NEWS,21.07.2013

OECD publishes plan to cut tax evasion

The Organisation for Economic Co-operation and Development (OECD) unveiled new plans to tackle tax evasion by improving the way tax authorities share information about individuals and entities like trusts.
Countries are increasingly moving to a standard of sharing information on taxpayers even in the absence of any specific request.
This is more likely to flag up inappropriate behaviour than the longer established practice of one tax authority starting an investigation into suspicions of wrongdoing, and then making a request for data.
The European Union has estimated hundreds of billions of euros are lost each year to tax evasion. The stashing of undeclared earnings in accounts in offshore jurisdictions has long been a favoured method for hiding cash from one's home tax authority, aided by the veil of secrecy.
The OECD, which advises its mainly rich nation members on economic and tax policy, issued an updated standard for the automatic exchange of information at the sidelines of a meeting of G20 finance ministers on Saturday.
The OECD has proposed a detailed description of the kinds of information that would be exchanged and proposals for common legal and technological standards to facilitate the flow of information.
The OECD hopes to have a new draft agreement ready for countries to sign in late 2013.
The shift to an international standard on automatic sharing of information has been accelerated by the US Foreign Account Tax Compliance Act (Fatca) which forces banks outside the United States to give Washington details of foreign accounts held by US citizens.
Countries like Bermuda, often labelled a tax haven by Western lawmakers, said that once they agreed to share information with the United States, other large countries pressured them for a similar deal.

China frees up lending rates

China's central bank removed controls on bank lending rates, effective on Saturday, in a long-awaited move that signals the new leadership's determination to carry out market-oriented reforms.
The move gives commercial banks the freedom to compete for borrowers, a reform the People's Bank of China said on Friday will help lower financial costs for companies. Previously, the lending floor was 70% of the benchmark lending rate.
However, the PBOC, in a statement, left a ceiling on deposit rates unchanged at 110% of benchmark rates, avoiding for now what many economists see as the most important step Beijing needs to take to free up interest rates.
The latest step underscores Beijing's resolve to start fixing distortions in its financial system and the economy more broadly as it tries to shift from export- and investment-led growth to more consumption-led activity.
Some analysts said cheaper credit could help support the economy, which has seen year-on-year growth fall in nine of the last 10 quarters.
"This is a big breakthrough in financial reforms," said Wang Jun, senior economist at China Centre for International Economic Exchanges, a prominent government think-tank in Beijing.
"Previously, people had thought the central bank would only gradually lower the floor on lending rates. Now they scrapped the floor once and for all."
The Australian dollar rose modestly on the news on hopes cheaper credit will lead to more demand from Australia's biggest export market.
The announcement provided some support to weak stock markets in Europe and a timely reminder to the world's top financial leaders meeting in Moscow of China's intention to rebalance its economy.
A Group of 20 draft communique will urge China to encourage more domestic demand-driven growth as part of wider efforts to rebalance the world economy, G20 sources said.
The United States welcomed the move, saying China promised to let markets play a bigger role in allocating credit during the US-China Strategic and Economic Dialogue in Washington last week.
"This is a welcome further step in the reform and liberalisation of China's financial system," Holly Shulman, a spokesperson for the US Treasury, said in an email.
Signal of resolve
China's big lenders, such as Industrial and Commercial Bank of China , China Construction Bank, Bank of China and Agricultural Bank of China have generally resisted interest rate reforms because they do not want to see their rate margins get squeezed.
But many economists say such a push is necessary so that lenders learn to better price risk, which will force them to allocate capital more efficiently and so help rebalance an economy saddled with overinvestment and overcapacity in sectors from cement to steel making to solar panels.
Scrapping the lending floor will likely cut borrowing costs for businesses and individuals, ending what many observers say had been artificially high rates that benefited state lenders at the expense of private enterprise.
Some economists were sceptical at how much direct economic impact the move would have because few banks have fully utilised the limited freedom they already had to charge interest rates slightly below benchmark rates, choosing instead to keep their rates slightly above the floor that has been in place.
"So the move may have more of a signalling effect than transmit immediately to the economy but it is an important signalling effect," said Manik Narain, emerging market strategist at UBS in London.
However, to the extent that it does lead banks to lower their lending rates, the move could serve to stimulate investment at a time when the world's second-largest economy is running around its lowest growth rates since 2009, having logged 7.5 percent growth in the second quarter.
More important, though, is the sign that policymakers are getting serious about tackling challenging reforms, just four months after Premier Li Keqiang took office, analysts said.
"This is one of the biggest steps they could have taken," said Mark Williams, chief Asia economist at Capital Economics. "It tells you something about the trajectory."
The need for financial reforms was put on full display in late June, when the central bank attempted to choke off funds flowing to "shadow banking" activities, leading to a crunch in the country's money markets that sent short-term borrowing rates to levels normally seen only during financial crises, prompting jitters among investors around the world.
The shadow banking sector, or non-bank lending, has ballooned in recent years, raising concerns that authorities are losing track of potential bad debts building in the economy.
Long path ahead
The central bank said it is also scrapping controls on rates on discounted bills, a common form of payment among companies.
The PBOC made clear in its statement it does not intend to ease up on its controls over mortgage rates. Beijing has been clamping down on the property sector for several years to try to keep a lid on rising prices and speculative buying.
It said it planned to free up deposit rates eventually but now was not the right time. It said it still needed to do more groundwork, which is expected to include launching a deposit insurance system, something many observers expect may happen this year.
"(Reform of deposit rates) is more difficult and more sensitive. We should not expect it to happen very soon," said Yu Yongding, former member of the central bank's monetary policy committee and a researcher at the Chinese Academy Of Social Sciences in Beijing.
Beijing worries that allowing banks to raise deposit rates to compete for funds could crush some smaller lenders and force them to go bust.
Longer term, the latest move could signal that the government will step up other reforms seen as necessary to help rebalance the economy.
"This underlines that China is moving to a fully convertible currency and floating exchange rates," said Flemming Nielsen, senior analyst at Danske Bank in Copenhagen. "Their next step will be to widen the daily trading band for RMB (yuan). They should do that within the next three months."

