‘Don’t give up on zero-10 without a reason to do so’
Tuesday 23rd November 2010, 2:30PM GMT.
THE Crown Dependencies should not give up on their zero-10 tax strategies without good reason, according to a founding member of the International Financial Centres Forum.
Ogier chief executive Nick Kershaw told members at this month’s Guernsey Institute of Directors lunch that it was the view of the IFC Forum, a body that promotes international financial centres around the world, that Guernsey, Jersey and the Isle of Man should maintain their corporate tax regimes because ‘tax neutrality was the bedrock of our financial systems’.
‘We don’t think a territorial system is a credible alternative to zero-10,’ said Mr Kershaw (pictured).
‘Once you look under the bonnet you begin to see an awful lot of complexity.’
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Guernsey is going the right way by going for 10% corporation tax,and Jersey and the Isle of Man should do the same.None of the Crown Dependencies can afford to let companies pay zero tax,and doing so only gives the E.U. the excuse they need to interfere with the way we run things.
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Ah Yeah. Don’t rock the boat.
Guernsey
BVI
Cayman
HK
Ireland
Jersey
Doesn’t get more entangled than that.
All you naysayers haven’t got a leg to stand on if the law admin lets you get away with this kind of spread.
David?
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Oh, yeah Mauritius for another lot.
And you’re not part of aggressive tax abuse?
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The offshore governments will do whatever it takes to pacify the financial sector. However, not all the citizens share the wealth. Guernsey is storing up trouble within the island if it does not spread the wealth more evenly. It must find a way of taxing companies or high earners soon otherwise merely trying to cut costs without raising direct taxes will lead to social unrest
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Arnald
Your comments above aren’t really worthy of a response. Hard to see why global offshore law firms shouldn’t have offices in, er, global offshore jurisdictions to serve their global clients. They don’t all want the Channel Islands you know!
What exactly is your point?
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Secrecy jurisdictions, David. If you connect them all up it makes things very, very opaque. That’s what these firms do. Promote opacity.
Not that you understand that.
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David, why do you bother engaging with Arnald’s rubbish?
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Absolutely agree with Arnald that “that’s what these firms do; promote opacity”. Very well put, in my view.
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Not rubbish, Greg. Tax avoidance and evasion using a network of different products and jurisdictions is a marketed reality. What is also completely obvious is that these channels not only facilitate the movement of illicit funds, but they encourage the denigration of other nation states by denying them their tax income.
Why can’t you understand plain English. It’s like people are being wilfully blind. It’s just arrogance.
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Arnald, perhaps in this case arrogance is better than ignorance.
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Arnald
Only if used for such purposes. Being private does not equate to anything untoward. And you know very well that tax avoidance is entirely legitimate.
Look – there are a couple of “new” posters here for you to engage with. Greg is absolutely right – no point in wasting my time with your same old drivel.
It’s not a question of being blind or not understanding. I see perfectly and understand perfectly thank you very much. But I draw totally different conclusions to yours because I see what’s there, while you focus on what might be there.
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Spot on Arnald!
Some people just cant see anything wrong with this dirty game designed for the wealthy by the wealthy who tell governments and their puppets what to do “or else”.
I must add that not everyone with wealth plays the game.
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The old argument – basically what Arnald fails to understand is that what we do in Guernsey is not only legitimate, it is entirely within the tax legislation of the UK and other onshore jurisdictions.
Those onshore jurisdictions could, if they wished, bring in legislation to prohibit certain financial activities from being undertaken in Guernsey – and if they did we would comply as we always do.
No, in my view, there is a case for introducing a modest level of corporation tax to help Guernsey dig itself outof its own black hole – not because outside jurisidctions tell us to.
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No David
It is a case of what HAS to be there. The system is global. There are too many holes for there NOT to be illicit movement, maybe through Guernsey, but who would know?
Greg
You made me chortle. Yeah, right.
