UK is willing to tackle CI ‘tax havens’
Monday 9th March 2009, 2:30PM GMT.
THE UK has issued its clearest warning yet that it is prepared to take action against ‘tax havens’ such as the Channel Islands.
Prime minister Gordon Brown’s own representative acknowledged that this policy would not be ‘zero cost’ for Britain, with its Crown Dependencies such as Jersey, Guernsey and the Isle of Man.
Lord Malloch-Brown, envoy to the Group of 20 nations, was asked by Foreign Press Association journalists whether the UK was actually ready to tackle tax havens and draw up a blacklist of countries that would include Jersey, Guernsey and Switzerland.
‘It would be utter hypocrisy if we weren’t,’ he replied. ‘For us to call for the fight against tax havens is not a zero-cost thing and I think that it’s a measure of our seriousness that we should do so.
‘It’s not just those places, but there are other Caribbean locations etc. where economies are very dependent on this but, you know, I think this is a measure of the seriousness that this is a time where leaders have to be willing to, if you like, go against their own immediate interests.’
The global economic problems did not start in tax havens, he said, but with sub-prime mortgages in the US and went on into very big banks in places like New York and London. ‘But the problem is if you introduce tougher regulation in these principal markets but don’t put the same regulation in place globally, then what you are going to do is squeeze the financial sector to relocate itself away from places like New York or London or Frankfurt or Hong Kong, or anywhere, to under-regulated places,’ said Lord Malloch-Brown.
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What a loser; sort out the tax havens eh? my word like most politicians they don’t know if they’re on their h his head or you know what.
So to keep the people lingering, nay almost one could say ‘in limbo’ on the dire words of others he’ll take action. no guts comes to mind.
Funny isn’t it there was another with the same name who many years ago upset the old apple cart, my word they don’t half fancy themselves.
however bet nothing comes of it, just letting off steam, those fat cats will stop his little game. It’ll be a case of him or them.
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In the European zone, I would like to see the Dublin Financial Centre closed down. It was responsible for a disproportionate amount of the structured finance/securitization structures which encouraged the collapse in lending standards and reckless credit advances. Actually a lot of the big Channel Island legal and admin firms bought or set up operations over there so they could get some of that quality business!
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Anyone who says we are not a “Tax Haven” is living in cloud cuckoo land. In my opinion the foundation of the Islands Finance Sector was built on monies being deposited offshore for tax evasion purposes and it is only in relative recent years that the need to be seen as squeaky clean has come about. All Banks from that time on had to comply with the “Know your Customer” principles, however you can bet your life that the monies already here were not returned as a result. These monies form the bedrock of the industry.
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Does a man own the fruit of his own labor or not? Tax havens are cast as evil? Yet when one man thinks he is entitled to the efforts of another, this is considered socially responsible? I hope GSY tells the UK they no longer desire their “protection”. And becomes totally independent. And I hope that Gsy will honor privacy and freedom above the goals of politicians.
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Oh come on Britsh Gov. do stop high earners avoiding paying their due tax.
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Cracking photo of the harbour though :)
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For what it’s worth, Brussels considers London and Dublin to be offshore tax havens. One of the biggest tax-havens in the world financially is Delaware. Type ‘delaware tax haven’ into a search engine.
“Starting in the early 1980s the United States was made into the largest tax and regulatory haven in the world for foreign nationals not resident in the US… Delaware is home to half of the New York and American Stock Exchange listed companies because of its business friendly environment, including its well-developed, unique business related judicial system.
Delaware has among the lowest costs and least disclosure requirements of any of the 50 states. Companies can be registered within 48 hours and shelf companies are available.”
Be interesting to see if the US shut down their own tax havens? I’m not in favour of any tax havens, but any attempt to shut them down should be non-partisan and seen to be fair.
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is it not about time that we become separate from the UK, We no longer need the protection of the crown, put in place an defence force in the island and we no longer need protection from are enemies ‘who ever they are’.
