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64-444: The CumEx-Files is an investigation by a number of European news media outlets into a tax fraud scheme discovered by them in 2017. A network of banks, stock traders, and lawyers had obtained billions from European treasuries through suspected fraud and speculation involving dividend taxes . The five hardest hit countries may have lost at least $ 62.9 billion. Germany is the hardest hit country, with around $ 36.2 billion withdrawn from

128-504: A Black Economic Empowerment transaction empowerment partners acquired a 21.5% stake in the South Africa-listed Investec. In 2005, Investec sold its UK private client stockbroking operation, Carr Sheppards Crosthwaite Limited to Rensburg plc. Investec retained a 47.7% interest in the combined entity, Rensburg Sheppards plc. In 2007, Investec plc acquired Kensington Group plc and Experien (Pty) Ltd. Investec plc acquired

192-468: A flagship project started by the Kutlwanong Centre for Math, Science and Technology. The project aims at improving the mathematics and science skills of students from historically disadvantaged regions across South Africa. The project has been a huge success year on year, with most of the students obtaining distinctions in mathematics and science, and their other subjects. In 2014 the project was awarded

256-399: A government department would, and some governments have adopted this approach. In Bangladesh , customs administration was partly privatized in 1991. Abuse by private tax collectors (see tax farming below) has on occasion led to revolutionary overthrow of governments who have outsourced tax administration. Tax farming is an historical means of collection of revenue. Governments received

320-492: A huge scale. In August 2005, Bangladesh had hired four PSI companies – Cotecna Inspection SA, SGS (Bangladesh) Limited, Bureau Veritas BIVAC (Bangladesh) Limited and INtertek Testing Limited – for three years to certify price, quality and quantity of imported goods. In March 2008, the Bangladeshi National Board of Revenue cancelled Cotecna's certificate for serious irregularities, while importers' complaints about

384-552: A landmark ruling by a Frankfurt court. In May 2020, the European Banking Authority announced a 10-point action plan to enhance the future regulatory framework surrounding dividend arbitrage trading schemes. According to the report, in some countries, the cum ex deals are not criminal offenses. In 2010, in an audit report, the Danish Ministry of Taxation was found to have ignored warnings on multiple occasions of

448-472: A lower-taxed or untaxed jurisdiction with the intention of avoiding VAT or sales tax in their home jurisdiction are technically breaking the law in most cases. This is especially prevalent in federal countries like the United States and Canada where sub-national jurisdictions charge varying rates of VAT or sales tax. In liberal democracies, a fundamental problem with inhibiting evasion of local sales taxes

512-399: A lump sum in advance from a private entity, which then collects and retains the revenue and bears the risk of evasion by the taxpayers. It has been suggested that tax farming may reduce tax evasion in less developed countries. This system may be liable to abuse by the "tax-farmers" seeking to make a profit, if they are not subject to political constraints. Abuses by tax farmers (together with

576-638: A strategic review, the Boards of Investec plc and Investec Limited announced that Investec Asset Management would become a separately listed entity. In March 2020, the Asset Management business was demerged and listed as Ninety One plc . The new name is in recognition of the brand's heritage – it was in 1991 that the investment firm was started in South Africa. In April 2023, UK wealth manager Rathbones agreed to buy Investec's wealth and investment businesses in

640-473: A tax loophole concerning dividend tax . In June 2020, it was reported by investigators that such transactions took advantage of European rules on the taxing of dividends, which made it possible to get refunds by using a combination of short sales and future transactions. At the end of October 2018, the Socialist deputy Boris Vallaud filed a complaint against X for fraud and aggravated tax fraud laundering with

704-575: A tax system that exempted the aristocracy) were a primary reason for the French Revolution that toppled Louis XVI. Pre-shipment inspection agencies like Société Générale De Surveillance S. A. and its subsidiary Cotecna are in business to prevent evasion of customs duty through under-invoicing and misdeclaration. However, PSI agencies have cooperated with importers in evading customs duties. Bangladeshi authorities found Cotecna guilty of complicity with importers for evasion of customs duties on

