Tax haven?

Tuesday 31st March 2009, 3:11PM BST.

LEAVING aside the rhetoric and the political chest-beating about tax havens, Thursday’s G20 summit could turn out to be a watershed moment for Guernsey. The reason is the chief minister’s quiet confidence that the island will not find itself on a blacklist of uncooperative jurisdictions.

As he put it, ‘I… believe the advice received, which suggests such a [positive] outcome is likely to provide a very positive shock to our economy for a variety of reasons.’

For Guernsey, being on a ‘whitelist’ of transparent, cooperative and well-regulated low-tax jurisdictions would be a significant achievement, especially since the concern at the moment is that it could end up in some sort of half-way house – neither black nor white.

The benefits of becoming, in effect, an approved offshore location are potentially enormous. Corporations and individuals who found themselves after the G20 meeting operating in declared tax havens would then have a very positive incentive to use Guernsey instead.

The flow of funds and assets could be significant. Whether that happens, of course, remains to be seen. The chief minister, however, must be confident in his sources to hint at success, especially given the bellicose statements from highly taxed countries such as Britain.

And while war has been declared on havens, it is not entirely clear what the target is. This newspaper asked No. 10 and the Ministry of Justice on Friday for a definition of ‘tax haven’ and why the Prime Minister has linked Guernsey with them.

In each case, we were told that the definition was a matter for HM Treasury – and we are still waiting for a response.

Interestingly, The Economist ran an article last week headed Haven Hypocrisy, which highlighted the ease with which American states Delaware, Nevada and Wyoming could be used as far more opaque and secret shelters than the Crown Dependencies ever could.

That and, as just one example, the operation of the City of London regarding the so-called non doms indicate that all countries, whether they are high- or low-tax, need to have some competitive areas.

The difficulty of establishing a one-size-fits-all definition of a tax haven is likely to be the island’s greatest asset in being declared an acceptable offshore location.

View more: Chief Minister news.

1
Stephen John

March 31, 2009 at 6:03 pm

If as you say “The difficulty of establishing a one-size-fits-all definition of a tax haven is likely to be the island’s greatest asset in being declared an acceptable offshore location” is correct, then surely it would be better for Guernsey if the diverse spokespersons for finance claiming Guernsey wasn’t a tax haven kept their traps securely shut.

Perhaps they should keep their silence and hope that the signing of tax exchange agreements would keep attention off the island.

What the “we aren’t a tax haven” merchants are doing is ensuring that Guernsey is kept well and truly in the sights of those who see Guernsey as a tax haven.

The protestations of innocence merely serves to encourage those who are anti tax havens to concentrate on tax haven techniques and instruments, such as setting up offshore companies to cream off profits, trusts, patents etc etc that the OECD seem to wish to sweep under the table.

Hopefully, the lesson will be learnt that silence in this instance might well be golden.

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2
Stephen John

April 1, 2009 at 12:11 pm

If as you say “The difficulty of establishing a one-size-fits-all definition of a tax haven is likely to be the island’s greatest asset in being declared an acceptable offshore location” is correct, then surely it would be better for Guernsey if the diverse spokespersons for finance claiming Guernsey wasn’t a tax haven kept their traps securely shut.
Perhaps they should keep their silence and hope that the signing of tax exchange agreements would keep attention off the island.
What the “we aren’t a tax haven” merchants are doing is ensuring that Guernsey is kept well and truly in the sights of those who see Guernsey as a tax haven.
The protestations of innocence merely serves to encourage those who are anti tax havens to concentrate on tax haven techniques and instruments, such as setting up offshore companies to cream off profits, trusts, patents etc etc that the OECD seem to wish to sweep under the table.
Hopefully, the lesson will be learnt that silence in this instance might well be golden.

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3
Arnald

April 1, 2009 at 1:10 pm

Yes Stephen John
And the techniques are there. Whereas it is true that the likes of the UK and the US need to impose some self regulation, secrecy jurisdictions are quite happy to point OUR fingers to them and say ‘look how dirty they are, Miss, they started it.’.

Guernsey and Jersey aid and abet the distortions of capital movement purely to enhance the wealth of the rich at the detriment of the poor. Of course the lobbyists will say ‘that’s our business, it’s kosher, back off’ but who speaks up for the developing nations who’s resources are being turned into mega-profits for corrupt governments and bribe paying multinats, using the secrecy laws to funnel monsy out of the areas that need most investment, into the myriad structures, never to be seen again?

Isn’t it right that people are investigating the wealth disparities that cause war, disease, refugees and death and finding that some of the roads lead, in a very roundabout way, to our doors?

Even if it means losing 10 or 20 percent of our business, wouldn’t it make it a more worthwhile industry to be involved with?

The fact that so many suits are jumping up and down saying there is nothing to see here implies that there are things to see here. Why are we on a ‘list’ in the first place?

You only have to google ‘avoid paying tax’ or somesuch, and there’ll be links to books that will cite Guernsey as a ‘place to do business to avoid paying tax’.

Is that the kind of list we want to be on?

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