We don’t need Gordon Brown
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Brown has wrecked the UK economy now he intends to wreck ours; he probably wants to force us into the EU aswell.
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Oh! Just in case you think I approve of these ‘havens’ then you are wrong.
I was trying to point out what wimps most politicians are.
They are not for you or me, oh no. they’re for themselves, ego boosting, the great I AM, affair.
True there must be politicians; however if they do not comply with their manifesto, then OUT,
Firms can sack people who do not come up to scratch, The people of Guernsey (Guernsey People) are the employers, it’s about time these so-called politicians went back to school and learnt their place in society.
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Perhaps it’s time the 20+ listed hotspots got together to discuss the situation
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Who do these politicians think they are? Do they think that they can ride roughshod over places with their own governments? Goes to show that all the sucking up done by Guernsey politicians to the UK counts for zero when the UK politicians need someone to blame. Blantant blame shifting – utter disgrace. Guernsey needs to stand up for itself. The posturing by the international community is purely self interest. What about our self interest. We are entitled to that. UK doesnt’ give a monkeys about us. About time we stopped doing what we are told by that bunch of idiots would can’t run thier own country or control thier own spending. The States should tell ‘em where to get off.
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I’d have thought we only had something to worry about if we were doing something wrong?
I mean, say all these misguided, naive fools like President Obama, the US Government, the UK Government, Europe and the Pope get their way and introduce legislation that ends the tax haven, does this necessarily need to be the end of Guernsey? London and New York do pretty well as international financial centres without preferential taxation, why can’t Guernsey? Surely we’ve imported enough expertise over the years to operate as a financial centre rather than an offshore financial centre? And is there any other government that is so completely in the banks pocket?
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The hunt for tax revenues is equal to the black hole dug by Brown in his failure to regulate the credit (debt) boom. When that debt blew up he plugged it with £83bn in bank bailout funds and guaranteed a further £530bn toxic assets with taxpayers lives. That’s one colossal costly mistake by any account. The biggest bailout per capita in the world.
Into this black hole created by Browns neglect of oversight while he raked in the tax revenues of the boom and spent every penny in the cupboard Brown now needs to find any means possible to fund the shortfall.
And Brown is on record, like the States of Guernsey, of not cutting public expenditure. His “strong economy.. creating 1m new jobs” turned out to be 935,000 public pen pushers.
Tax havens are an easy target compared to cutting your own empire down to size
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Student Bob – we aren’t doing anything wrong! Far from it in fact.
It seems to me the only definition Brown, Obama et al seem to have for a “Tax Haven” is that its an island.
All we need to do is fill in the gap between us and France and…problem solved!
If we are shut down then it goes without saying that Delaware, Dublin, Luxembourg, Monaco, The Vatican, Andorra, the entire carribean, Cyprus, The City of London etc etc must also be done for. Hmmmm
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Hmmm, and I was hoping to get some work in the Caribbean over the summer….
Trouble is, is that many of these other jurisdictions aren’t so completely reliant on finance. The Caribbean, Monaco, Jersey, Cyprus etc, are all lovely places for a holiday! Well, maybe not Jersey.
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Ha Ha a independent Guernsey… you sold out to the offshore banking world long ago.
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Don’t blame Gordon Brown for the present financial crisis as it originates in the USA.
Haven’t you heard of globalisation, well the Yanks have globalised the problems caused by their fraudulent financial practices and greed.
Gordon Brown is just like many world leaders facing problems originating in the US of A.
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how very true Pete!
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The problem as I see it is we’ve got 700 billion sitting in the islands… Obama and Brown want this money out of here and back in to circulation.. To help get the USA and British economy going again..
The question is. Would Mr Obama and Mr Brown sacrifice the economies of Guernsey/Jersey for the greater good of the world economy ?.
I don’t think they would even think twice about it ?.
They want our hidy hole closed and the money back in circurlation
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There are other ways and means of tax planning investors money – the US and UK must realise that the legal and tax specialist brainboxes are already way ahead of them in searching for valid ways to protect wealth.