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768-636: Is dual-listed on the London Stock Exchange and the Johannesburg Stock Exchange . It is a constituent of the FTSE 250 index. Investec was founded as a small leasing and financing company in 1974 in Johannesburg , South Africa , by Larry Nestadt, Errol Grolman and Ian Kantor. It has expanded through growth and acquisitions. It secured a banking licence in 1980 and was first listed on

832-427: Is a serious problem for the tax administration in many countries. Tax evasion is a crime in almost all developed countries, and the guilty party is liable to fines and/or imprisonment . In Switzerland , many acts that would amount to criminal tax evasion in other countries are treated as civil matters. Dishonestly misreporting income in a tax return is not necessarily considered a crime. Such matters are handled in

896-478: Is required to resolve the theoretical ambiguities. Income tax evasion appears to be positively influenced by the tax rate , the unemployment rate , the level of income and dissatisfaction with government. The U.S. Tax Reform Act of 1986 appears to have reduced tax evasion in the United States. In a 2017 study Alstadsæter et al. concluded based on random stratified audits and leaked data that occurrence of tax evasion rises sharply as amount of wealth rises and that

960-423: Is stored in tax havens stays undetected in random audits. Even though there is high diversity among people who evade taxes, there is a higher probability among the highest wealth group. According to Alstadsæter, Johannesen and Zucman 2019 the extent of taxes evaded is substantially higher with higher income, and exceptionally higher among people of the top wealth group. In line with this, the probability to appear in

1024-452: Is that liberal democracies, by their very nature, have few (if any) border controls between their internal jurisdictions. Therefore, it is not generally cost-effective to enforce tax collection on low-value goods carried in private vehicles from one jurisdiction to another with a different tax rate. However, sub-national governments will normally seek to collect sales tax on high-value items such as cars. One reason for taxpayers to evade taxes

1088-489: Is the legal use of tax laws to reduce one's tax burden. Both tax evasion and tax avoidance can be viewed as forms of tax noncompliance , as they describe a range of activities that intend to subvert a state's tax system, but such classification of tax avoidance is disputable since avoidance is lawful in self-creating systems. Both tax evasion and tax avoidance can be practiced by corporations, trusts, or individuals. In 1968, Nobel laureate economist Gary Becker first theorized

1152-402: Is the personal benefits that come with it, thus the individual problems that lead to that decision Additionally, Wallschutzky's exchange relationship hypothesis presents as a sufficient motive for many. The exchange relationship hypothesis states that tax payers believe that the exchange between their taxes and the public good/social services as unbalanced. Furthermore, the little capability of

1216-548: The JSE Securities Exchange in South Africa in 1986, after merging with Metboard, a trust company. In 1988, Investec Bank Limited was restructured into Investec Group Limited ("IGL"), giving Investec Management and staff control of the company. In 1990, Investec acquired property management company I. Kuper & Company (Pty) Limited, Corporate Merchant Bank Limited (formerly Hill Samuel Merchant Bank Limited) and trade finance company Reichmans Limited. Investec entered

1280-480: The Mail & Guardian Investing In The Future STEM award. As of March 2019 Investec also helps to fund, along with several other large corporate sponsors, a private software engineering college called Wethinkcode, with campuses in both Johannesburg and Cape Town, with the objective of confronting the youth unemployment crisis in South Africa by providing free tuition for eligible students. Other sponsorships included

1344-596: The National Financial Prosecutor's Office  [ fr ] . A parliamentary information mission on tax evasion of the National Assembly has also published a report on the results of the fight against cross-border malicious financial engineering . The Danish State Commissioner August Schäfer first warned of the practice in 1992, after the testimony of five whistleblowers. However, the practice remained widespread until an administrative assistant in

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1408-568: The Panama Papers rises significantly among the top 0.01% of the wealth group, as does the probability to own an unreported account at HSBC. However, the upper wealth group is also more inclined to use tax amnesty. Investec Investec is an Anglo-South African international banking and wealth management group. It provides a range of financial products and services to a client base in Europe, Southern Africa, and Asia-Pacific. Investec