Israel to free Palestinian prisoners

Israel announced on Saturday it will release some Palestinian prisoners as a "gesture", after the two sides agreed to lay the groundwork to resume peace negotiations frozen for three years.

Some of those to be freed have been in prison for decades, Israeli Intelligence Minister Yuval Steinitz said.

His announcement came hours after US Secretary of State John Kerry said Israeli and Palestinian negotiators had agreed to meet to pave the way for a resumption of direct peace talks.

The last round of direct talks broke down in 2010 over the issue of Israeli settlements in the West Bank and east Jerusalem.

Speaking on privately owned Channel 2, Israeli Justice Minister and chief peace negotiator Tzipi Livni noted that while there were no preconditions to talks, "everything will be on the table", including the 1967 borders and east Jerusalem, which the Palestinians want as their future capital.

Steinitz said his government would engage in the staggered release of a "limited number" of prisoners, some of whom he defined as "heavyweights", who have been in jail for up to 30 years.

4 713 imprisoned

"There will definitely be a certain gesture here", he said, without noting how many prisoners were to be freed.

According to Israeli rights group B'Tselem, at least 4 713 Palestinians are imprisoned in the Jewish state.

Their release is one of the Palestinians' key demands for resuming peace talks, particularly the 107 prisoners arrested prior to 1993, when the Oslo peace accords were signed.

An Israeli official said no prisoners would be released before direct talks begin, and the process would then be dependent on the Palestinians proving they are "really serious and not playing games".

"It won't happen tomorrow and not next week," the official told AFP, speaking on condition of anonymity. He could also give no indication of the number of prisoners involved.

He said the releases, once they begin, would take place in stages and include "pre-Oslo prisoners, prisoners set to be released anyway, and those the Palestinians 'forgot' during the Oslo accords".

Commitment

Steinitz said Israel would not compromise "diplomatic issues", and that there was no agreement on a settlement construction freeze or on accepting the borders that existed prior to 1967 Six-Day war as the basis for talks, as the Palestinians demand.

He said the Palestinians had committed to "negotiate seriously" for "at least nine months", during time which they would refrain from taking action at the United Nations and other international institutions.

Kerry gave away very little detail of the agreement, which came after four days of consultations with Israeli and Palestinian leaders, saying both sides had reached "an agreement that establishes a basis for resuming direct final status negotiations".

"This is a significant and welcome step forward," he added, having doggedly pushed the two sides to agree to resume talks in six intense trips to the region since becoming secretary of state in February.

A State Department official said Kerry had wrenched a commitment from both sides "on the core elements that will allow direct talks to begin".

The Israelis and Palestinians remain far apart on final status issues including the borders of a future Palestinian state, the right of return of Palestinian refugees and Jerusalem.