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Arnald
It doesn’t HAVE to be there at all. Who says it is? So do you belong to the school of hang them first and then try to find the evidence? I would prefer to base my decisions on hard facts and evidence, and then act accordingly to convict, rather than cluelessly and recklessly shooting from the hip. Just because a firm operates in a jurisdiction which may or may not offer privacy advantages does not, in my book, make them guilty of anything at all. Blimey – I went to Amsterdam once – by your logic that makes me a drug dealer does it?
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CD
Tax avoidance is destructive. No amount of blathering on about legitimacy will change that.
What you fail to accept is that much of the finance industry here makes money at other people’s expense.
The ideology that motivates ‘tax competition’ and the rest is bunkum. Look at the state of the world.
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Tax avoidance is of course, perfectly legal. That’s why it’s not evasion. BUT….tax avoidance is entirely repugnant to a growing number of people. I think it is rotten that those with the most money think it is their god-given right to avoid contributing fairly to the society that made them wealthy.
Oooooh….best put me in the stocks and call me a commie. Is that the way it works here?
On the one hand, people are moaning that there is a growing deficit in Guernsey, and on the other, that it is fine to avoid paying tax by the most complicated (if legal) of means. So isn’t that the problem? People are finding all kinds of creative ways to avoid paying tax due, and as a result, the public coffers are running dry a little too quickly.
Very little we do in Guernsey is within the spirit of tax legislation anywhere. It is all about finding loopholes in interpretation of the letter of the law (and of course, this is why we have so many “Global Offshore Law Firms” here, hey).
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“not give up on their zero-10 tax strategies without good reason”.
A 40million annual deficit not being one of them?
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Arnald writes in a strange way but through the riddles he is of course right. Only the self interested can support tax avoidance, it benefits no one else. It does not ‘trickle down’ the wealth nor spread it around. Guernsey needs to attract other forms of business or seriously pursue tidal power etc.
Whilst it will be a slow process I can see a very different world in a few years time and financial services will not be the powerhouse it has been.
The trouble is many people in financial services think they are extremely clever and that without them the world would stop. Masters of the Universe rubbish. The new UK government recognise the future and are desperately trying to find new ways of creating jobs and wealth for the UK. The party will not carry on for the offshore jurisdictions.
And, I’ll say it again. The wealth gap is as stark in Guernsey as in America. The public sector workers in Jersey are not happy and it will spread. Politicians, lawyers, fund managers, accountants, you have been warned. Pay your way in Guernsey now or go and live in Panama.
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Arnald, do you accept that Guernsey has fiscal independency, and as such can set whatever rates of tax it wants?
If not, then (frankly), you’re wrong. WE ARE INDEPENDENT – GET IT IN YOUR HEAD.
Whether we are leant on by the EU/anyone else, and end up choosing to change our rates of tax is another matter – but it is still our choice to do so.
Any other nation state in the World could set the rates of tax that Guernsey sets, if they so desired, but each case is different – the rates of tax we set wouldn’t work/be suitable in many other (often larger) jurisidictions, so they set what tax rates works for them.
Do you really believe that all nation states around the World should agree to adopt standard rates of taxation across the board? Do you think that would be a) sensible, b) workable?
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Sarniaaa
It’s nothing to do with the setting of tax rates. Of course that should be determined by what the democratic mandate wants to achieve with tax income.
It is everything to do with how the system is set up to unbalance economies, both home and away, and the opacity that system generates.
Guernsey is fairly unimportant in all of this, but you only have to look at the language used by the guy quoted on this report, and all the rest of them, and you will see that the ideology is engrained.
Tax avoidance, in its aggressive forms, is a harmful practice. We specialise in it. Get it in your head.
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Arnald
Unfortunately I can’t read the article because I’m off-island at the moment…
With all respect, in your last post you speak in very general, wishy-washy terms, rather than specifics.
The tax ‘avoidance’ (not ‘evasion’) you speak of is within the rules set by any given jurisdiction. By it’s very nature it is legal – ‘avoidance’, not ‘evasion’.
