist Republic of Vietnam is as dry as it gets. Hardly anyone has yet heard of it.

But the result could mark a significant shift in the way huge multinationals fight off the threat of taxes from desperate revenue authorities in developing countries.

For ConocoPhillips is using the not-so-glamourous Bilateral Investment Treaty Mechanism of the UN to launch a pre-emptive legal strike against Vietnam’s intention to levy an estimated $179m capital gains tax charge on oil fields sold by one of its UK subsidiaries.

Capital gains: A new frontier

Think of any of the major tax avoidance scandals that have dominated headlines in the last ten years: Google, Facebook, Apple, Nike, all have focused on profit shifting, the art of moving money out of profitable markets and into tax havens as a means of avoiding corporate income tax.

Most commonly, profit shifting happens when companies move revenues abroad, for example by billing their customers from an offshore company, or by invoicing a local business for fees and costs from an offshore company.

However, there is another important form of tax avoidance which multinationals frequently abuse but which has received little attention from the media: avoiding tax on capital gains.

Over the next few years, as more countries claim their resources have been bought and sold by foreigners tax free, this issue is likely to become a new frontier in the anti-tax avoidance campaign.

A capital gain is where a company or an individual sells an asset and makes a profit on that sale due to an increase in value of the asset being sold. Think of selling a house. The money you make by the virtue of your house increasing in value is your capital gain.

When it comes to major multinational mergers and acquisitions the capital gains can be enormous, and tax can easily be avoided if deals are structured offshore.

Capital gains tax: Made in Vietnam?

In 2012, a UK subsidiary of ConocoPhillips sold two other UK companies it owned, ConocoPhillips Gama Limited, and ConocoPhillips Cuu Long. It sold them to a UK company owned by Perenco, the Anglo-French oil firm. Perenco is also a party to the arbitration.

The only assets held by ConocoPhillips Gama and Cuu Long were Conoco’s oil interests in Vietnam.

ConocoPhillipsAccording to accounts filed at UK Companies House, ConocoPhillips sold the companies for $1.3bn making a profit of $896m. Buried in the detail of those accounts, a small note states that the company paid no taxes on that capital gain.

Why? Because Britain operates a loophole known as a “substantial shareholder exemption”. This means that profits on the sale of shares in subsidiary companies are not subject to capital gains tax in the UK.

But although the UK may choose not to levy any capital gains tax, that has not prevented Vietnam’s policymakers from trying to do so.

Under the terms of the UK-Vietnam tax treaty, Vietnam has the right to tax any capital gains made by UK companies that originate in Vietnam. If the profits on the deal were subject to the standard corporation tax rate in Vietnam, then ConocoPhillips could have to cough up an estimated $179m to the Vietnamese government.

So the question therefore becomes, what and where is the source of the profits?

If you are ConocoPhillips, the value is all in the shares, and the profit should be located in the UK. When we asked the company about the deal a spokesman said: “The sale was between two UK incorporated and resident entities with no taxable presence in Vietnam. The target companies are also UK companies. As a result, no taxes were owed on the sale in Vietnam.”

The Vietnamese government takes a different view, claiming the profits really arise out of the transfer of the oil assets. As these were located in Vietnam, it says that’s where they should be taxed.

Indeed, Vietnam has signalled its intention to tax the transaction – and that has alarmed not only the US oil giant, but also in all likelihood other similarly powerful corporations.

The potential precedent for multinationals

If Vietnam is successful, there could be profound implications for other developing countries, which have often seen Western companies make huge profits on their investments, only to walk away with them tax-free.

It is an issue that has concerned policymakers at the highest levels of the United Nations and the Organisation for Economic Cooperation and Development. In essence, the argument is: if multinationals make fortunes from a poorer country’s resources, then surely the host should have the right to levy the appropriate tax on the gains.

But ConocoPhillips is holding firm, telling Finance Uncovered that it would “pursue all available legal remedies to challenge any attempt by Vietnam to tax the transaction”.

And that is exactly what the company is doing with this new legal move: it wants to stop the threat in its tracks.

ConocoPhillips and Perenco have quietly filed a petition in the secretive investment tribunal, requesting it orders Vietnam not to levy the tax.

Unusually, the case is being brought under the UK-Vietnam Bilateral Investment Treaty, which is subject to an arbitration process run by a little known corner of the United Nations System, The United Nations Commission on International Trade Law.

The use of the Bilateral Investment Treaty Mechanism is itself controversial. Such disputes are expensive, opaque and are not usually used to settle tax disputes.

Cavinder BullNeither ConocoPhillips nor Cavinder Bull (pictured, left), a senior Singaporean barrister and chairman of the arbitration panel looking into the case, would disclose the location, or the dates, of the hearings.