1472-636: The Super Rugby competition since 2011, when it acquired naming rights in New Zealand. Investec also supports the International Rugby Academy South Africa which aims to capitalise on an untapped demand for high performance in playing and coaching rugby in South Africa. Investec became a long-term sponsor of The Derby festival in the UK in 2009. The deal was extended to run until 2026 but

1536-433: The economics of crime , on the basis of which authors M.G. Allingham and A. Sandmo produced, in 1972, an economic model of tax evasion. This model deals with the evasion of income tax, the main source of tax revenue in developed countries. According to the authors, the level of evasion of income tax depends on the detection probability and the level of punishment provided by law. Later studies, however, pointed limitations of

1600-639: The 12-year period were known as the Investec International Series (formerly the Investec Challenge) and were played at Twickenham Stadium , England. In 2010 Investec became the official sponsors of the Tri Nations rugby competition in New Zealand, now known as The Rugby Championship . In 2016 the deal was extended through to 2020, and in 2019 the competition was known as The Investec Rugby Championship in New Zealand. Investec has sponsored

1664-578: The 2008 tax gap found a range of $ 450–$ 500 billion, and unreported income to be about $ 2 trillion, concluding that 18 to 19 percent of total reportable income was not being properly reported to the IRS. Generally, individuals tend to evade taxes, while companies rather avoid taxes. There is a great heterogenic among people who evade people as it is a substantial issue in society, that is creating an excessive tax gap. Studies suggest that 8% of global financial wealth lies in offshore accounts. Often, offshore wealth that

1728-449: The CTA seeks to mitigate the misuse of shell companies for tax evasion purposes and bolster efforts to combat financial crimes within the U.S. jurisdiction. As of 2007 the most common means of tax evasion was overstatement of charitable contributions, particularly church donations. The IRS estimates that the 2001 tax gap was $ 345 billion and that the 2006 tax gap was $ 450 billion. A study of

1792-502: The Dutch broker Frank Vogel with more than €12 billion to facilitate his alleged tax arbitrage scheme. Tax fraud Tax evasion is an activity commonly associated with the informal economy . One measure of the extent of tax evasion (the "tax gap") is the amount of unreported income, which is the difference between the amount of income that the tax authority requests be reported and the actual amount reported. In contrast, tax avoidance

1856-960: The European treasuries through suspected fraud and speculation with dividend tax. The five hardest hit countries have lost together at least $ 62.9 billion. Germany is the hardest hit country, with around €31 billion withdrawn from the German treasury. Estimated losses for other countries include at least €17 billion for France, €4.5 billion in Italy, €1.7 billion in Denmark and €201 million for Belgium. A paper by economists Annette Alstadsæter, Niels Johannesen and Gabriel Zucman, which used data from HSBC Switzerland (" Swiss leaks ") and Mossack Fonseca (" Panama Papers "), found that "on average about 3% of personal taxes are evaded in Scandinavia, but this figure rises to about 30% in

1920-468: The Exchequer George Osborne promised to collect £5 billion by "waging war" on tax evaders by announcing new powers for HMRC to target people with offshore bank accounts. The number of people prosecuted for tax evasion doubled in 2014/15 from the year before to 1,258. In the United States of America, Federal tax evasion is defined as the purposeful, illegal attempt to evade the assessment or

1984-541: The German Federal Central Tax Office noticed abnormally large tax rebate claims from a US pension fund. Various banks and other financial institutions were involved in these alleged trades. Among those named in the leaked files include Macquarie Bank , Deutsche Bank , HypoVereinsbank , M. M. Warburg , Maple Bank , Merrill Lynch , KPMG , Ernst & Young , Investec , and Freshfields . Investigations revealed that since 2012 Investec had provided

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2048-432: The German treasury. Estimated losses for other countries include at least €17 billion for France, €4.5 billion in Italy, €1.7 billion in Denmark and €201 million for Belgium. The network stole several billion Euros from the treasury, through what Correctiv calls a "cum-ex" trade: The participants in the network would lend each other shares in large companies, so that to tax authorities there would appear to be two owners of