The assets that might end up being shifted out of Guernsey will just end up in another jurisdiction protected from full taxation.
Chances are that the money sitting in Guernsey banks will go nowhere as exotic restructuring exercises will just take place to enable this.
Good luck to those who want to tackle our ‘tax havens’. Those who are being paid top dollar to protect wealth are the ones more likely to win this battle.
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Alright; let them do their worst: then let us hold our heads high and say,
Get thee gone UK and USA, you squeezed us for over a thousand years, we don’t want you any
more. You have defiled our good name.
As for help: now that’s a good laugh– where ever have England helped us-
Didn’t they as good as say we removed all military from the Islands,
you can take over now. That to the German high command.
Granted there wasn’t much they could do to stop them, but at least they could have used better words.
Not surprising really, keep it in the family,
England always hated the French, and we have closer ties with them that up North.
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What do they expect? do they expect all nations on Earth to be completely under the same regulations? have the same tax rate? etc etc
There are always going to be differences which make it better for some companies to operate in some countries. Difference is a fact of life. There is always going to be sunnier or snowier weather, lower tax rates or better community services, better skilled population or better natural resources in certain areas of the world no matter where you look – the grass will always be greener in some parts on the other side. The oldest trick in the book is for the guilty to try to find a scapegoat. The CIs or any other country with lower tax rates did not make this mess and pointing the finger wont help confidence anywhere. Many companies are relying on the stability of the channel islands to stay afloat during this turbulent time. This is not helping them.
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Wil
Offshore centres did provide the structures which helped contribute to the mess. Think collapse in lending standards from the “originate and distribute” model. So we played our part, a faustian pact in exchange for nice legal and admin fees. Ok a link in a big chain but a significant link nevertheless. Banks and quasi-banks use places like us to get round the capital adequacy rules while taking commissions for pushing questionable loans.
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Wil
It’s not to do with the tax rate, it’s to do with the secrecy practices. If there was no secrecy then the appropriate tax could be retrieved. People have no problem with wanting to keep your funds elsewhere, in low tax jurisdictions, they just want to know how it got there and if they paid their due before it went offshore.
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>>where ever have England helped us-<<
Historically the Guernseyperson has shown far more loyalty to the Crown than random parties have ever shown to the islands. Look at the war memorials around the place; not a bad sacrifice for an island that doesn’t have to fight another countries wars.
Declaration of UDI, neutrality and a free port is worth considering
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To Jackie I say this;
Those memories you talk so glibly about was to honour the men who; not dying for England, but for the vile way innocents were being handled. They died in France, Italy Africa, all over the world, because they believed in people’s rights to live their lives.
NOW back to the help from England; If you had lived in the Channel Islands in those dreadful years, you would ask the same question.
when the war DID end; they refused to allow us to ask for compensation from the German Nation (looking after their own) We had traitors, there is no other word for it; they took them to England and released them, no further action.
They lent us a few million £s, after a very short while demanded payment in full.l they continually asked for money for defence purposes. (what a laugh) what defences?
They actually commandeered the Old fort and built it at our expense: then had the utter and audacious nerve to sell it back to us.
They sold us Herm and other places. They do not allow our language to be taught in our schools.
I see places like Elizabeth College needs Money. They the English want it to be known that it is an English College, built on our land. so let the English college ask England for financing.
There are so many things that are far wrong in our little Island that it beggars belief.
The day they go for good: will be a long long party of relief.
Ask any (if there still some on the Island what happened to the money donated by Guernsey people in England during the war to send food, but refused by the then PM.
No Jackie, swot up a little, and learn some of the things that we are sore about.
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Fast Robert
I often agree with you, both on this site and Vue des Isles, but you have to be realistic. Morality of jurisdictions is one thing, morality of individuals is another altogether. It’s the tax laws of “onshore” jurisdictions such as the USA and the UK that permit legal avoidance of some taxes (and the word legal ought to be stressed) and if their own citizens choose to “avoid” certain taxes then so be it. Look on the internet at how easy it is to form De la Ware and UK companies then tell me how Guernsey is facilitating wholesale tax evasion?