'Ball in Israel's court'

Palestinian president Mahmud Abbas has also repeatedly called for a freeze to Israeli settlement building and a prisoner release.

"The ball is now in Israel's court," a Palestinian official said, speaking on condition of anonymity.

"Kerry has proposed the bases for a resumption of negotiations and asked [Israeli Prime Minister Benjamin] Netanyahu to respond favourably to one of them.

"The bases are the release of Palestinians jailed before the Oslo accords, minors, the sick or the elderly," he said. "And that Israel recognise the 1967 border lines as a reference point, or a halt to settlement building."

The official said Netanyahu had agreed to hold a special cabinet session to draw up Israel's response to Kerry's proposals.

The Islamist Hamas movement which runs the Gaza Strip rejected a return to talks, saying Abbas had no legitimate right to negotiate on behalf of the Palestinian people.

And the leftist Popular Front for the Liberation of Palestine warned that "a return to talks outside the framework of the United Nations and its resolutions would be political suicide".

Venezuela ends rapprochement with US

Venezuela says it has "ended" its rapprochement with the United States due to a statement by Samantha Power, nominated to become the US envoy to the United Nations.
Power said at a US Senate confirmation hearing on Wednesday that if she got the job she would stand up to "repressive regimes" and challenge the "crackdown on civil society being carried out in countries like Cuba, Iran, Russia, and Venezuela."
Washington and Caracas have not exchanged ambassadors since 2010 even though Venezuela exports 900 000 barrels of oil to the US per day.
"The Bolivarian Republic of Venezuela hereby ends the process ... of finally normalising our diplomatic relations" that began in early June, the Foreign Ministry said in a statement.
Venezuela is opposed to the "interventionist agenda" presented by Power and noted that her "disrespectful opinions" were later endorsed by the State Department, "contradicting in tone and in content" earlier statements by Secretary of State John Kerry.
Kerry and his Venezuelan counterpart, Elias Jaua, agreed on the sidelines of an Organisation of American States meeting in Guatemala in June that officials would "soon" meet for talks that could lead to an exchange of ambassadors.

NEWS,16.6.2013

Tax evasion, bank secrecy: G8 talks tough

Tax evasion and banking secrecy, hot topics and top targets because of the financial crises and austerity, could be the focus of strong statements at the G8 meeting this week.
The British government, organising the meeting in Northern Ireland, has promised big developments on the basis of substantial progress recently in clamping down on evasion and bursting bank secrecy.
But many observers from civic bodies are pessimistic and say that the summit on Monday and Tuesday will amount to a lost opportunity despite the public outrage over recent brazen cases at a time of tax rises and budget cuts.
The tightening up of tax systems across borders, and opening up information on how businesses do their accounting across borders, are two of the burning issues for Britain which is currently chairing the G8 (Group of Eight) leading countries.
The G8 comprises the United States, Japan, Germany, France, Canada, Britain, Italy and Russia.
British Prime Minister David Cameron has prepared the way for the summit of heads and state and government by stating the "ambition" that the meeting at Lough Erne will "knock down the walls of banking secrecy" with "concrete measures".
French President Francois Hollande, badly bruised by a recent scandal involving an admission by his budget minister Jerome Cahuzac, also responsible for fighting tax evasion, that he had hidden money abroad, has said: "Tax havens must be eradicated in Europe and throughout the world."
The climate has turned strongly in favour of tough action: pressure on these two fronts, which seemed to have eased after progress in 2009, is again at a high pitch.
First, a new law in the United States, called Fatca, obliges all banks to provide US authorities with all information they hold concerning all assets owned by US taxpayers.
Meanwhile, revelations by journalists, known as "Offshore Leaks", have further strengthened the perception that no bank account can be considered secret and that hidden funds are liable to exposure.
The consequence of this is that the gates of some strongholds of banking secrecy, such as Switzerland, are beginning to give way.
The European Union, in which some countries have arrangements considered favourable to those seeking to dissimulate funds, seems to be overcoming internal divisions and trying to catch up with the United States, even though Austria and Luxembourg still show some reticence.
The G8 leaders are expected to make strong statements calling for a "truly global system of multinational information exchange", according to a draft final statement. But concrete measures appear unlikely.
Cameron has opened a second front to combat strategies by multinational companies to avoid paying tax via transfer pricing and other techniques to generate costs in high-tax countries and profits in low-tax countries or tax havens.
"Missed opportunity"
Public opinion in several countries, already inflamed by stories of tax evasion and tax avoidance at a time of austerity, has been roused further by revelations in the United States and Europe that international brands such as Starbucks, Google, Amazon and Apple, pay little tax in countries where they have high-volume business.
In Northern Ireland, the G8 leaders, all of whom are facing national budget pressures, will support an action plan to be put forward soon by the Paris-based Organisation for Economic Cooperation and Development.
But even under this programme, hard-hitting measures will have to wait, mainly because of diverging interests.
Sources in Paris which are close to the talks said that "France is most interested in digital issues" while "American negotiators are not particularly enthusiastic."
One of the most sensitive matters concerns trusts and other structures which can be used as legal shields to conceal the identities of people with offshore activities and assets.
Britain has put transparency in this field on the agenda, saying that change is needed also to help fight the laundering of illicit funds.
Cameron, to show goodwill, has also urged British crown dependencies and territories such as the Cayman Islands and British Virgin Islands, reputed to be flourishing tax havens, to join in and ramp up their cooperation against evasion.
However, the outcome of this appeal is unclear since some of them, such as Bermuda, are reluctant to sign an agreement put forward by Cameron. This could be a blow to the position taken by the G8.
Non-governmental organisations are calling for "public registers of the owners and real beneficiaries of companies and other legal entities offshore," in the words of Mathilde Dupre, the coordinator of a body called the tax and judicial haven platform.
"This is a long way away," she said, noting that the draft final statement so far referred only to vague "national action plans."
At the NGO called One, founded by rock star Bono, Guillaume Grosso commented that "in the field of registers, Cameron has been unable to turn intentions into acts."
He held that the United States and Russia had countered what would have been "the big step forward by the G8."
Judging that this was "a missed opportunity", he said that "these issues could just be forgotten."