2112-750: The Jockey Club agreed to terminate the sponsorship in 2020 after the delayed running of the 241st Derby Festival on 4 July 2020. The two-day race meet became known as the Investec Derby Festival, incorporating two of the five British Classic Races , The Oaks and The Derby, the latter of which is also commonly known as the Greatest Flat race in the World. Investec has also sponsored the Investec Cape Derby in South Africa since 2009. Investec became

2176-547: The Pandora Papers also cites that the former Managing Director of IMF and French finance minister, Dominique Strauss-Kahn was permitted to create a consulting firm in the United Arab Emirates in 2018 after the expiry of tax exemptions of his Moroccan company, which he used for receiving millions of dollars worth of tax free consulting fees. A network of banks, stock traders and top lawyers has obtained billions from

2240-497: The Swiss tax courts, not the criminal courts. In Switzerland, however, some tax misconduct (such as the deliberate falsification of records) is criminal. Moreover, civil tax transgressions may give rise to penalties. It is often considered that the extent of evasion depends on the severity of punishment for evasion. Professor Christopher Hood first suggested privatization of tax enforcement to control tax evasion more efficiently than

2304-968: The UK and Channel Islands for £839 million. The deal excludes Investec Bank (Switzerland) and Investec International wealth business. Investec employs approximately 8,200 people worldwide and operates primarily in South Africa and the United Kingdom . It also has banking operations in Ireland , Switzerland , Mauritius , Guernsey , India , Jersey , and the United States . Investec consists of two areas of activity, namely: wealth, and investment and banking. Its specialist banking divisions include private banking, for high net worth and high income individuals, and corporate and investment banking, providing lending, transactional banking, treasury and trading, advisory and investment services. In July 2002, Investec became

2368-425: The UK market in 1992, by acquiring London-based Allied Trust Bank Limited ('ATB'), its first international acquisition. In 1998, Investec acquired Guinness Mahon , a leading London based merchant bank, and Henderson Crosthwaite, its stockbroking arm, for £95 million. It also bought Hambros plc , another London-based merchant bank the same year. It was first listed on the London Stock Exchange in 2002. In 2003, in

2432-475: The UK tax collection agency stated that it would continue to crack down on tax evasion, with the goal of collecting £18 billion in revenue before 2015. In 2010, HMRC began a voluntary amnesty program that targeted middle-class professionals and raised £500 million. Corrupt tax officials co-operate with the taxpayers who intend to evade taxes. When they detect an instance of evasion, they refrain from reporting it in return for bribes . Corruption by tax officials

2496-456: The amount of money a person or a corporation possesses. Efforts to evade income tax decline when the amounts involved are lower. The level of evasion also depends on the efficiency of the tax administration. Corruption by tax officials makes it difficult to control evasion. Tax administrations use various means to reduce evasion and increase the level of enforcement: for example, privatization of tax enforcement or tax farming. In 2011 HMRC ,

2560-464: The contract came to an end in August 2020. Investec has been involved in a number of rugby sponsorships around the world, stating that "rugby embodies Investec's beliefs in collaborative teamwork, innovative play and determination and it’s for these reasons that we support many rugby initiatives". From 2000 to 2011 Investec sponsored England Rugby Union home autumn internationals. The 35 games throughout

2624-650: The first South African company to list on both the London and Johannesburg stock exchanges, by implementing a dual listed companies (DLC) structure. The main features of the DLC structure are: Investec's approach to transformation within South Africa involves: Investec announced a ten-year title sponsorship of Investec Test Match cricket for the England and Wales Cricket Board on 24 November 2011 at Lord's Cricket Ground . The deal covered all home test series and ran for six years until

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2688-417: The foundation that tax compliance is costly for individuals as well as firms (tax filling, bureaucracy ), hence not paying taxes would be more economical in their opinion. Customs duties are an important source of revenue in developing countries. Importers attempt to evade customs duty by (a) under-invoicing and (b) misdeclaration of quantity and product-description. When there is ad valorem import duty,