Would you expect an accountant/other professional to say to their clients – ‘I’m going to organise your affairs so that you pay more tax than is strictly necessary, on the basis that I think the extra portion of tax is morally payable’? No, of course not – you play within the rules set.
If you think the rules of international accounting/legislation of any given country need changing, or that other governments should tighten up their affairs, then go and lobby them. Why do you keep posting on this website? If your argument did in fact pass muster, then your time would be much better spent arguing in other forums – not the Guernsey Press website.
Guernsey is an internationally respected, white-list financial centre. So you cannot argue that tax ‘evasion’ is a problem – far less tax evasion will occur in Guernsey than the vast majority of other jurisdictions, because (for one thing) there is a spotlight on us. The World is watching, and our highly regulated (too regulated, many would argue…) financial services industry stands up to the scrutiny.
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Good lord, Arnald. Where have you been?
It’s so long since I’ve seen you post I was worried you might be ill.
Tax avoidance is endemic from the bottom up (my MIL is a taxi driver and pays less tax in a year than I used to pay in a month when working).
Money all comes back into the system eventually, like water making its way to the sea. What rich people don’t pay in taxes they usually spend on fast cars and holidays.
Personally I think the onshore jurisdictions are worse, because no one examines them and they don’t examine themselves too hard either.
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Sarniaaa
Yes I would expect an advisor to act within the spirit of the law. Using loopholes and inventing vehicles to falsely create accounting that steers tax due away from a jurisdiction, whilst paying fees that distort the picture further, is not a wholesome practice.
These guys think they are so clever clever, but the reality is harm to social cohesion. It is worse than those that falsely claim welfare. Much worse.
I only appear on here because I live here and I dislike the tone of the soulless finance industry spokespeople. Nothing wrong with that.
On the regulation front, the rules are made from within by industry stalwarts. It is always the minimum possible action from a lowest common denominator. Only true external investigation can prepare the best environment that suits society. After all it is society that creates the wealth, not the wealthy that seek to hide possible tax revenue that would progress that society forwards.
It is not a question of paying MORE of anything, just paying the right amount.
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Arnald You’re right again when you say:
“What you fail to accept is that much of the finance industry here makes money at other people’s expense.”
They do – but when something goes horribly wrong as was the case when a GFSC-regulated bank imploded in 2008, taking the savings of many Guensey pensioners with it, the authorities suddenly don’t want to know.
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Sarniaaa
“Arnald, do you accept that Guernsey has fiscal independency, and as such can set whatever rates of tax it wants?”
Dont you mean the rates the finance dictates?.
Mrs Meat
the rich just keep getting a lot richer so i dont think it all trickles back down into the system, and their clever tax manouvers help make sure it stays that way?.
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M Flynn – they will end up getting 90p in the pound when the administration is done and dusted.
I honestly do have a lot of sympathy with the investors (which is what they were), but they have lost 10% on a financial investment – not worthy of some of the shock/horror commentary you hear on this.
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Mrs Meat reckons:
“Money all comes back into the system eventually, like water making its way to the sea. What rich people don’t pay in taxes they usually spend on fast cars and holidays.”
And people think I’m nuts!!!
Do you honestly think that is the case?
Astonishing.
So the corps that bleed the resources from their origination put the investment into the ’system’?
Be a bit more questioning, yeah?
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Sarniaaa
Sorry but they were not investers. this has been chewed over many times.
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I won’t let the sun go down on 0/10. All the people bashing just want to be in our shoes, even if it is for just for one day. The riddle will be explained soon enough.
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Arnald is absolutely right – but Spirit puts it across in a much better manner. Legal but repugnant – spot on.
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“It is not a question of paying MORE of anything, just paying the right amount.”