Obama heads to prickly Putin talks

President Barack Obama meets Russia's Vladimir Putin on Monday for potentially vexatious talks, as both leaders now offer open military backing to rival sides in Syria's civil war.

Obama, who leaves Washington on Sunday, will confront Putin at the G8 summit in Northern Ireland, after his administration signalled it would begin arming vetted rebels battling Syria's government, Russia's top Arab ally.

That decision last week complicated the already delicate politics of the Obama-Putin meeting and prompted Russia to acidly decry US claims that Syria crossed a 'red line' by using chemical weapons as unconvincing.

Washington, trying to preserve the troubled notion of a Geneva peace summit co-organized with Moscow, wants a change of strategy from Putin, who has backed President Bashar Assad even as Obama has repeatedly demanded he leave power.

But no one expects the Russian leader to yield, especially in the wake of battlefield gains against the rebels by Assad's forces bolstered by Hezbollah militia fighters and Iran.

Putin may also be taking some Machiavellian comfort from the public agonising consuming Western governments over what to do about Syria, which has been particularly acute inside the Obama administration.

"We still continue to discuss with the Russians whether there is a way to bring together elements of the regime and the opposition to achieve a political settlement," said Ben Rhodes, a deputy US national security advisor.

"There are no illusions that that's going to be easy."

Different opinions

US officials will try to convince Putin that a descent into deeper chaos and instability in Syria is not in Moscow's national interests.

Top US officials, keen to avoid in Syria the messy splintering of state institutions that led to chaos in Iraq, are stressing the idea that if Assad leaves, elements of the regime, presumably sympathetic to Russia, might stay.

But the argument's potency has weakened given indications that Assad's position is more stable than it has been for months.

"I don't think Obama is going to shift Putin in his way of thinking. The French and the British certainly won't be able to do this," said Michael Geary, a European Studies fellow at the Wilson Centre in Washington.

Putin seems in no mood to compromise, and on Sunday hit out at the decision to arm Syrian opposition factions.

"It is barely worth it [supplying arms] to support people who not only kill their enemies but open up their bodies and eat their internal organs in front of the public and the cameras," Putin said in London.

Western powers may hope that by arming selected rebels they can shift the dynamics of the fighting on the ground, which could chip away at Assad's position and raise pressure on Putin to reengage.

"We would very much like to see the Russians taking a similar view about the importance of an inclusive political process to create a transition that Syria needs," a Western diplomat said.

"We would like to see Russia engaging on what that means, less directly attached to the continuation in power of Bashar Assad."

Obama may press Putin on whether Russia plans to complete the delivery of S-300 anti-aircraft missiles to the Damascus regime, which could complicate any future US or Western air operations over the country.