And this case is thought to be the first to look at the issue of capital gains tax. If it goes ahead, that itself could act as a deterrent to developing countries trying to levy taxes because such battles cost fortunes in legal fees – about $5m a case, on average.

Michael Lennard is the Chief of the UN International Tax Cooperation Section who is currently on sabbatical as a visitor at the Oxford University Centre for Business Taxation. He has negotiated many tax and investment agreements, and speaking in a personal capacity he told Finance Uncovered: “The proceedings are held in secret, with expensive Western law firms often having to be hired to deal with arcane procedures.

“Most of the potential arbitrators in tax-related cases are not tax experts or else are tax advisers to corporations, with insufficient experienced and non-partisan arbitrators from the developing world (such as academics), not enough women and not enough younger experts.

“As a result it is extremely difficult for developing country governments to secure the expertise they need to defend these cases.”

For many, this reeks of injustice: big multinationals using the sledgehammer of a secretive and prohibitively expensive court to deprive developing countries of the revenue they feel is theirs.

Jayati Ghosh, a renowned professor of economics at Jawaharlal Nehru University in New Delhi, said: “Developing countries’ experience with the outcomes of such cases does not inspire optimism, as it is well known that the panels tend to be more investor friendly and generally support the claims of firms over the rights of governments or even the human rights of their citizens.”

Perenco declined to comment.

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Venezuela: Economic Warfare Brings Nation To Its Knees

Featured article from Mint Press News.

Which is mightier; the pen or the sword? In the case of the recent upheaval in Venezuela, the pen is the obvious answer.

The bankers fight using the pen — the pen that signs the paperwork to impose the sanctions that incur mass starvation, dissolve order, hike prices, and bring nations to their knees — Venezuela is in the crosshairs this time.

Last year, U.S. President Donald Trump signed a determination that singled out Venezuela for failing to adhere to counternarcotics obligations. The accusation came – perhaps not so coincidentally – on the same day that Venezuela declared it would no longer participate in the U.S.’ petrodollar trade system.

Venezuelan President Nicolás Maduro made his position clear, he had stated earlier in that month that the country would look to “free” itself from the dollar within a week’s time, following the U.S.’ sanctions against the embattled nation.

The decision is similar to that once made by former Iraqi leader Saddam Hussein, who dropped the dollar in favor of the euro a few years prior to the 2003 U.S. invasion of Iraq, we all know how that ended.

International markets thus far have failed to noticeably react to the policy shift, despite the threat it presents to the petrodollar system. The system, created in the 1970s, calls for OPEC nations to sell their oil in dollars in order to create artificial demand for the U.S. currency, a fiat currency based on thin air — held together by force.

Venezuela, home to the world’s largest oil reserves, is likely to exert some effect on the demand for dollars through its new policy, though the extent of the potential damage remains unclear. What is clear is that it means enough for the U.S. to declare a financial soft war in retaliation.

Millions of Venezuelans have seen their living conditions vastly improved through the Bolivarian process which shifted the focus away from compliance to the Western Banking Cartel.

The problems plaguing the Venezuelan economy are not due to some inherent fault in socialism, but to artificially low oil prices and sabotage by forces hostile to the revolution.

Starting in 2014, the Kingdom of Saudi Arabia flooded the market with cheap oil. This is not a mere business decision, but a calculated move coordinated with U.S. and Israeli foreign policy goals. Despite not just losing money, but even falling deep into debt, the Saudi monarchy continues to expand its oil production apparatus. The result has been driving the price of oil down from $110 per barrel, to $28 in the early months of this year. The goal is to weaken these opponents of Wall Street, London, and Tel Aviv, whose economies are centered around oil and natural gas exports.

Venezuela is one of those countries. Saudi efforts to drive down oil prices have drastically reduced Venezuela’s state budget and led to enormous consequences for the Venezuelan economy.

At the same time, private food processing and importing corporations launched a coordinated campaign of sabotage. This, coupled with the weakening of a vitally important state sector of the economy, has resulted in inflation and food shortages. The artificially low oil prices have left the Venezuelan state cash-starved, prompting a crisis in the funding of the social programs that were key to strengthening the United Socialist Party.

Corruption is a big problem in Venezuela and many third-world countries. This was true prior to the Bolivarian process, as well as after Hugo Chavez launched his massive economic reforms. In situations of extreme poverty, people learn to take care of each other. People who work in government are almost expected to use their position to take care of their friends and family. Corruption is a big problem under any system, but it is much easier to tolerate in conditions of greater abundance. The problem has been magnified in Venezuela due to the drop in state revenue caused by the low oil prices and sabotage from food importers.