So what is the right amount, then? is it:
a)An amount paid in accordance with the rules laid down by the democratically elected government of (say) UK; or
b)an unspecified, wishy-washy, “changes to suit the mood of the observer and his political standpoint” amount, only ever to be defined as an amount likely to be somewhere in excess of a) above for wealthy people and big corporations, but probably limited to a) above for everyone else??
When one runs out onto a footie pitch, one knows the rules in advance. Playing to the rules is allowed, encouraged even, and makes you more likely to win. According to Arnald’s logic, knowledge of the rules and their use is somehow unfair to the FA, the opposition and the ref, all of whom were responsible for writing many of the rules in the first place, and are able to change them – even part way through the game to suit themselves. You may not like the game as a spectator, but no-one forces you to watch.
If “onshore” governments want to close loopholes, none of us here are in a position to stop them. Surely it is better for them to amend their legislation, rather than for them to lean on us. They may succeed in getting us to change our laws, but there are many other jurisdictions that they couldn’t change.
Roll on a simplification of the UK tax system.
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Im a expert in this field and believe me there are a lot of wrong doings going on within the finance industry,we need a outside legal force to open up the can of worms of this shocking industry
no wonder we had landsabnki,the gfsc should be made accountable and the individual people who are employed by them and allow such scandals
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@ bcb – What, ‘the rich’ are cartoon baddies? http://www.globalrichlist.com/ shows that living in the West pretty much puts all of us in the top 10% richest of the world.
Lottery winners keep proving that it’s easier to turn a million into nothing than the other way round. I admire people who’ve made money from nothing and kept it. I don’t want to be on the breadline, no ambition, no nous. Poor-but-honest isn’t something most people believe in any more either!
Arnald – I agree that it’s corporations which provide most work for offshore jurisdictions like us. That doesn’t mean all those corporations are dodgy.
I would argue not that Guernsey’s tax regime is ‘harmful’ but that other countries could/should lower their taxes.
Business tax breaks in the UK mean plenty of new rich people crop up there each year. Unlike in France, say, where high tax & bloated welfare state makes it very hard for businesses to thrive. It’s like an all-inclusive holiday where the service & meals are rubbish but you’ve no money left to go elsewhere. Rewards mediocrity & ignores excellence.
Even if the rest of the world dropped their taxes, I reckon we’d still be busy because we have such a concentrated area of expertise in corporate law, trusts, banking, etc. Much of it local-born. People with mouths to feed who’ve taken exams in their free time.
I’m not being nutty or naive about this. Just pragmatic. There’s no utopia where the need for our services won’t exist.
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But Bob. there will always be loopholes. That’s what jurisdicitions like Guernsey spend their time doing.
If the state sets a rate, then that’s what you pay, net of any mandated relief.
Using connivances to shift the rate downwards using other jurisdictions is not ‘right’.
What’s the point in any of it otherwise?
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Sarniaaa.
Landsbanki Guernsey depositors may get back 85-91% over the next couple of years.
but if you listenes to our Chief Minister in the Depositors Compensation Scheme debate, he appears to have new inside knowledge that thay will get over 100%. Unfortunately he hasn’t shared it with the administrators !!!
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PB Falla
You don’t seem like an “expert” to me. You don’t even appear capable of writing proper English!
Its very interesting that several “new names” have appeared on this thread to support Arnald – names which have never previously appeared on any thread which Arnald has dominated. Are these “new” posters even local? I would speculate that they are either Arnald in disguise, or are bloggers from a socialist blog who Arnald has recruited to give him support, seeing as he is usually so heavily outnumbered here. I wonder….
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“But Bob. there will always be loopholes. That’s what jurisdicitions like Guernsey spend their time doing.”
Arnald, yet again you display your ignorance of the issue. You are confusing onshore tax avoidance with the use of offshore centres. Onshore advisers look for loopholes within domestic tax, because their client remain tax resident. You don’t need a loophole to use an offshore jurisdiction, you simply make sure that it is not resident onshore. There is no skulduggery involved. It is located offshore, out of jurisdiction of the onshore authorities, and declared to the onshore authorities. Simples.