Relationship already shaky

Disagreements over Syria have frayed an already testy relationship between Russia and the United States, which has deteriorated since the "reset" engineered by Obama and former president Dmitry Medvedev.

Yet US officials believe progress may be possible in some areas, especially ahead of a planned meeting between the leaders when Obama heads to St Petersburg for the G20 summit in September.

Obama will likely probe whether Putin is ready to talk about weapons cuts as he seeks to cement his nuclear arms reduction legacy after agreeing on a new START treaty with Moscow in his first term.

Both sides also have a renewed interest in co-operation on counter-terrorism issues, following the bombing of the Boston marathon by attackers with origins in the Caucasus region of Russia.

Obama and Putin are not expected to take questions after their talks, but will make statements to the press at the G8 venue in Loch Erne.

Journalists and analysts will be reduced to sifting visual clues.

"I think if we see scowling and stiff body language, you will interpret that one way," said Heather Conley of the Centre for Strategic and International Studies.

"If we see smiles and backslaps, you will interpret it in another way."

Israel: Iran sanctions should increase

Israel on Sunday warned the international community against easing sanctions on Iran following the election of a reformist-backed president, saying the country's nuclear efforts remain firmly in the hands of Iran's extremist ruling clerics.

Prime Minister Benjamin Netanyahu issued the warning a day after the surprise victory by Hasan Rowhani. Although Rowhani is considered a relative moderate and had the backing of Iranian reformists, Supreme Leader Ayatollah Ali Khamenei is the ultimate authority on all state matters and key security policy decisions, including nuclear efforts, defense and foreign affairs, remain in the hands of Khamenei and his powerful protectors, the Revolutionary Guard.
Netanyahu noted that the Iranian clerics disqualified candidates they disagreed with from running in the election. He said the international community must not get caught in "wishful thinking" and ease the pressure on Tehran, saying "Iran will be tested by its deeds".
Israel considers a nuclear-armed Iran to be an existential threat, citing Iranian calls for Israel's destruction, its support for anti-Israel militant groups and its missile and nuclear technology.
Tehran insists its nuclear program is peaceful, a claim that Israel and many Western countries reject.
Netanyahu said that sanctions on Iran should be increased. "The more pressure increases on Iran, so will the chance of ending Iran's nuclear program, which remains the biggest threat to world peace," Netanyahu said.
Israeli President Shimon Peres took a softer line. While Peres said it was too early to make predictions, he felt the vote was a clear sign of dissatisfaction with Iran's hard-line leadership and its outgoing president, Mahmoud Ahmadinejad.
"More than half of Iranians, in their own way, in my judgment, protested against an impossible leadership," Peres told The Associated Press. "Ahmadinejad spent hundreds of billions of dollars to build an idol of uranium. What for? He brought down the people on their knees. The economy is destroyed. Children don't have enough food. Youngsters are leaving the country. Iran became a centre of terror, they hang people, they arrest people. What for?"
He said the biggest loser in the vote was Khamenei. "It is clearly a voice of the people and a voice that says, 'We don't agree with this group of leaders'," Peres said.
Israel has said that it prefers diplomacy and sanctions to end Iran's nuclear program but has hinted that military action would be an option if peaceful attempts fail. It has called on the international community to issue a clear ultimatum to Iran to curb its nuclear programme.
Some Israeli analysts felt having a more moderate Iranian president might make the Islamic Republic harder for Israel to deal with.
Meir Litvak, head of Iranian studies at Tel Aviv University, told Israel Army Radio that Rowhani's "smiley face to the west" might make the option of military action less likely.
In contrast, Uzi Arad, Netanyahu's former security adviser, said that Rowhani's taking over might be good for Israel.
"It's true it might be easier to have an unstable, screaming and vulgar character like Ahmadinejad. but at the end of the day it might be better to have a character that you can deter and can convince via pressure to get the desired result," Arad said.
Arad told Israel Radio that it was a good sign that millions of Iranians voted for a candidate who "explicitly spoke about acting to ease sanctions and strive for talks with the West."

North Korea proposes talks with US

North Korea's top governing body on Sunday proposed high-level nuclear and security talks with the United States in an appeal sent just days after calling off talks with rival South Korea.

