The Isle of Man News has a fascinating article asking whether the pressure has been taken off the Isle of Man now on tax matters.
Much of the analysis is wrong because they think the issues are now resolved, and that is far from true but just for the moment I want to highlight another issue, which is the credit implicitly given to the Tax Justice Network for forcing change. As they say:
Over the past five years, our financial services, tax rates and Customs deal have come under intense scrutiny from beyond our shores.
We've had the EU question our corporate tax regime, the painful revision of our VAT deal twice in two years, an inquiry commissioned by the Westminster government has run the rule over our ability to withstand financial shocks and the OECD has reviewed our tax transparency and co-operation.
It seems that barely a week went by without another brickbat being lobbed our way by Brussels, London or Washington.
And quite right too. All of then were justified. As they then out it though, discussing the introduction of incredibly limited automatic information exchange under the European Union Savings Tax Directive:
It is notable that even the Tax Justice Network, consistent critics of so-called ‘secrecy jurisdictions' has acknowledged the work the island has done in this area.
On VAT, the loss of more than £175 million in revenue — about one third of total government income — has caused major problems in balancing the budget. But even here, the UK has indicated it won't be back for more.
And on zero/10, now finally resolved with the announcement last week by Brussels, criticisms from Europe were dealt with by decisive action: by scrapping ARI, the anti-avoidance measure, that the EU Code Group considered as harmful. The result was to save the corporate tax strategy and the thousands of jobs that depend on it.
Tax justice campaigners argue that offshore centres help to plunder resources and siphon wealth from Third World Countries.
Mr Bell denies the Isle of Man plays any such role. He confirmed that the island is considering extending Tax Information Exchange Agreements to developing nations, a move advocated by the OECD's Global Forum — so long, he said, as an appropriate model is in place to do so, given that many such countries did not have a properly developed tax system and there were issues of corruption in some regimes.
We've been right on everything else. We're right on this too. And that's why none of the pressure on tax havens will be going away in 2012. Because that was the issue that always motivated me and the Tax Justice Network.
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Richard,
They also say:
“A case in point is the introduction earlier this year of automatic tax information exchange, the Isle of Man being one of the first jurisdictions anywhere in the world to do so.
While there had been initial reservations from some in the island’s business community, automatic exchange has proved its worth — at a stroke, it has served as a valuable foil to any criticism about lack of tax transparency.”
I’d be glad of your (or anyone else’s) informed comments on this. My (limited) understanding until now has been that the much-vaunted TIEAs were next to useless just because information exchange was NOT automatic (and that the requesting authority had to pretty much know the answer to their questions before they could be asked). “Automatic” sounds as though any account opened offshore would automatically be declared to the home tax authorities. Presumably however the devil is in the detail and there are/will be plenty of loop-holes for the unscrupulous to continue to exploit? Is this a real advance, or another case of island spin? I suspect a little of each, but would welcome some facts in the matter.
Best wishes to all for the difficult year ahead.
Automatic information exchange applies only to accounts held by individuals under the European Union Savings Tax Directive
So it’s avoided completely by putting the cash in a simple trust or company name
It’s pure blather and utter rubbish to say they have done automatic information exchange
Re TIEAs see here http://www.taxresearch.org.uk/Documents/InfoEx0609.pdf
They are useless
Sorry to be a little off topic , but have you missed the up coming changes in the qrops legislation, which should put an end to a lot of tax avoidance and easy fees paid to shysters and “investment advisers” in the IOM, Jersey, Spain etc ….
@ catsick.
Not entirely off topic. For some time the Crown dependencies have provided a platform for dodgy financial products, which are then “promoted” by “shysters” and fraudulent “investment advisors”, Vulnerable and elderly people are frequently targeted by these unprincipled operators and because the “governments” of the Crown Dependencies consider “consumer protection” and “fair trading” to be inconveniences which could impact their precious financial services industries they are largely ignored.
A recent survey conducted by The Centre for the Modern Family, a think tank backed (ironically) by Scottish Widows, found that almost half of people over 60 live by themselves; a statistic which raised fresh concerns about older people being left alone at Christmas. And as Ros Altman director general of Saga says: “We must as a nation spare time for increasing numbers of older people who are left alone – if you know a neighbour who is on their own pop in and see if they want some company.”
This increasing loneliness is too easily exploited by “shysters” and fraudulent “investment advisors” who, regardless of the law, scent easy pickings pilfering pensioner’s life savings.
A pox on the governments Isle of Man, Jersey and Guernsey.
The PSG will use all available means to ensue that “none of the pressure on tax havens will be going away in 2012” – particularly with regard to the Isle of Man and Guernsey.
The Isle of Man government exploits the OECD and the Tax Information Exchange Agreements to window dress the island as “transparent and co-operative”. In reality before any country, suspecting one of its citizens of engaging in criminal tax evasion, can obtain “information exchange” it must first have reasonable evidence — evidence that would be sufficient for the country to prepare its own prosecution without seeking further proof… exposing the OECD efforts to crackdown on tax havens as little more than a hypocritical charade; which is also an excellent description for the Isle of Man government.
Last month the world population passed 7 billion – and on the same day the number of people suffering unremitting hunger passed the 1 billion mark. From the perspective of 99% to 1% ratio (defining the super rich tax dodgers from the rest of us) the 1% embodies more people than many may think; and for suggesting that tax havens were largely to blame for this callous inequality Richard was recently branded (by a member of the Guernsey “government”) a “communist”.
This mindless remark is typical of the drivel relentlesslychurned out by the Crown Dependencies PR machines every day and provides further reason for as all too vigorously expose the iniquity and injustice of tax havens in 2012.
