Do you remember what Philip Hammond once had to say about the UK post Brexit? In January this year he went to Germany to declare that Britain could transform its economic model into that of a corporate tax haven if the EU fails to provide it with an agreement on market access after Brexit. And now, eleven months later the EU has come up with what looks like an innocuous tax haven listing until you read between the lines. As I have already noted, implicit in this listing is a massive threat to at least five UK tax havens. The EU has given notice to Jersey, Guernsey, the Isle of Man, Cayman and Bermuda that they have to transform their entire corporate tax systems if they are to avoid the imposition of tax haven sanctions within a year.
At one level you can read this as being the EU Code of Conduct on Business Taxation giving notice that they are fed up with these places having got round earlier sanctions, and I suspect that is true.
More specifically, I think that there is a much deeper, implicit, and more important message inherent in this notice of intent, which is quite specifically targeted at the UK. What the EU is saying to Philip Hammond, and anybody else who cares to listen, is that we can think about becoming a tax haven if we so wish but if we do then a quite impressive list of sanctions will be imposed upon us. Of course that would imply the opening of a trade war between the UK and EU, but it was Hammond who fired the first shots in that, and retaliation is to be expected. I think it has arrived.
There is one other point to note. I am quite sure that the Crown Dependencies will be taking comfort from the fact that many, if not most, of the funds they receive from the financial markets come from the City of London, which they expect to be outside the EU in the near future, meaning that the sanctions proposed by Brussels will not apply. I do not think that they should be too optimistic about that. My suspicion is that if Brussels thinks that the UK is helping these places get round EU sanctions then they will be imposed upon the UK instead.
As a tax haven listing today's announcement looks to be innocuous, and even a failure. As a warning shot to the UK, and Philip Hammond in particular, this looks like a broadside fired just across the bows. I think the UK would be very wise to take note: we can be a post Brexit tax haven if we wish, but sanctions would quickly follow and the cost to the City of London would be enormous.
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Call me cynical but could this be what the drive behind Brexit has been about all along? – i.e. getting the UK & it’s dependencies out of EU jurisdiction before these changes take effect.
Yes.
That’s not cynical at all, the idea’s been kicking around for some time. The whole Brexit morass has become even more convoluted with the apparent revelation that there weren’t any impact assessments, leading some to wonder if it hasn’t been tacitly understood within elements of government at least that there was never going to be any Brexit. It appears we all may have been watching a charade. Thus, the Crown Dependencies mentioned above look like they’ll be in trouble anyway.
The new EU laws against tax avoidance and tax havens come into force on April 1st 2019. We just happen to be leaving the EU on the 29th of March 2019.
Is it a coincidence? – Of course it’s not. The wealthy elite and their Tory stooges are protecting their fortunes? THAT!!! is the reason those in power have manipulated a largely ignorant and prejudiced electorate to their own ends. Readily putting the UKs economy and population in harms way for the sake of party political advantage and financial self interest, regardless of the consequences.
Sorry – but that’s just nonsense
The world really is not one big conspiracy
A lot is just cock up
You are just wrong on this
He’s probably right David,
With the reason being that your suggestion assumes that the Tories’ evil plan would succeed. Given the EU’s much greater size and economic power relative to Britain it is not entirely clear that the Tories’ alleged plan would have any success at all.
Sorry you think it’s nonsense. I know I have a cynical view. Am I a conspiracy theorist? Yes sometimes – but over 40 years of political engagement and enlightenment has proven me more right than wrong. The Westminster bubble exists to represent and protect the aristocracy, establishment hangers on and the corporate elite. Nothing has changed in the last 500 years. In my view neoliberalism serves the same function. As you have said yourself most MPs and Lords of whatever party support that world view.
Leaving the EU has nothing to do with what’s best for the UK, emigration, free movement or xenophobia. For the Tories it’s about removing what little sovereignty the EU has and preparing the way to create a political system the establishment can exploit to their own advantage.
Maybe
But to suggest the neatness of association that you did is not credible
The people who actually voted to leave were far removed from Westminster. They voted because of the community they live in and what they see as wrong there. They feel leaving the EU can fix the issues they see day after day. They dont care about London.
If it looks like a duck…..
Paul says:
December 6 2017 at 7:58 am
“The people who actually voted to leave were far removed from Westminster…….”
But that’s how our democracy works. By telling the people what they should vote for without them realising that they are being told what to think and what to do. And of course sometimes you have to appeal to the contrarian human instinct. And sometimes it works; most of the time it works and when things move the ‘right’ way you hear the ratchet click (if you are listening for it) and you can’t go back.
Controlling the media and thus the parameters of debate is the key to operating a ‘functional democracy’. Ironically it is essential to have a ‘free press’ to achieve this because a state run press is clearly a government propaganda tool and inherently suspect.
So the Eu are really saying the rest of the World is terrible and full of nasty countries, yet Luxembourg and Ireland is okay.
That’s a good question, Dave.
It seems that Ireland, Lux, the Dutch, Maltese and others have been (more or less) forced into making concessions and that thus far Britain has been the EU’s biggest obstacle to tax haven reform.
With Britain out of the way (and begging to become a target) those smaller EU members will probably come under greater pressure in future. Well, that’s what press articles such as these are suggesting directly and implicitly:
https://euobserver.com/economic/140154
https://euobserver.com/economic/140165
http://www.nation.co.ke/news/world/EU-divided-over-tax-haven-blacklist/1068-4214826-102pl27/index.html
Mind you this is mostly just slap-on-the-wrist stuff so far but the momentum for change seems to be there. Brexit may accelerate that.
l
dave says:
December 5 2017 at 8:44 pm
“So the Eu are really saying the rest of the World is terrible and full of nasty countries, yet Luxembourg and Ireland is okay.”
I am inclined to agree it doesn’t look good. On the other hand if this is the EU response to having a UK-sized Tax Haven on its shoreline post Brexit it’s not about cosmetic refinement is it?
Surely those ‘defensive measures’ or sanctions are items that member states can implement today against anybody if they want to, with taxation being devolved to members.
So saying there is a threat of impending sanctions is nothing new – there has been all along. If I’ve read it right,aA phone call from the EU in December 2018 asking members to implement the sanctions doesn’t change anything as members have the power to say yes will do or no won’t do already.
Those measures are not usually used because under international tax rules they are hard to implement
With international endorsement and commonplace action they are much easier to enforce
We are of course all playing a very complicated political game.
If it was the will of the UK government to shut down, for example, the IOM as a tax haven and bring it into conformity as a part of the UK that could be done. It would be messy and highly contentious with respect to questions of human rights, civil liberties and goodness knows what else, but that’s not why it hasn’t happened yet and probably won’t.
The IOM, and other tax haven ‘protectorates’, exist and persist because they are useful. To the people who are in positions of power who need safe places to protect their spoils. End of.
We as individuals have bank accounts, the Deep State, establishment call ’em what you will… use small countries as banks.
Of course there is no ‘conspiracy’. The very idea…. it’s just the way it is.