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The fact that has to be faced is that globalisation has occured in manufacturing which means the jobs got to the countries that pay the lowest wages.
This means a lower tax take from the pauperised workers in the so called developed world so now they’ll look into globalising the financial system.
This will mean no more low tax area’s where those who have money can hide it away from the tax collectors of their native land.
The Americans need billions upon billions a year just to keep their military going and they’ll not think twice about ruining other countries to get it.
The problen will not come from the north but from the west across the Atlantic.
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Eric / Jackie – this is a debate about offshore tax, not the war.
Guernsey enjoys a competitive & comparative advantage from EU / European / whatever you want to term them, countries, as the rates are lower, therefore this brings about a couple of problems:
1 – tax evasion
2 – tax avoidance
3 – money laundering
4 – proceeds of crime activity
People will do these things to maximise their returns – they are illegal, however a lot of money that circulates in the world is from illicit sources. Just ask Madoff.
You can’t get away from the fact that people intentionally place money in Gsy instead of the UK as it can be hidden, with a better return.
(As for the war, while you bring it up, England could have bombed Gsy however what would have been the point of that other than to kill a lot of civilians. Eric – more people were adversely affected in England and France than in Guernsey and it riles me you sound so bloody victimised by it. Millions died for freedom – the deaths that occured on Gsy from direct German or Allied actions were HOW MANY???????).
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Phil
I completely agree, the problem is not just in the Channel Islands, but you would think that from the spin by the industry that we are somehow better than the other areas.
The Cayman Islands have has a TIEA with the US for ages. How many requests do they budget for? 120 a year. This from reputedly the ‘worst’ tax haven there is, where one law office alone holds 18,000 companies.
That’s how useful to the authorities these agreements are.
London and Delaware are the elephants in the room, but we play by their rules also, so by targeting them we must also target ourselves. The changes must be mulitlateral, and until those ‘dark forces’ address this, I thiink Guernsey will not suffer unduly.
Secrecy attracts evasion, of that there can be no doubt.
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FR – the mammoth in the room is Switzerland.
An enourmous amount of the worlds wealth is there – I’d like to see Obama and Brown take on the Swiss!
What gets missed in the rhetoric that keeps being spouted is that places like Guernsey facilitate the free movement of money around the global economy – thus creating further wealth.
I’ve used this analogy before – but here goes…US State pension fund wants to invest private equity money into Eastern Europe, PE firm sets up a pooled investment fund via a Guernsey Limited Partnership. The fund manager is in Paris, the investor is in the US, the pooled fund is administered in Guernsey – why?
Simple really – Guernsey provides both parties with the tools and skills to perform perfectly legitimate investments that benefit the US, France, and people on the ground in, say, Romania.
Having said the above – nothing is perfect and greater regulation is bound to happen.
I’d love to know if Obama or Brown have ever done a “cash job” with their plumbers and therefore been complicit in the evasion of tax.
Lets launch and enquiry.
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Gilthead
Indeed, nothing is perfect, like the way PE goes about its business.
I would argue that secrecy jurisdictions impede the flow of global capital by removing vast chunks of it from the market and so disabling the very principles of capitalism.
We don’t need to lose our tax autonomy, we just need to be honest. Surely that’s not too much to ask, if it is, then again, we admit that there are things to hide that we would rather not lose. That goes for all of the jurisdictions.
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FR – agree with you!
Even if everything becomes transparent Guernsey will still have a big part to play in the global financial economy simply because we have the tools and skills to do it.
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Darren;
so easy to talk as you do, about it not being about war;
The whole darned effort revolves around the war; no one wanted to help us; But then the French did.
England only scorned us,
Yet if you think back it was England that declared war.
You may think and say what you like; I know different; as many Islanders do.
