Alastair Darling has announced his independent review of British offshore financial centres.
Over the last few weeks traffic on the site from Jersey, Guernsey and the Isle of Man has been very high. The message has been consistent. Those who support the financial services industry in these places say they are well regulated, transparent, fully cooperative and doing everything that is asked of them. They say there is absolutely no tax evaded money within them, and they do not want such business. They deny there is an offshore problem or that they have anything to do with creating problems for the developing world.
Yesterday the OECD firmly disagreed, even with regard to those locations that have signed Tax Information Exchange Agreements.
But to me there is just one question that really needs answering by these places, and it is this. If they are so adamant that they are committed to fully transparent and accountable financial services why do they steadfastly and persistently refuse to fully exchange information under the terms of the EU Savings Tax Directive, an option that is completely and openly available to them, but which they refuse to embrace?
There is only one possible explanation for their action, and that is the desire of Jersey, Guernsey and the Isle of Man to protect tax evaders using accounts in their domains from discovery by their domestic tax authorities. No other explanation is possible.
Now we know that the EU wishes to extend the Savings Tax Directive to all companies and all trusts, a matter on which I will write more next week after I have made a presentation to the EU Parliament on the issue. This measure is particularly targeted on offshore jurisdictions including Jersey, Guernsey and the Isle of Man.
These three jurisdictions (and others like them) have a choice if we are to believe that they are as transparent, accountable and clean as they claim. They can fully embrace the existing EU STD by committing themselves to full and open tax information exchange and we will call that a step in the right direction. They can then welcome the new STD with open arms, with its extended commitments to full information exchange and say that it will help them eliminate all tax evasion, and we will praise them.
But if they do neither we will know exactly where they stand. You can either be on the side of tax evaders on this issue, or on the side of upholding the rule of law in your neighbouring countries. There is no ambiguity. It is one or the other. Right now Jersey Guernsey and the Isle of Man are firmly positioned on the side of the evaders.
They have a choice. They can change their minds. But will they, and very soon? That is the question to which we need an answer. That is the question that this Commission must pursue. Without a positive answer no undertaking given by any of these jurisdictions has any meaning. I can be as blunt as that.
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Click on to the Guardian cif onto ‘Mantissa’ to see what I wrote about this a few comments ago. the Pound is by virtue of the Offshore havens Worldwide a Dual Currency,the Tax Liabilities on one side of the Note ,the scams Tax avoidance and a Host of Ills on the other side,sooner or later the Mother Currency will be called into Account Worldwide.I wrote this will cause Havoc eventually. I am not an Economist,accountant or Lawyer or Indeed a Politician,although I did an offshore Study in 1967 of the Channel Islands.I have French,Dutch,Irish and English family,and all have taken this up over the Years.My Nephew In Law is an International Banker,and my Son in Law is an Accountant.
[…] on Friday I wrote a challenge, […]
[…] on Friday I wrote a challenge, […]
OK Richard, I will be the first.
Your argument is one-sided and does not present a true picture of the reality of the situation. I can only comment on Jersey:
1. We have embraced the EU STD in that we pay over tax deducted from interest on accounts held by EU residents, an option which the EU allow.
2.Your logic is flawed because there is another possible reason, that of the level playing field. Jersey would be stupid to adopt a measure that its main competitors refuse to sign up to.
3.Tax evasion is illegal, and any evidence that Jersey administrators receive that their clients are evading tax is reportable under All Crimes legislation. We do not hesitate to do so.
4.Your understanding of trusts and trust law may be a little short of a full pack. Exactly what sort of trust holds a bank account in the name of the trust?
5.Equally, your attempt to draw back the corporate veil in respect of company bank accounts is futile since any interest earned is income to the company, not the shareholders. So who are we trying to recover tax from exactly?
6.Using companies to evade tax, as opposed to avoid tax, falls into exactly the same criminal activity as mentioned before and would be reported.
7. Finally, there are tax evaders all over the world, possibly even your next door neighbour. The point is that Jersey does not welcome such activity, does not promote itself as a tax haven, nor does it condone tax evasion, despite your one sided argument that it does.