Venezuelans told of how the privatizations mandated by the International Monetary Fund made life in Venezuela almost unlivable during the 1990s. Garbage wouldn’t be collected. Electricity would go off for weeks. Haido Ortega, a member of a local governing body in Venezuela, said: “Under previous governments we had to burn tires and go on strike just to get electricity, have the streets fixed, or get any investment.”

Chavez took office on a platform advocating a path between capitalism and socialism. He restructured the government-owned oil company so that the profits would go into the Venezuelan state, not the pockets of Wall Street corporations. With the proceeds of Venezuela’s oil exports, Chavez funded a huge apparatus of social programs.

After defeating an attempted coup against him in 2002, Chavez announced the goal of bringing Venezuela toward “21st Century Socialism.” Chavez quoted Marx and Lenin in his many TV addresses to the country, and mobilized the country around the goal of creating a prosperous, non-capitalist society.

In 1998, Venezuela had only 12 public universities, today it has 32. Cuban doctors were brought to Venezuela to provide free health care in community clinics. The government provides cooking and heating gas to low-income neighborhoods, and it’s launched a literacy campaign for uneducated adults.

During the George W. Bush administration, oil prices were the highest they had ever been. The destruction of Iraq, sanctions on Iran and Russia, strikes and turmoil in Nigeria — these events created a shortage on the international markets, driving prices up.

Big oil revenues enabled Chavez and the United Socialist Party to bring millions of Venezuelans out of poverty. Between 1995 and 2009, poverty and unemployment in Venezuela were both cut in half.

After the death of Chavez, Nicolas Maduro has continued the Bolivarian program. “Housing Missions” have been built across the country, providing low-income families in Venezuela with places to live. The Venezuelan government reports that over 1 million modern apartment buildings had been constructed by the end of 2015.

The problems currently facing Venezuela started in 2014. The already growing abundance of oil due to hydraulic fracturing, or fracking, was compounded by Saudi Arabia flooding the markets with cheap oil. The result: massive price drops. Despite facing a domestic fiscal crisis, Saudi Arabia continues to expand its oil production apparatus.

The price of oil remains low, as negotiations among OPEC states are taking place in the hopes that prices can be driven back up. While American media insists the low oil prices are just the natural cycle of the market at work, it’s rather convenient for U.S. foreign policy. Russia, Venezuela, Ecuador, and the Islamic Republic of Iran all have economies centered around state-owned oil companies and oil exports, and each of these countries has suffered the sting of low oil prices.

The leftist president of Brazil, Dilma Rousseff, has already been deposed due to scandal surrounding Petrobras, the state-owned oil company which is experiencing economic problems due to the falling price of oil. Although much of Brazil’s oil is for domestic consumption, it has been revealed that those who deposed her coordinated with the CIA and other forces in Washington and Wall Street, utilizing the economic fallout of low oil prices to bring down the Brazilian president.

The son of President Ronald Reagan has argued that Obama intentionally drove down oil prices not just to weaken the Venezuelan economy, but also to tamper the influence of Russia and Iran, Trump has continued this foreign policy.

Writing for Townhall in 2014, Michael Reagan bragged that his father did the same thing to hurt the Soviet Union during the 1980s:

“Since selling oil was the source of the Kremlin’s wealth, my father got the Saudis to flood the market with cheap oil.

Lower oil prices devalued the ruble, causing the USSR to go bankrupt, which led to perestroika and Mikhail Gorbachev and the collapse of the Soviet Empire.”

Read more here.

 

Pride Day: Masking The Artificially Induced Homosexuality “Gay Bomb”

Homosexuality and all other atypical sexual and gender orientations are not healthy nor “normal” biological phenomena; they are clear indicators of biological malfunction, an outward reflection of inward endocrinal disarray — a sorry exhibition of the biological turmoil many people are being subjected to by the men behind the curtain.

The Pride movement and the LGBT community and its associated doctrinal social campaigning is an elite-subsidized mask to cover up the real cause of the rise in queerness in its many forms — the dramatic spike in the also elite-subsidized (and ignored/glossed over by establishment regulators) atrazine, BPA, dioxin, phtalates, perchlorate, fire retardants, lead, mercury, arsenic, PFCs, organophosphate pesticides, glyphosate, glycol ethers and other similar chemicals found in food, medication and water supplies; which have scientifically proven endocrine-disrupting & feminizing properties that are actively making the population more homosexual (and everything on the sexual spectrum — except healthily heterosexual). Feminizing chemicals suppress or deactivate masculine gene expression essential for making men suitable mates for the opposite sex.