Bully boys is how I would describe them; They came bearing gifts. I say and said “Beware of those who come bearing gifts”
They came, and the gifts cane, True; But our Island was ruined, prices soared, houses went berserk over prices. The harm done to our Island far out way the German occupation as regards our way of life, the friendliness, the helping of others.
True we were old-fashioned and it was lovely.
Today look around. what do you see. Pillars and poles, for telephones. A Monstrosity called shopping centre. People who knew that area before would have done something more charming.
Our harbour was a delightful place, where one could take a walk and enjoy the views, now we see an old friend the North beach gone forever, so the walk cannot continue unless you wish to see the haze of smoke from the motor vehicles, or the noise,
I feel the only natural place left in St Peter’s Port is Candie Gardens. How long will it be so.
They built a place on Beau-Se-Jour, for us. or as they proudly advertised,
” Place to relax with your children, a place for sports for all and blah blah
The price to enjoy OUR own sports centre is nothing short of Piracy,
You have to be known to join the various “Things” they advertise, and the attitude if someone of the official side is nothing less than utter snobbery.
And you ask why I demonise the ruling bodies.
Look around the world and see what happened to the famous *ÊMPIRE’ sickening is what I see, and read about, use of the big stick, was the method. and you talk about war to end those who were hard done by. Shameful is how I see it.
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Its about time we told the U.K to get stuffed. Enough is enough, labour has made an absolute mess of the UK. Do we really want them telling us what to do over here. Its all threats anyway – what legal right do they have over this island?
We owe them nothing at all.
Lets hope our Guernsey politicians stand by their own people.
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Gilthead the US are currently at odd’s with the Swiss on this issue. What happens in that dispute will colour the US attitude to everyone else.
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Darren (and others)
How many times have I got to say it. We in Guernsey do not knowingly have anything to do with tax evasion, money laundering or handling the proceeds of crime.
The assumption that we are involved in these illegal activities is at best a myth and at worst a lie put about by people with an ethical or political agenda which seeks to undermine offshore finance (for whatever reasons). If we want to avoid mass unemployment in this Island we need to start putting the facts straight now.
As for tax avoidance – the term is entirely misleading. International trusts and companies etc. who are legally resident in Guernsey are not avoiding paying tax in the UK or anywhere else for that matter. They are Guernsey resident entities who are subject to Guernsey tax legislation. They would only be avoiding onshore taxes if they were resident in onshore jurisdictions – they are not.
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CD
The companies may be resident, but they are usually subsidiaries set up for precisely the reason to avoid tax. Most of them won’t even have staff here. Not misleading at all, the big banks are coming out (at last) and if they’ve been involved I would wager that many other corps are. Maybe Guernsey has avoided these avoiders, but let’s be honest, we’re all up to it.
As for ‘not knowing’ about a criminal element – that’s not the same as it not existing. The very fact that we ‘don’t know’ would imply that we also ‘don’t know’ that it isn’t happening. The reason we ‘don’t know’ is because of the structures of the facilities we offer.
It would therefore seem reasonable for an indepth investigation into these products with a view to eliminating the ‘not knowing’ aspect of our primary industry. That would shut people up, don’t you think?
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Fast Robert
Sorry but you are wrong. Guernsey’s fiduciary industry has only a fraction of corporate-related business of the type to which you refer (i.e. using Guernsey subsidiaries). The fiduciary industry here is dominated by private client structures, not corporate-owned structures.
Your comment “..buts let’s be honest, we’re all up to it” is completely and utterly wrong. Trust me – we are not !
Your analysis of “not knowing” is laughable. Nobody operates to those standards any more.
Why on earth do you think that so much of Guernsey’s finance industry is operating in the dark ages ? We are not.
Such comments from you suggest that you don’t know what you are talking about and are merely spouting off because it suits your personal anti-finance agenda.
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CD you said that the term ‘tax avoidance’ is misleading.