The National Defense Commission headed by North Korean leader Kim Jong Un issued a statement through state media proposing "senior-level" talks to ease tensions and discuss a peace treaty formally ending the Korean War.
In Washington, a National Security Council spokesperson said talks with North Korea would require that it comply with UN Security Council resolutions and live up to its international obligations.
Foreign analysts expressed scepticism over the North Korean proposal, saying the impoverished country often calls for talks after raising tensions with provocative behaviour in order to win outside concessions.
The rare proposal for talks between the Korean War foes follows months of acrimony over North Korea's defiant launch of a long-range rocket in December and a nuclear test in February, provocative acts that drew tightened UN and US sanctions. The US and South Korea countered the moves by stepping up annual springtime military exercises that prompted North Korea to warn of a "nuclear war" on the Korean Peninsula.
However, as tensions subsided in May and June, Pyongyang has made tentative overtures to re-establish dialogue with South Korea and Washington.
In a notable shift in propaganda in Pyongyang, posters and billboards calling on North Koreans to "wipe away the American imperialist aggressors" have been taken down in recent weeks.
Meanwhile, a recent proposal from Pyongyang for Cabinet-level talks with South Korea (the first in six years) led to plans for two days of meetings in Seoul earlier this week. The talks dramatically fell apart even before they began, amid bickering over who would lead the two delegations.
North Korea fought against US-led United Nations and South Korean troops during the three-year Korean War in the early 1950s, and Pyongyang does not have diplomatic relations with either government. The Korean Peninsula remains divided by a heavily fortified border.
Reunifying the peninsula was a major goal of North Korea's two late leaders, Kim Il Sung and Kim Jong Il, and is a legacy inherited by current leader Kim Jong Un. North Korea is expected to draw attention to Korea's division in the weeks leading up to the 60th anniversary in July, marking the close of the Korean conflict, which ended in an armistice. A peace treaty has never been signed formally ending the war.
As Pyongyang continues to shun disarmament and shut out nuclear inspectors, Washington's top worry is North Korea's nuclear weapons programme. Pyongyang is estimated to have a handful of crude nuclear devices and has been working toward building a bomb it can mount on a missile capable of striking the United States.
Earlier this year, Kim Jong Un enshrined the drive to build a nuclear arsenal, as well as building the economy, as national goals. North Korea claims the need to build atomic weapons to defend the country against what it sees as a US nuclear threat in Korea and the region.
North Korea will not give up its nuclear ambitions until the entire Korean Peninsula is free of nuclear weapons, a spokesperson from the National Defense Commission said in a statement carried by the Korean Central News Agency.
"The denuclearisation of the Korean Peninsula does not only mean 'dismantling the nuclear weapons of the North'", but also should involve "denuclearising the whole peninsula, including South Korea, and aims at totally ending the US nuclear threats" to North Korea, the spokesperson said.
The US denies having nuclear bombs in South Korea, saying they were removed in 1991. However, the US military keeps nuclear submarines in the region and has deployed them for military exercises with South Korea.
After blaming Washington for raising tensions by imposing "gangster-like sanctions" on North Korea, the unnamed NDC spokesperson called on the US to propose a venue and date for talks but warned against setting preconditions.
US National Security Council spokesperson Caitlin Hayden said on Sunday that the US hopes to have "credible" negotiations with North Korea.
"But those talks must involve North Korea living up to its obligations to the world, including compliance with UN Security Council resolutions, and ultimately result in denuclearisation," she said. "We will judge North Korea by its actions and not its words and look forward to seeing steps that show North Korea is ready to abide by its commitments and obligations."
Washington has been burned in the past by efforts to reach out to Pyongyang. Months of behind-the-scenes negotiations yielded a significant food-for-disarmament deal in February 2012, but that was scuttled by a failed North Korean long-range rocket launch just weeks later.
Pyongyang's bid to reach out to the US comes as South Korea's new president, Park Geun-hye, is to sit down for talks with China's new leader, Xi Jinping, in Beijing later this month.
Park, whose North Korea policy calls for building trust while remaining firm on provocations, has been active in reaching out to Beijing. Xi, meanwhile, met recently with Obama in California.
China crucially supplied North Korea with troops during the Korean War, and has remained a key ally and benefactor since then, but has pushed Pyongyang to return to disarmament talks.
"The fact that North Korea proposed talks [with the US] ahead of the South Korea-China summit signifies its intent to keep China in check," said Kim Yong-hyun, a professor of North Korean studies of Dongguk University in Seoul, South Korea.
Pyongyang also is sending a message to South Korea warning that if Seoul does not actively try to improve relations with North Korea, the regime will go directly to Washington, sidelining Seoul, he said.