2752-480: The model, highlighting that individuals are also more likely to comply with taxes when they believe that tax money is appropriately used and when they can take part on public decisions. The literature's theoretical models are elegant in their effort to identify the variables likely to affect non-compliance. Alternative specifications, however, yield conflicting results concerning both the signs and magnitudes of variables believed to affect tax evasion. Empirical work

2816-527: The official shirt sponsor for Tottenham Hotspur 's domestic cup games and UEFA Champions League games for the 2010/2011 and UEFA Europa League games for the 2011/2012 seasons. This sponsorship marked the first promotion into the football world for Investec. In 2014, Investec became the official shirt sponsor for Widnes F.C. in the North West Counties Football League Division One . Since 2005 Investec has been sponsoring

2880-555: The other three PSI companies mounted. Bangladesh planned to have its customs department train its officials in " WTO valuation , trade policy, ASYCUDA system, risk management" to take over the inspections. Cotecna was also found to have bribed Pakistan's prime minister Benazir Bhutto to secure a PSI contract by Pakistani importers. She and her husband were sentenced both in Pakistan and Switzerland. In early October 2021, 11.9 million leaked financial records in addition to 2.9 TB of data

2944-519: The overwhelming majority of states instead collect sales taxes . Canada uses both a VAT at the federal level (the Goods and Services Tax ) and sales taxes at the provincial level ; some provinces have a single tax combining both forms . In addition, most jurisdictions which levy a VAT or sales tax also legally require their residents to report and pay the tax on items purchased in another jurisdiction. This means that consumers who purchase something in

3008-446: The payment of a tax imposed by federal law. Conviction of tax evasion may result in fines and imprisonment, such as five years in prison on each count of tax evasion. The Internal Revenue Service (IRS) has identified small businesses and sole proprietors as the largest contributors to the tax gap between what Americans owe in federal taxes and what the federal government receives. Small businesses and sole proprietorships contribute to

3072-471: The payout date for the dividend, allowing traders to reclaim double the taxes. Financial institutions in essence allowed two parties to simultaneously claim ownership of the same shares, therefore allowing both to claim tax rebates to which they were not entitled. Authorities have since deemed the reclaims illegitimate, but at the time of the trades, this was less black and white, and a vast network of traders, analysts and lawyers were thought to be involved in

3136-453: The practice throughout the continent. The prestigious law firm Freshfields Bruckhaus Deringer gave tax advice which was used to justify the legality of the scheme. In November 2019, Ulf Johannemann, a former Freshfield partner who was head of the international tax department, was arrested. In January 2024 Ulf Johannemann was found guilty of aiding and abetting a multiyear dividend tax fraud and sentenced to three years and six months in jail in

3200-635: The remaining shares in Rensburg Sheppards plc in 2010. This business has since been rebranded as Investec Wealth & Investment and incorporates other wealth activities previously operated through the bank. In June 2012, Investec plc completed the €32 million acquisition of Irish brokerage firm, NCB. As a result, Investec now employs more than 240 specialists in Ireland. In December 2017, Investec acquired Amicus Commercial Finance and rebranded it as Investec Capital Solutions. In September 2018, following

3264-558: The same time, tax avoidance was estimated at £1.7 billion (this does not include international tax arrangements that cannot be challenged under the UK law, including some forms of base erosion and profit shifting (BEPS)). In 2013, the Coalition government announced a crackdown on economic crime . It created a new criminal offence for aiding tax evasion and removed the requirement for tax investigation authorities to prove "intent to evade tax" to prosecute offenders. In 2015, Chancellor of

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3328-503: The shares, when there was only one. The bank that was used in stock trading would then issue a "confirmation" to the investor that tax on the dividend payment had been paid, without it being done. "It's a bit like parents claiming a child benefit for two – or more – children when there is only one child in the family." writes Correctiv. This practice was outlawed in 2012. In cum-ex trades, shares with and without dividend rights were quickly traded between various market participants just before

3392-605: The summer of 2017, when the company exercised a break clause in its contract with the ECB . Investec became the principal sponsor of the England and Great Britain Women's Hockey teams in July 2011, from grassroots to international level, for an undisclosed sum. The agreement was initially for a term of five years, and in March 2016 the deal was extended for an additional four years but was not renewed when