It would help if you could point out to the obviously ignorant (me) as to why these international entities that you mention have a resident status in our island. And if there is a benefit greater that the level of tax that they would otherwise pay then why are we providing such a beneficial service to these entities at a cost to ourselves?
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David
Are you saying that the Guernsey finance industry is NOT flourishing because of a natural desire to ‘plan’ tax arrangements and mitigate expense? Is it truly because we have the best fund managers?
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Fast Robert
it seems the argument is that because tax planning / tax avoidance schemes are legal in Guernsey everything is all right.
The reality is that schemes conjured up in Guernsey to save tax payments might not be regarded as legal or acceptable by the country where the person or business is domiciled.
The “tax planing credibility gap” is the reason for the anti tax haven campaign.
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Steven.
If you want to form a business or establish a trust, or whatever, you are free to do so anywhere in the world. Why should you be forced to base your business venture in any one country?
You may, if you so choose, do so in a low tax jurisdiction like Guernsey. This does not mean you are stealing – say – the UK’s tax revenue. Your business or trust is not resident in the UK and is therefore not liable to pay UK tax.
Many of the business who set up shop here in Guernsey are truly global in nature, so basing up the parent company here makes a lot of sense – take the following hypothetical example:
Say you are a Frenchman living permanently in England who wants to start up a company that manufactures – say – motorbikes. The manufacturing process will take place in factories in China, South Korea and America. The bikes will be sold all over the world so you will need separate companies in Europe, Asia and America to deal with the marketing and others to handle global deliveries.
Where would you register the parent company?
If you base it in China and pay Chinese taxes does that mean you are doing South Korea out of their tax revenue? Should you base it France because you were born there even though you now live permanently in the UK?
No of course not, you form your company in the jurisdiction that makes the most business sense. Guernsey is a low tax jurisdiction and that is one obvious advantage, but it is also politically stable and has a well established finance industry who can help oversee and centralise the global operation.
Bear in mind also that you will employ thousands of people in your factories and retial outlets all of whom will pay income tax. You will pay their national insurance contributions too and – say you had offices in London – you would pay council tax, income tax on any UK income, VAT and goodness knows what other taxes.
A company has to have a base somehwere – I have yet to see why it is less ethical to do so in Guernsey than any other country.
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CD
The issue is how the income is treated. It is quite feasible for it to be repackaged to a different jurisdiction without it being classed as income, and so the full amount of tax is not levied.
Also by setting up companies to own assets in other jurisdictions, such as property, happens all the time, thus transferring tax implications away from the home jurisdiction. This can’t be right can it?
A building in London using resources, owned by a company in Guernsey with 0 tax, so the company pays no dues on that building?
If everyone did that society would fall apart. That’s the real issue.
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Fast Robert
What I said was that Guernsey’s fiduciary industry is private client-dominated and not corporate client-dominated, and as a result the island does not have a huge number of corporate subsidiaries of major multinationals in the same way as Cayman, Jersey and one or two other jurisdictions. We have also not grabbed a significant share of the SPV market which is where off-balance sheet debt was transferred by many global banks, which again tended to focus on Cayman and Jersey because their leading law firms made this a specialist area of their practices whereas Guernsey’s law firms did not.
Yes, of course Guernsey specialises in running compliant tax mitigation structures, which are perfectly legal. Your social/moral views clearly indicate that in your opinion they shouldn’t be legal, but its a fact that they are indeed legal. You may not be able or willing to draw the distinction between lawful tax mitigation and unlawful tax evasion but many others do, including the legislators, and its their view that counts, not yours.
And yes, we do have some excellent investment managers physically situated in Guernsey, making real investment decisions, unlike in some other offshore jurisdictions.
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I disagree Fast Robert.
Taking your example – a Guernsey company owning a building in London would still have to pay a hefty council tax bill (which is a direct contribution to local services such as rubbish collection etc.)
If the building was let, the Guenrsey company would have to pay full income tax on that rental income (probably at a rate of 40%).