Despite my considerable personal experience of the IOM’s PR machine, I was almost fooled for a minute by the reference in this article to “the introduction earlier this year of automatic tax information exchange”. Silly me!
In fact, it would appear this refers to the implementation of automatic exchange of savings income within the context of the European Union Savings Directive (ending the option of a withholding tax) and thus applies only to bank interest paid to residents of EU countries. Clearly there remains plenty of scope for continuing to facilitate other and wider forms of tax abuse.
Beyond that, the Tax Information Exchange Agreements remain as PSG describe: information requested has to concern an identified individual and be “forseeably relevant to tax administration and enforcement of the requesting party”. Even then, requests can be “declined” if the requesting party “has not pursued all means available in its own territory to obtain the information”. What a sham!
Indeed, the IOM are masters of window dressing.
You are quite right
Automatic information exchange applies only to accounts held by individuals under the European Union Savings Tax Directive
So it’s avoided completely by putting the cash in a simple trust or company name
It’s pure blather and utter rubbish to say they have done automatic information exchange
From the IOM govt website:
“Recent research commissioned by the Isle of Man Government has shown the Isle of Man continues to dominate the AIM market.”
“The current market capital of non-UK AIM 100 companies registered in the Isle of Man stands at £1147 million (£1.14 bn).”
“Minister for the Department of Economic Development, John Shimmin MHK, commented:
‘This research shows the Isle of Man performing very well in the AIM market despite difficult market conditions and serves to illustrate that the Island is the preferred gateway to London for international corporate capital raising requirements. This is another example of how the Isle of Man is a significant contributor to the City of London and why the Crown Dependencies are important to the UK economy as a whole.’ ”
http://www.gov.im/lib/news/ded/isleofmancontinu1.xml
So the City is operating through its branch in the IoM – this is the alternative government structure of the UK and it’s designed to undermine the rule of law, democracy, regulation and tax decreed by Westminster
That the Isle of Man government continues to show no contrition about its role in the tax dodging industry is indicated in today’s (3rd January 2012) PR blather.
Commenting on the island’s alleged success in the AIM market the Minister for the Department of Economic Development comments:- “:.that the Island is the preferred gateway to London for international corporate capital raising requirements. This is another example of how the Isle of Man is a significant contributor to the City of London and why the Crown Dependencies are important to the UK economy as a whole.”
Not that the world needs reminding about the interdependence of the City and the Isle of Man in individual/corporate tax dodge tricks. But the City could quite easily find another tax haven equally as unsavoury as the Isle of Man, while the island’s present nefarious “economy” is totally reliant on the the continuing “arrangement” of processing tax avoidance vehicles for the City.
Claiming that “the Crown Dependencies are important to the UK economy as a whole” is rather like saying that the UK, and not the City, is responsible for the tax revenue discrepancies which wreak economic havoc across the world, particularly in third world countries – or claiming that counterfeiters are important to the forged money industry.
More PR bxllshit from this obnoxious government.
http://www.gov.im/lib/news/ded/isleofmancontinu1.xml
Nothing about using IOM (or Jersey, Guernsey, or BVI) companies to list on AIM is done to circumvent the rule of law. Companies that use offshore vehicles to list do so for two reasons: first, those vehicles are not liable to tax in their jurisdictions of incorporation, and secondly, the look and feel of those vehicles is familiar to investors (as IOM companies behave similarly to UK companies).
It is INVARIABLY the case that the operations of the company that is listing are based predominantly outside the UK. These groups pay the taxes where their operations are based, but need a transparent, investable holding company at the top of their group structure for their listing. There is no tax leakage to any jurisdiction as a result of these structures.
Oh utter nonsense
The aim is to access the Uk and not pay tax in the UK
End of, as the story goes
We provide the infrastructure, the law, the everything else
You just free-ride it
The aim is to access the UK’s capital markets. Capital markets is a big export for the UK – every foreign company that lists on London’s markets represents a success for the UK, not some unholy burden shouldered by it.
And that is the “end of”. Good for Britain, good for the Crown Dependencies, good for the companies in the foreign countries who can access investors, good for investors who have increased choices of investment.
But in your book, bad, because a “secrecy jurisdiction” might make a bob out of it.
Bad because it is the exploitation by capital of the system paid for by ordinary people
As ever
@gGutbucket
Suggesting that the Crown Dependencies are good for investors who have increased choices of investment is total and utter garbage.
There is no freedom of information, no financial services regulation and no understanding of the meaning “fair trading” or “consumer protection” on these wretched islands, These places are hell holes of fraudulence and dishonesty and anyone (other than a very wealthy individual or large corporation) seeking to invest or deposit a single penny on them may live to regret the decision for the remainder of their lives.
First of all, there is freedom of information because companies that list on the UK capital markets are required to comply with those markets’ disclosure rules.
As for there being no financial services regulation, that is (i) not true and (ii) not relevant for the vast majority of companies that list on the London exchanges, because they are companies rather than investment funds. The Isle of Man’s company law offers minority shareholders protection that is at least equivalent to that in the UK.
Thirdly, of course it increases choice: there are more companies to choose from if Crown Dependency companies are also available. It is also open to investors to choose not to invest.
From your name and comments it sounds like you have been burned by an investment in a company based in the IOM, Jersey or Guernsey. I’m not convinced that the location of the company should be the focus of your anger: instead it should be those directly responsible for the mis-selling.
UK capital markets exporting their services is win-win for the UK. It results in better balance of trade and more jobs. That is good for every single person in the UK.
If you think the disclosure made by AIM companies is transparent you really don’t understand transparency, or much else