3456-422: The system to catch the tax evaders reduces associated risk. Most often, it is more economical to evade taxes, being caught and paying a fine as a consequence, than paying the accumulated tax burden over the years. Thus, evasion numbers should be even higher than they are, hence for many people there seem to be moral objective countering this practice. The level of evasion depends on a number of factors, including

3520-442: The tax base can be reduced through under-invoicing. Misdeclaration of quantity is more relevant for products with specific duty. Production description is changed to match a H. S. Code commensurate with a lower rate of duty. Smuggling is import or export of products by illegal means. Smuggling is resorted to for total evasion of customs duties, as well as for the import and export of contraband . Smugglers do not pay duty since

3584-509: The tax gap because there are few ways for the government to know about skimming or non-reporting of income without mounting significant investigations. Shell companies have historically been utilized as vehicles for tax evasion and other illicit financial activities due to their opaque ownership structures. These entities, often devoid of substantial operations or assets, allow individuals to conceal their true identities and assets, thereby evading taxes and facilitating money laundering. Recognizing

3648-505: The tax havens of Bahamas and British Virgin Islands through an Emirati company, partially owned by an investment conglomerate, Dubai Holding and Axiom Limited, major shares of which were owned by the ruler. As per the leaked records, the Dubai ruler owned a massive number of upmarket and luxurious real estate across Europe via the cited offshore entities registered in tax havens. Additionally,

3712-513: The top 0.01% of the wealth distribution... Taking tax evasion into account increases the rise in inequality seen in tax data since the 1970s markedly, highlighting the need to move beyond tax data to capture income and wealth at the top, even in countries where tax compliance is generally high. We also find that after reducing tax evasion—by using tax amnesties—tax evaders do not legally avoid taxes more. This result suggests that fighting tax evasion can be an effective way to collect more tax revenue from

3776-447: The transport is covert, so no customs declaration is made. During the second half of the 20th century, value-added tax (VAT) emerged as a modern form of consumption tax throughout the world, with the notable exception of the United States . Producers who collect VAT from consumers may evade tax by under-reporting the amount of sales. The US has no broad-based consumption tax at the federal level, and no state currently collects VAT;

3840-461: The ultra-wealthy." HMRC , the UK tax collection agency, estimated that in the tax year 2016–17, pure tax evasion (i.e. not including things like hidden economy or criminal activity) cost the government £5.3 billion. This compared to a wider tax gap (the difference between the amount of tax that should, in theory, be collected by HMRC, against what is actually collected) of £33 billion in the same year, an amount that represented 5.7% of liabilities. At

3904-401: The underpayment (or remittance) gap. Voluntary tax compliance in the U.S. is approximately 85% of taxes actually due, leaving a gross tax gap of about 15%. The tax gap is growing mainly because of two factors, the lack of enforcement on the one hand and the lack of compliance on the other hand. The former is mainly rooted in the costly enforcement of the taxation law. The latter is based on

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3968-400: The very richest are about 10 times more likely than average people to engage in tax evasion. The tax gap describes how much tax should have been raised in relation to much tax is actually raised. The IRS defines the gross tax gap as the difference between the true tax liability for a given year and the taxes actually remitted on time. It comprises the nonfiling gap, the underreporting gap, and

4032-564: The vulnerabilities posed by such practices, the United States enacted the Corporate Transparency Act (CTA). The CTA mandates that companies disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) , aiming to dismantle the anonymity of shell corporations and increase transparency in corporate ownership. By requiring comprehensive reporting of beneficial ownership information (BOI),

4096-566: Was released in the name of Pandora Papers by the International Consortium of Investigative Journalists (ICIJ), exposing the secret offshore accounts of around 35 world leaders in tax havens to evade taxes. One of the many leaders to be exposed was the ruler of Dubai and prime minister of the United Arab Emirates, Sheikh Mohammed bin Rashid al-Maktoum . Sheikh Mohammed was identified as the shareholder of three firms that were registered in

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