The company would have to pay UK stamp duty on the purchase of the property to say nothing of VAT on the purchase of furniture, services and utilities required to keep the building running.
You may want to employ agents to look after the building or people to mainyain it in which case you would pay their wages, taxes and national insurance contributions.
What you would not have to pay are UK corporation tax because this is not a UK company, capital gains tax (but in the current property market you would probably have made a capital loss rather than a capital gain). Ownership of the property would also fall outside of the UK inheritance tax net.
The reason you do not pay those taxes is because – under UK tax legislation (note NOT Guernsey tax legislation) – a foreign company does not have to pay those taxes.
This goes back to my main point – a Guernsey company is a foreign company as far as the UK is concerned, just as it would be if was – say – an American company.
An American comapny would be treated in exactly the same way as a Guernsey company – it too would NOT have to pay those UK taxes so the net result for the UK tax payer is exactly the same. The only difference is that an American company would be subject to US tax law and may have to pay additional US taxes.
By setting up your company in Guernsey rather than America you are not doing the USA out of it’s tax revenue either. Where you set up your company is entirely a matter of choice. Our low tax regime makes us more attractive than America but that does not mean we are stealing their revenue.
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If a Guernsey company owns a property in London then the property will be subject to local rates. It will not avoid the property taxes in UK.
Tax avoidance is not illegal in any country that I know of. Tax evasion is.
If Guernsey is involved in structures that are properly formed and the rules of a foreign jurisdiction all the tax avaoidance arrangement that it is used for then this is not illegal.
As for money laundering/proceed of crime: the criminals who conduct this business will hide in plain sight. Large sums coming through Guernsey are noticeable. In London, NY, Delhi etc. they are not so noticeable.
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CD
If Guernsey is so squeaky clean why is it still on the US black list?
Can you explain what the US sees wrong with Guernsey?
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Aeschylus
It is not a question of legality but of ethical practice, and whether or not it is ultimately detrimental to a global capitalist system.
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Stephen John
“If Guernsey is so squeaky clean why is it still on the US black list?
Can you explain what the US sees wrong with Guernsey?
Yes I think I can.
The main reason we are on the US blacklist is because the US government (in common with the UK and European governments) are desperate to increase their tax revenues.
They could try to address the real problem and change their own tax legislation so that ALL foreign banks and companies (not just offshore) who do business in the US pay US taxes as if they were US resident companies.
This is clearly impossible – you simply cannot impose your own internal taxes on companies that are not resident in your country. It would also be patently unfair as any company doing business in the US would have to pay taxes in its home jurisdiction as well as in the USA.
So – if the the US cannot legitmately raise tax revenues from foreign banks and companies (including offshore banks and companies) what can they do ?
Well, (if they can gain consensus from other leading nations) they can perpetuate the myth that all offshore finance centres are “tax havens” and hives of criminal activity and put them all on a blacklist.
In this way the US and those other onshore nations can unite to impose sanctions on all offshore centres – regardless of how ‘clean’ they are.
The fact that we in Guernsey operate legally and to very high regulatory standards is of no consequence (they cannot let one or two offshore jurisdictions survive or all the money would simply move there). It is necessary for them to brand Guernsey as a “tax haven” in the same bracket as Cayman or Monaco so that all offshore jurisdictions will be subject to the same embargo.
If they can pull this off all offshore banks and companies around the world will be forced to migrate ‘onshore’.
Hooray I hear you say.
Personally I think the fact that the US and others are having to use dirty tricks to shut us down demonstrates the weakness of their argument. They are taking away the freedom to set up a business anywhere apart from where they want you to and they are trying to get their hands on money to which they are not entitled.
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CD
Thanks for taking the time to explain.
The US certainly does not classify Guernsey with the bad boys of the Tax Haven Class of 2009.
Sadly, the rationale of your explanation justifies the US stance.
Your viewthat “Dirty tricks” used close down tax havens. Whatever next will Uncle Sam be accused of?
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