US tax agreement ‘good if Obama’s crackdown happens’

Thursday 12th February 2009, 2:30PM GMT.

GUERNSEY’S tax agreement with the USA should help the island if President Barack Obama goes through with a pledged crackdown on so-called tax havens, according to States external affairs adviser Jonathan Hooley (pictured).

The island signed a Tax Information Exchange Agreement with the US in September 2002 and so far it remains the only TIEA the island has signed that has come into force, having done so at the beginning of 2006.

Guernsey has since signed nine others but all are awaiting full ratification to bring them into effect.

However, since the US agreement, hardly any exchange requests have been made.

‘There’s been very few. And a few really does mean a few,’ said Mr Hooley, who said exact figures could not be made available.

And that raises the question of how many requests will be made by the UK following the signing of a TIEA with the UK earlier this year.

Some tax analysts, including in the past week Andrew Watt of Alvarez & Marsal Taxand, have speculated that the island could be receiving requests on a weekly, if not daily, basis.

But Mr Hooley questions whether that would be the case if the US example were followed.

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View more: Tax news, Tax Havens news, Usa news.

1
Frank

February 12, 2009 at 3:18 pm

Surely it will only “help” the USA to obtain information and make people less likely to invest through the island if such information can be freely exchanged. Most US clients who bank in Guernsey probably do so for only one reason, and if that reason ceases to exist they will go elsewhere. Or am I being naive??

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2
Bobster

February 13, 2009 at 2:11 pm

Every cloud has a silver lining…

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3
Stephen John

February 13, 2009 at 2:58 pm

There seems to be a claim from those in finance in Guernsey, that through various exchange agreements and arrangements , the island should not be regarded as a tax haven .

Such an approach is naive or blissfully ignorant of the realities of life.

The approach seems to be built on Guernsey’s interpretation of requirements and on the assumption that it is Guernsey that decides whether or not it would be regarded by the likes of the US, as being a tax haven.

The reality is that it is the US who will decide whether or not they regard Guernsey as a tax haven.

The US requiement is one of Guernsey proving to the US, through the working of arrangements, not the agreements themselves; that Guernsey is not a tax haven. The presumption is you are a tax haven, until proved otherwise.

The examples of what the US regards as activities of a tax haven that are contained in the speeches that introduced the Stop the Tax Haven legislation, show just how precarious the position remains in Guernsey trying to convince the US of its compliance with their requirements.

Although Guernsey has little business with the US, the US has a might roar and a hard bite.

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