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What a surprise – the high/global tax brigade are out in force.
Tax harmonisation will not solve global or local inequalities. Only ending the ponzi scheme of fractional reserve banking and the machinations of the various central banks (including the IMF, BIS etc) and bankers (looking at you GS and JPM too. The system is broken and needs to be reset – basically we need a “debt jubilee”. Until that happens we (Guernsey etc) need to make the most of what we have and not be bullied by the EU (or by the Socialist idealists that populate these boards).
FWIW, it would be great if the EU (etc) would lower their taxes for their citizens. High taxes are bad. Wasteful government spending is even worse (looking at you States of Guernsey)
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TL
Yes, that’s one way of doing it.
Are you serious in not believing that the very services wee offer cannot be used, or are not used for tax avoidance and evasion? Or for laundering? It’s easy to do.
Are you telling me that the weight of the accountancy and legal firms do not study onshore regimes and then advise and create services in order to circumvent those regimes?
That’s why it’s so frustrating talking to people like you. You just cannot see the bigger picture. You refuse to acknowledge the gap between reality and your theoretical view.
Smudger
Daft. Why would I bother “recruiting” anyone? To do what? And why is it surprising that some other people may agree with parts of what I say? It’s more of a conspiracy that listening and agreeing to ‘offshore’ professionals that opine about the way of the world can be deemed reality.
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“Tax harmonisation will not solve global or local inequalities. Only ending the ponzi scheme of fractional reserve banking and the machinations of the various central banks (including the IMF, BIS etc) and bankers (looking at you GS and JPM too.”
Absolutely correct.
It is astonishing how few people, (even those working within the system!), understand how fractional reserve banking works. However, it will fairly soon become apparent to everyone, as the bubble is about to burst. It will be a shock to most people at first but in the long-run it will probably turn out better for the majority. For those of you that don’t already own some “real” assets that can’t easily be created out of thin air, (like money), go and get some!
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Aaldrn
Arnald – what sort of a new moniker is that….has “Arnald” become ashamed of being Arnald?
What is surprising is that these “new” posters have very suddenly appeared. Why now? Where have they been all this time…very suspicious indeed!
And now you change your own moniker. Very strange behaviour. But then again maybe not?
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Typo fail only, Redgums. Laptop touch pads, long sleeves and head-down typing.
Think what you like, Smudger, but people are able to make their own opinions heard without having to recant verbatim finance industry marketing material.
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Arnald
Is that right? Sorry but you aren’t fooling me….several new “Arnald supporters” that we’ve never seen before…. Hmmmm…
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Smudger
I dont know who Arnald is never seen him or spoke to him,so as most of your posts this is yet another wrong assumption
Feel free to join me on the bridge anytime
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P B Falla – shouldn’t that be “under the bridge”? ;-)
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Smudger
Several new supporters? there are many who agree with what he is saying, maybe he speaks in riddles at times:) but there is no doubt there is a lot of truth in what he says.
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Smudger
You are fooling yourself.
I notice you haven’t brought anything new to the table. Are you a double? Yeah.
Reality is as it is. I have no need for games.
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It’s been suggested, you know. Naturally, such nuttiness and mind-altering theories of a conspiratorial model will always promote/suggest that such is surreal. Is It? Perhaps other beings/life have, rather, invented and fabricated our whole existence and history. Agendas….if any? Experimentation? Harvesting? Or simply a reasonably slow galactic system of subliminal imperialism. S*itloads of material to absorb regarding this broad and specific subject matter. Any thoughts….??
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PB Falla
Yes I have some thoughts….the main one being that you are clearly as nutty as Arnald.
Arnald
Not sure that there is much new to bring to the table….you’re just repeating your “same old” garbage.
bcb
Really?