NEWS,22.05.2013

EU tackles tax evasion

Tax cheats big and small were under the microscope in Brussels on Wednesday, as European Union leaders gathered at a summit to discuss tax evasion amid a fresh scandal involving computing giant Apple.
"All of the questions of tax fraud and tax evasion will be taken up, meaning both those involving individuals and those involving companies," French President Francois Hollande pledged ahead of the talks with his 26 EU counterparts.
"I believe in low taxes for businesses because we've got to encourage investment, we've got to encourage jobs ... But we've got to make sure as we set those tax rates that companies pay taxes," British Prime Minister David Cameron added.
Their comments came a day after politicians in the United States publicly slammed Apple - one of the world's most successful technology companies - for using its international presence to dodge hefty US taxes. The arrangements are legal under loopholes in US law.
Among the allegations is that EU member state Ireland gave Apple a 2% income tax rate - far below its current, already-low corporate tax rate of 12.5%. But Irish Prime Minister Enda Kenny rejected those claims as he arrived for the Brussels summit.
"Ireland's corporate tax regime is very clear and transparent, and we do not do any special deals with individual companies in regard to that tax rate," he said.
The fight against tax evasion and avoidance has become a new global rallying cry, following a media expose on the widespread use of tax havens and scandals involving high-profile people in France and Germany.
The battle has gained traction in Europe amid concerns that painful austerity will be harder to sell if tax cheats are not forced to pay up. It is believed that EU governments lose €1 trillion ($1.3 trillion) annually in uncollected taxes.
The anti-poverty organization Oxfam estimates that more than €12 trillion are stashed away in tax havens within the EU and the territories it controls.
"Most governments claim to have no alternative but to cut public spending and development aid, but ... there's enough potential tax to be had on hidden 'private' money to end extreme world poverty twice over," said Natalia Alonso, head of Oxfam's EU office.
During their meeting in Brussels, the 27 leaders were set to call for progress on tackling "aggressive tax planning and profit shifting" by companies, according to a draft of their final statement seen by dpa.
European Parliament President Martin Schulz has proposed that all multinational companies should have to submit reports detailing what taxes they pay, profits they earn and how many people they employ in any given country.
"It is quite simply unfair that it should be the largest and most successful companies which pay virtually no taxes, even though they benefit enormously from state investment," Schulz told the leaders, according to a copy of his speech.
Various EU parliamentarians and non-governmental groups have called for the leaders to deliver hard-hitting measures, such as a blacklist of tax havens that would be subject to punishment.
But standing in the way of too much aggressiveness are Austria and Luxembourg, bank-secrecy stalwarts that are concerned about losing their attractiveness as banking destinations.
The draft summit statement does not propose any new measures, simply urging more action on VAT fraud, money-laundering and the taxation of the digital economy, along with more information-sharing between tax authorities including the adoption of EU reforms opposed by Austria and Luxembourg "before the end of the year."
Diplomats have argued that the Brussels summit, even without breakthroughs, will contribute to the "global momentum" against tax evasion and convey a united European position ahead of discussions at a Group of 8 summit in June.
German Chancellor Angela Merkel spoke of "a giant step forward."
"Just to be perfectly clear: we are not talking about harmonizing taxes or Europe taxing more or taxing less," EU President Herman Van Rompuy said. "We are talking about jointly fighting unacceptable practices that allow some people to avoid paying taxes altogether."
Also on Wednesday, the leaders were to discuss how energy policies can contribute to reinvigorating growth in the EU, with an unprecedented focus on energy prices. Bringing them in line with other parts of the world is seen as key to appeal to manufacturers.

