This Is Guernsey

By Simon Tostevin

CONFIDENCE in Guernsey’s position as a cooperative jurisdiction is building ahead of tomorrow’s G20 summit.

With the island and many other jurisdictions likely to come under the microscope of world leaders for their positions as so-called tax havens and offshore centres, a feeling has grown locally that Guernsey should have done enough to appease those who want it placed on a blacklist of uncooperative places, especially with the signing of three more tax information exchange agreements with France, Ireland and Germany last week.

And this week Chief Minister Lyndon Trott said Guernsey should expect a positive outcome from the London get-together of powerful figures including Prime Minister Gordon Brown and US president Barack Obama. He said the island was transparent, cooperative and well regulated and with 13 TIEAs there could be no questioning of its commitment to international standards.

Guernsey International Business Association committee member Mike de Haaff agreed and said the sudden rush of TIEA signings should not be looked on as a panic move. ‘Entering into these three agreements with France, Ireland and Germany will be positive for Guernsey, formally acknowledging its already good name internationally as a cooperative jurisdiction.

‘As already stated by the chief minister, the signing of these TIEAs has been under consideration for some considerable time and is not a last-minute event, despite the fact that they come in the run-up to the G20 summit.

‘By concluding these agreements, Guernsey will have formally entered into 13 TIEAs that conform to the Organisation for Economic Cooperation and Development’s standard agreement.’

Tax expert Graham Parrott, a partner at Ernst & Young, also felt the process the island had gone through lately should not be looked on as rushed because it had been going down this route for a while.

He said it should not matter how many TIEAs the island had signed if the issue looked at by G20 members was transparency and cooperation. If it was, he said, Guernsey would be fine.

However, if the other issue was scoring political points, then the island should worry.

Mr Parrott said Mr Brown’s statement in Strasbourg just last week referring to this as being the beginning of the end for tax havens and offshore centres, with no need felt to distinguish between the two, was a big concern.

‘If this is actually what matters more, the week really will end in tears rather than TIEAs.

‘And I don’t think our position is helped by what has been a rush to respectability in recent weeks by what have previously been perceived by many as “bad havens”, seeking to come late to the table of cooperation and regulation. This may be too little too late for some of them, but it does also make it more difficult to distinguish good offshore centres from bad havens.

‘The question is then asked, well what can “they” do anyway? To date this has perhaps been a valid challenge, with a number of territories seemingly unconcerned by the threat of blacklisting by the OECD some years ago, which was avoided by entering into TIEAs. But these countries clearly think now is different and we would be unwise to do otherwise.

‘This is not the time for rattling a toy sabre.’

Mr Parrott said that the outcome was unlikely to be black or white. ‘It seems inevitable that there will be some changes emerging during or as a consequence of the summit this week that will present a challenge to certain aspects of the business being carried on in the island.

‘So, signing the latest TIEAs does seem to have been the right thing to do. It certainly won’t hurt our case this week and it seems that doing business without them in the super-regulated world into which we are moving will become increasingly difficult, if not impossible.’

Article posted on 1st April, 2009 - 1.30pm