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Sarniaaa
They weren’t “investments” – they were deposits, plain and simple, 100 per cent guaranteed by a Parental Guarantee approved by the GFSC which was deemed to afford even better coverage than a DCS. This is because the Guernsey Government thought its finance centre was too well regulated for a bank ever to fail and therefore didn’t think it needed a DCS. Only problem is the GFSC forgot to check whether the PG had been signed by the Directors! Duh…
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“there is no trickle down effect from the finance industry”
IF it wasn;t for the finance industry very few people in the island would have a job. There aren’t many people working in guernsey who aren’t in someway reliant on the finance industry.
A large number of civil servants and undertakers are about it if you ask me.
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I’m pretty sure that the legal definition/interpretation of a bank deposit is such that the bank is deemed to borrow the money from the person depositing i.e. that person loans money to the bank. In that sense, it is very much an investment, albeit one that practically everyone makes, and I appreciate that most people aren’t aware of this distinction.
Please feel free to shoot me down though. I couldn’t be bothered to Google/look into this. This has always been my understanding though.
In any event, as we are now seeing with sovereign debt, nothing (investment, deposit, whatever you want to call it) can be taken as being 100% safe. As I understand it, the bank in question was paying higher than average interest rates, so in that sense, you’d expect it to be a more risky place to put your money.
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@ Smudger. Are you reading the same things as the rest of us?
Arnald would be more likely to create fictitious posts arguing violently Against himself! In fact…hold on a minute. How do we know that YOU are not in fact Arnald doing just that?
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“If the state sets a rate, then that’s what you pay, net of any mandated relief”
Er…
Every word requires definition in a taxation context.
However, I have no doubt that all my clients follow some defensible legal interpretion, based on legal precedent of that statement…whatever it might mean.
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Bob
I’m sure your clients do.
That’s why laws need changing.
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Mrs Meat
I can’t prove it but I most certainly am not Arnald. My views and Arnald’s views are about as far apart as it is possible to be!
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…’The tax ‘avoidance’ (not ‘evasion’) you speak of is within the rules set by any given jurisdiction. By it’s very nature it is legal – ‘avoidance’, not ‘evasion’.
Oh, yes, absolutely!
I, for one, am totally confident that if we weren’t the ones profiting from that, but instead, one of those places that’s actually LOSING money (because our residents put their investments ‘elsewhere’ for ‘tax benefits’), then those who so avidly and doggedly support the system would still be proactively defending it……..
wouldn’t they…?
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Hold on a minute…I thought I was Arnald!
Go compare!
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Actually, I’m Arnald. And so is my wife.
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No, I’m Arnald!
This is like Spartacus!
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Sarniaaa
I think you will find that most people do know the banks loan out their money.
But they are not investments even if you think they are.
There is a difference which is what you fail to understand.
Look the defination up and you will see.
Hope this helps :)
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Surely it’s a good thing that my clients comply with the law and pay the correct amount of tax?
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Smudger – the concept of Arnald “recruiting” someone with my name is a tad far fetched to say the least. You only have to read his alter ego’s postings on another local forum to realise how abhorrent my name is to him. But on this topic, he and I [and Spirit] agree.
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I wish you lot would desist from the tit for tat posts and just consider the fact that zero 10 may be “good” for the international businesses based here, lets face it if you had the option to pay no tax or 10% or 20% which would you choose.
The problem with zero 10 is No.1 those nice chaps in Brussels don’t like it and they will make life difficult for the island if zero 10 remains, No.2 it is ruining the local economy.
In years past the island was run on a healthy margin, now, there is no money and it is down to the island tax payers to foot the bill for making these international companies richer still.
Make companies pay a reasonable rate of tax, tax the VERY wealthy more and put this island back in the position it always was, comfortably off thank you.
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Jersey has made an introductory video about their finance industry (and taxation regime)in Mandarin for the new Chinese market. I think we should do the same.
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Whats the difference between tax avoidance (I believe still legal)
And tax evasion (not legal?)
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soph
Why don’t you just try Googling it ?
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DA666 that’s what I said, sort of
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