New threat for UK's offshore havens: tax

[R.A. Hettinga]

You can run, but you can't hide.

But you knew that already, right?

Right?

(This thing even on anymore?)

Cheers,
RAH
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<http://www.guardian.co.uk/business/2009/oct/28/tax-more-tax-havens-told/print
 >

The Guardian


New threat for UK's offshore havens: tax
Nick Mathiason
guardian.co.uk, Wednesday 28 October 2009 21.59 GMT


A Treasury report will ask overseas territories and crown dependencies
to raise taxes. Photograph: Cate Gillon/Getty

Britain's tax havens will be read the last rites tomorrow when a
Treasury commissioned report will tell them to raise new taxes if they
are to survive the economic crisis.

Amid fears that Britain may have to bail out tax havens which are
showing signs of financial stress, the government will publish the
findings of an economic healthcheck of its overseas territories and
crown dependencies including Jersey, the Isle of Man and the Cayman
islands.

Having spent the last 20 years luring the world's super-rich and top
companies to their shores, Britain's offshore centres will be told
they have no excuse not to diversify their tax bases to ward off
financial crisis.

Sir Michael Foot, a former Bank of England official and Bahamas bank
inspector, will demand that island paradises must take greater
responsibility for their economic futures. He is likely to emphasise
that offshore jurisdictions will have no one to blame but themselves
if they get into financial difficulties. Foot is also expected to say
they have no excuse not to abide by anti-money laundering and counter-
terrorism finance benchmarks.

It is understood the government has particular concerns over the
ability of Anguilla and Montserrat to ride out the economic storm. The
Caribbean islands have been affected by the decline in financial
services and US tourism.

In the event of further economic deterioration, certain Caribbean
islands could become failed states and be dragged into the illegal
drugs trade, Whitehall insiders have said recently.

Jersey, Guernsey and the Isle of Man are all UK crown dependencies.
Britain's 14 overseas territories include Bermuda, the Caymans,
Gibraltar and the British Virgin islands. It is thought Foot believes
the crown dependencies have taken significant steps to abide by
international regulations. But there is concern that moves to reduce
all three islands' corporation tax to zero may breach European tax
protocols.

Earlier this month the Treasury slashed the Isle of Man's budget by
#140m after it discovered a 400-year revenue sharing agreement was
weighted sharply in the tax haven's favour. The cut was equivalent to
a 24% budget reduction. The 80,000-strong island faces steep spending
cuts and possible higher taxes.

Similarly, the Caymans have also faced a financial crisis after a
public spending programme and reduced fees from banks meant it was
forced to beg the Foreign Office for permission to raise a #280m bank
loan. Chris Bryant, the Foreign Office minister, refused until the
islands' leaders convinced him they had a financial plan.

For tax havens that spent tens of millions in attracting international
business, the fall from grace has been swift as the opaque nature of
their finances has led to world leaders blaming them for helping to
destabilise the financial system.