Repeatedly facing an uphill struggle on the level playing field of international finance, GuernseyFinance chief executive Peter Niven has trouble remembering just who our friends are supposed to be WHAT is a tax haven?
Is it Dublin, with its preferential rates of corporate tax to attract financial services business?
Is it the UK, where residents who claim another domicile can avoid tax on their income earned outside the UK - a fact that draws more and more of them into London year after year?
Or is it the myriad other large nations that have preferential rates of tax for different types of business undertaken by non-residents?
No, of course not. How could it be them?
No, it’s Guernsey and other small jurisdictions that are essentially easy pickings for the world’s larger nations and where we essentially rely on others to plead our case in international forums.
How unfair is that?
Well, it’s something I suppose that we have all learned to live with over the years, but I have to say that it gets no less galling when the accusations continue to fly.
The chief minister’s recent, excellent, spirited defence of Guernsey against the mighty US is a particular case in point.
We have the unedifying prospect of the US Senate branding us a so-called ‘tax haven’ and potentially including us on a public list of places where ‘it would be better not to do business’ (or repercussions might follow) followed closely by two US bills that are progressing through its Senate that basically seek to do the same.
And all this from a so-called friendly nation with whom we have already signed a Tax Information Exchange Agreement (aptly named a Tiea - pronounced ‘tear’), which allows for the passing of information to its tax authority, on the basis that a number of agreed stipulations are met.
And it’s not just our so-called ‘friends’. There is always a long list of others that are queuing up to brand us as ‘uncooperative’ or some such pejorative term where quite the opposite is true.
In fact therein lies the dilemma.
As a responsible member of the international community, we are constantly agreeing to scrutiny from the world’s policemen - the IMF, the OECD and many others - and at the same time we have agreed to participate in and are actively engaged in initiatives such as the EU Savings Tax Directive and the OECD’s initiative to agree information sharing for tax purposes (again those dreaded Tieas).
But on the other hand our industry is quite rightly urging caution and trying to ensure that we receive something tangible and to our benefit in return for our efforts. The ease of squaring that circle is an interesting one.
We are chased incessantly and the name-calling continues despite the fact that when any of these world policemen do come and take a good, thorough look at us and what we are doing, we always come out of the process with flying colours and despite the fact that we do agree to take part in these EU or international initiatives to show our credentials as a responsible member of the international finance community.
What more, you might ask, do we have to do?
Who knows?
But what does seem to be clear is that as a small nation we are easy pickings and the abuses of the system that we in no way tolerate here (bearer shares, no record of beneficial ownership to mention just two) will continue to be available in a whole array of the ‘big boys’ where the proverbial ‘blind eye’ mentality continues to work to their advantage.
Level playing field be damned.
Fortunately we have been able to withstand these ’slings and arrows of outrageous fortune’ for many years and we will, I know, continue to do so proactively.
It doesn’t get any less galling, though, that despite all we do and the accolades we get, and despite what others don’t do, we still have to spend time pleading our case to so-called friends in the international community.
Let’s make sure it all doesn’t end in ‘tears’.
Article posted on 1st June, 2007 - 12.00am
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