One estrogenic chemical, BPA, widely found in plastics, is doing this to the human biology:

“Investigators looking for obvious BPA-induced differences, such as chromosome deletions or DNA mutations, could be missing subtle behavioral differences that eventually lead to long-term adverse outcomes, including demasculinization of male behaviors with a decreased reproductive fitness.”

The studies had some alarming findings on BPA’s effects on masculine traits in mice:

(Natural News)

For the new study, the researchers fed female deer mice a BPA-supplemented diet for two weeks prior to breeding and throughout lactation. The mothers were given a dosage equivalent to what the U.S. Food and Drug Administration considers a non-toxic dose for pregnant women to ingest.

When the deer mice offspring were weaned at 25 days of age, they were fed on a non-supplemented BPA diet. Then, after the rodents matured into adults, their behavior was tested to study each mouse’s ability to navigate a maze to safety.

Male deer mice normally have an enhanced spatial navigational ability. It’s important because it allows them to find female mates that are dispersed throughout the environment. Female deer mice do not need to search for mates so their navigational abilities have not been enhanced by evolution. But when the University of Missouri researchers tested the navigational skills of male mice that had been exposed to BPA early in their development, something was terribly wrong.

Each male mouse had two five minute opportunities per day, for seven days, to try to find their way in to a home cage through one of several holes placed around the edge of an open maze.

The maze was marked with a set of visible navigational cues to help the animals. Yet many of them could not find the exit. On the other hand, all the male mice who had not been exposed to BPA found the correct exit quickly – some on the first day.

Adding to the strong evidence that the BPA dramatically changed the ability of the male mice to navigate normally, the scientists found that the non-BPA exposed mice quickly learned the most direct approach to finding the correct hole, while the exposed males appeared to sort of randomly and inefficiently wander around looking.

The female deer mice also were turned off by potential mates who had been exposed to BPA. In a mate choice experiment, the scientists measured the females’ level of interest in a stranger male by observing specific behaviors, such as nose-to-nose sniffing and the amount of time the female spent checking out her potential partner. According to Dr. Rosenfeld, both non-exposed and BPA-exposed females strongly preferred control males over BPA-exposed males.

The results are clear; what was once natural masculine instinct in the male mice became totally absent. Think of the same or similar implications in human males. Men incapable of tapping into their natural ability the attract and mate with the opposite sex. We’re seeing this everywhere. Emasculated men.

Oh, and the frogs are, in fact, actually turning gay because of man-made chemical exposure.

Even more revealing is that the U.S. actually has on record considered using a “gay bomb” to make military opponents attracted to each other in order to distract them and make them easier to defeat. So yes, this kind of hormonal manipulation exists on public record, so just imagine what hasn’t been publicly admitted — I believe it’s your responsibility to keep your hormones in check; else Big Brother will take them and bend them to their will.

The devastating in-womb effect of queer chemical exposure has a dramatic effect in steering the outcome of the gender, sexuality, and biological integrity in newborns; thus retarding the mental and physical development of children and the resulting adults they will then become — this is a powerful way of destroying the upcoming generation of people; making them weak, subservient and bound to yearn for government securities in willing exchange for their own self-governance.

Queerness is being deliberately caused, this isn’t an organic social revolution at all.

Queerness is entirely cause and effect, and not a “social revolution”, or the result of people’s “greater acceptance” as we are told to believe every day, this is an all-out war against our physiological bodies and minds. The LGBT cultural movement is merely a psychological crutch in order to build acceptance and boost a positive reception to the massive artificially-induced changes being actively made to humans in order to fulfill political ends, it’s as simple as that.

The goal of all this? 

The goal of this is simple and effective. Feminize the masses, groom, champion and legitimize white anthropological decline. Homosexuality will reduce the white birthrate and make voters more inclined to emotional arguments.

Also, to sow the seeds of biological decay as a potent form of population control; a healthy, capable population with men who are actually masculine, logical, and level-headed (masculine traits) is a threat to the established powers.

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It also serves to fragment society, a person conflicted with their own confused identity is, as the facts displayed below reveal — weak, self-loathing, often dependent on medication, and will always feel marginalized — the biologically atypical will turn to socialism and big government as the apparent and most immediate savior, weakness clings to the nearest floating piece of driftwood, whereas strength is independent.

The establishment will claim to “save” queer people from their “oppression” and “marginalization” at the hands of those “normal” people (the target group) — once more, mass divide & conquer is at play. All this, and I haven’t even gone into how toxic feminism is being deliberately used (and mass funded) to lower the white birthrate and sow yet more division.

I’ll finish with some facts that prove LGBT is not “healthy” or “normal” as we are being constantly told.