Please, if you are going to change the world then, as Frank Walker once told me to my face, “Get real”. A little bit of truth and less counter-spin would also help.
Unfortunately we all suffer from the politics of envy, but at least I will suffer in silence, sipping my G & T watching the sunset over the surf of St Ouen.
A bientot, mon vie.
How incredibly depressing our answer is. I’ll answer each of your points using your paragraph numbering:
1. You have not embraced the EU STD. The EU STD is about information exchange and beating tax evasion. You are doing neither.
2. So facilitating g law breaking is just a matter of profit maximisation? Is that how you define ethics?
3. Not true. No one reported criminal money laundering in Jersey in 2006. Your banks did not report the tax evasion that was rife and demonstrated by the UK tax amnesty.
4. Of course a trust can have a bank account. It is absolutely normal here in he UK. It’s only you tax abusers who pile layer upon layer of opacity in an attempt to facilitate tax evasion.
5. Clearly you have not read the proposed changes to the EU STD – this is exactly what it will require of you.
6. There is no evidence that this happens.
7. Of course tax evasion exists elsewhere – but that was not my point. My point was that Jersey could tackle it – and instead of doing so chooses to facilitate it, and explicitly so. In that case you have not answered my point.
I assure you I am for real. Much more than Frank is.
And this has nothing to do with envy – much as you’d like it to be. This is simply about crime – and beating it.
Copies of all these reports and commentaries should be made in triplicate to Europol,the Surete,the FBI and to other interested Parties,as the scale of the fraud has now reached the level of Subversion. The Pound will come under stress as will the Pension Funds,Hedge Funds and the Credit default Funds and thats the good News,Sovereign Wealth Funds should be withdrawn is the logical procedure.
The UK does not need to impose constitutional change or directly interfere with Island tax rates and fiscal autonomy by way of the intended review. The ability to do this by auto-suggestion and proxy is already built into the system.
Allegedly, the planned UK review of smaller British jurisdictions, aka financial centres according to the UK Chancellor, and for which it is ultimately responsible as the sovereign metropolitan power, will examine the robustness or otherwise of their financial stability so as to be sufficiently self-funding in the face of economic global turmoil. Effectively, the UK is exercising its responsibility to ensure “good government.”
Curiously, the UK does not define what form that economic turmoil might take or if it will be a deliberate political creation. A continuance or worsening of current conditions? New and unified global political developments regarding delinquent taxes instigated by co-operative cash hungry governments?
Mayhap that London foresees future turmoil evolving consequent upon pressure applied to reduce or terminate the tax sensitive role of UK Sovereign “financial centres” so as to create a state of tame dependence on the existing, or some “to be nominated,” metropolitan power(s)? A closer fiscal relationship with the EU under UK auspices as an existing member of the British Islands group is a possibility.
Seeds of turmoil have been sown in that so many banks globally are propped up or nationalised such that the taxpayer is effectively the guarantor of whatever credit exists, even to the extent of securing the very existence of offshore banks and the like intent, however legally, in facilitating tax “avoision”.
The UK Chancellor’s pre-Budget report referred to the need to review the ‘long-term opportunities and challenges for the UK’s Crown dependencies and overseas territories as financial centres’. Their life blood in other words. It specifically includes fiscal arrangements as a target.
London must avoid interfering with existing autonomy so as to avoid a premature exodus of funds and institutions. If it be the political intent, then the UK will carefully ensure that the Islands are gradually forced to rely almost solely upon internal tax and spend powers, thus creating the circumstances necessary to bring Island parliaments to heel through that democratic self-determination which UK Sovereign Risk itself serves to guarantee.
Direct interference would implicate the UK in assuming the burden of financing the Islands as offshore counties by compensating for what it had effectively destroyed when EU involvement may be the long-term plan.
Being 80% dependent for government funding on the goodwill of the UK via a Customs and Excise Agreement, we can be certain that the Isle of Man will not take much pushing down whichever road the UK may finally, “suggest”!
Barrie Stevens. 4, Leigh Terrace, Douglas. Isle of Man.