Ireland feels heat from Apple tax row

Ireland called on Wednesday for an international clampdown on multinationals shifting profits around the world to avoid tax, after criticism that Irish loopholes helped technology giant Apple to shrink its tax bill.
A US Senate investigation into the tax affairs of the maker of iPhones, iPads and Mac computers has shone an uncomfortable spotlight on Ireland's tax regime and forced the government to defend itself against accusations of being Europe's onshore tax haven.
Other European governments, notably France, have previously criticised Ireland's low rate of corporation tax - 12.5% - but the revelations from Washington focus on loopholes in the Irish tax code that are more difficult to defend.
Richard Bruton, the minister in charge of attracting foreign companies to Ireland, admitted that companies need to be reined in.
"They play the tax codes one against the other; that is tax planning, and I think we do need international cooperation through the OECD to deal with the aggressive nature of that," he told state broadcaster RTE.
"Tax has always been an element of the Irish offering, and this will continue to be so, but what you have to avoid is what is known as harmful tax competition. We scrupulously avoid that."
Provoking Capitol Hill
The US investigation showed that Apple had paid just 2% tax on $74bn in overseas income, largely helped by Irish tax law, which allows companies to be incorporated in the country without being tax resident. Britain had a similar rule but changed it over 20 years ago to stop tax avoidance.
Unlike Britain, however, Ireland is heavily dependent on foreign companies such as Google, Pfizer and Intel for employment 150 000 of a labour force of around 2 million and for its much-vaunted economic model of export-led growth.
While Ireland has successfully repelled attacks on its corporate tax rate from European neighbours, US pressure is more difficult to ignore.
By closing its own loopholes, Washington could threaten Ireland's status as European hub for multinationals, and economists said it would be better for Ireland to act first.
"In the long run, the US Congress, if they wanted to, could wipe out those 150 000 real jobs, and we don't want to provoke people by over-egging it, by doing things that are clearly upsetting the US," said John FitzGerald, a professor at the Economic and Social Research Institute (ESRI), an Irish think-tank.
Ireland's Prime Minister Enda Kenny will face tough questions at a summit of European leaders in Brussels on Wednesday where the issue of tax avoidance will take centre-stage.
Bruton said scapegoating individual countries was not the answer and pointed to the fierce competition Ireland faces in trying to attract companies.
"When I go into the boardrooms either in Asia or the US, I am followed into those boardrooms by Swiss, by Singaporeans, by Dutch, by Belgians who are offering specially put-together deals on the tax front," he said.
"Ours is not a specially put-together deal; it is absolutely transparent, there are no side deals, no special arrangements."
"We make no apologies for having a regime that is designed to promote employment. It is a regime we have had for close to 50 years."

Japan trade deficit hits $8.6bn in April

Japan's trade deficit expanded a worse-than-expected 70% on year to $8.6bn in April, government data showed Wednesday, as a weaker yen made imports costlier.
The monthly trade deficit came to ¥879.9bn ($8.6bn), 69.7% higher than the year-before deficit of ¥518.4bn, finance ministry data showed.
The deficit was the biggest for the month of April in comparable official data that goes back to 1979 and was also worse than a shortfall of ¥620bn economists predicted on average in a poll by the Nikkei business daily.
Exports in April rose 3.8% to ¥5.78 trillion while imports jumped 9.4% to ¥6.66 trillion.
The yen's average rate was 96.01 to the dollar in April against 82.31 in April 2012, meaning the value of the Japanese currency fell by nearly 17% on year, the data showed.
A lower yen helps Japanese exporters but pushes up import bills.
Higher import costs have been resulting in higher materials and parts prices, which are leading to higher retail prices of various items ranging from foodstuff to laptops.
With the yen hitting multi-year lows against the dollar, some politicians have started voicing concerns over its negative impact on people's lives.
Japan's fuel imports have also stayed high as most of its nuclear reactors remain off-line since the huge earthquake and tsunami in 2011 sparked the world's worst atomic accident in a generation. 

Office bullying video sparks outcry in Singapore

A Singapore company supervisor caught on video slapping a male intern is in trouble after the clip went viral on the web and sparked a public outcry.

Police confirmed to AFP that a complaint had been lodged against the supervisor, who works at a software company, and the manpower ministry said it had also been alerted about the alleged case of workplace abuse.

The 17-second Singapore office bully clip, first uploaded on the video-sharing website YouTube last Friday, showed the boss repeatedly slapping a younger man described by local media as a 29-year-old intern.

A fellow intern who filmed the video said in a posting at an online forum that he had noticed the supervisor "constantly bullying" his co-worker soon after starting his internship.

When he confronted the boss, the supervisor explained that "there is a story behind" the abuse.

"He said that my colleague apparently has an inferiority complex and apparently my supervisor is trying to 'nurture' him to get over it," he said.

"I felt this was stupid, as how can you nurture someone by hitting them? My co-worker is very timid and seems like the kind of guy that will not stand up for himself."

The Straits Times reported on Wednesday that after the video went viral, two former interns in the same company also came out to say they had worked in fear under the supervisor.

Local Chinese-language newspaper Shin Min said the intern, a university graduate, was being paid $400 a month and that his parents may seek compensation from the firm.