Tax News.com has an amazing story. It says:
The positive part played by the Isle of Man in the global war against financial crime has been highlighted by a key official from one of the US Treasury's main anti-money laundering agencies.
William F. Baity - Deputy Director of FinCen, the Financial Crimes Enforcement Network - spoke of the Island's involvement with his and other agencies when he delivered the Chief Minister's International Lecture at the Mount Murray Hotel.
Try telling that to Senator Carl Levin. The New York Times report on his investigation into tax havens in August 2006 said:
So many super-rich Americans evade taxes using offshore accounts that law enforcement cannot control the growing misconduct, according to a Senate report that provides the most detailed look ever at high-level tax schemes.
That investigation concentrated entirely on the Isle of Man. One of these stories has to be right and the other wrong. I can tell you which my money is on.
There is good reason for my doubting Mr Baity. First he was speaking to a dinner in Douglas, Isle of Man. Second,on the issue of the Island's reputation, he advised a move away from the label 'offshore', which had connotations that could not be overcome, he said, to something like 'independent financial centre'. He added:
Perception is reality and you will struggle as long as people talk about offshore
He is right in part. Some of us do struggle with people talking about offshore. The fact is that the Isle of Man is a tax haven. Any other description is wrong.
As for his suggestion that:
the Isle of Man use its maturity and experience in financial regulation to help less developed jurisdictions around the world
I have an obvious response. The less developed jurisdictions of the world are called its developing countries. We know that places like the Isle of Man create poverty in those countries. Worse, we know that the offshore activities that are undertaken there to contribute to the deaths of hundreds of thousands of children a year by denying them essential resources that they need.
The Isle of Man can help the less developed jurisdictions of the world. It can stop being a tax haven. Nothing else will do.
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Have the Isle of Man invaded Africa then? For once you are right, the 2006 Levin reported analysed 6 sensational cases involving the Isle of Man although the truth is such cases are in a minority. Most people who have money in tax havens are tax compliant.
Prove it
Richard
No you prove it. You are so full of it, you prove your absurd allegations. It is perfectly obvious that the cases you shout from the rooftops about are a few rotten apples in the barrel, yet you would have us believe the whole barrel is rotten! By all means let’s root out the rotten apples but there is no need to throw away all the apples and trash the barrel too.
You look at the Isle of Man Government tax invoice that has just landed on my doormat, and then tell me again that the Isle of Man is a tax haven. You look at how much tax we pay for flights and fuel. What a joke!
Isla
Not a joke at all
Tax havens are not tax havens for those who live there, only for those who live elsewhere
You pay the price
Richard
I’m not sure where this broadside is coming from but the Isle of Man is not a tax haven, it is an independent country that happens to set it’s tax rate at a level it chooses to as does every other nation on earth. If your argument is with distribution of wealth then I consider you look in your own back yard as, regardless of tax, country scael wealth resides much more in places like the US mainland than offshore jurisdictions. If,m as you suggest, the activities of US nationals seeks to hide wealth from the US Govt (and that throws a light on the mentality of US citizens) then would the repatriation of this money mean that it would get redistributed to poor nations – even if the govt had the taxes I think not. The issue should be about regulation and there are a vast amount of nations that have poorer transparency than Isle of Man, running down through Russia and China to the more obvious ‘offshore’ jurisdictions such as Cyprus (a Russian favorite) along with the US favorites such as Caymen.
I think people need to decide what they are fighting against – if it is against world poverty then all developed nations are at fault and the ‘offshore’ contribution to this is miniscule and, bizzarely enough, the sensitivity to this may be more than anywhere else. If we are looking for accountability then that should start at home, whereever that may be, before looking to blame elsewhere.
Kurt
Please read http://www.taxresearch.org.uk/Blog/2008/08/27/finding-the-secrecy-world/
Please read
http://christianaid.org.uk/images/deathandtaxes.pdf
Please read http://www.globalpolicy.org/nations/launder/haven/2005/Price_of_Offshore.pdf
Please read
http://www.new-rules.org/docs/capitalismsachillesheel.htm
Then when you’ve done that tell us why we’re wrong
Of course you’re not alone. Nor are all those who are committed of murder alone. It doesn’t mean any of them are innocent
So don’t offer excuses. Tell me why what you do is acceptable
And tell us – show me – what is wrong in our analysis
We’ve made the case. I’m still waiting for anyone to answer it
Richard
>Then when you’ve done that tell us why we’re wrong
ok, read on…
>Of course you’re not alone. Nor are all those who are committed of murder alone. It doesn’t mean any of them are innocent
Ohh that’s a very provocative statement. You aren’t alone in your outlook either, so you must be a murderer too. – which of course is just as silly an assertion as what you wrote.
In fact you have made several assertions in your post here that are quite emotional and subjective: “We know that places like the Isle of Man create poverty in those countries”
False. Poverty existed in those countries long before IoM etc became financial centres.
No doubt you would then change your assertion to say “IOM perpetuates the poverty in those countries”.
….and that would be False again. places like IoM etc helps keep the money flowing around rather than being horded by the G8 countries.
>So don’t offer excuses. Tell me why what you do is acceptable
There weren’t any excuses in what Kurt said. He was absolutely right.
Phil
Your logic does not follow: if I was one of those prosecuting murder it would not make me a murderer, it would make me a fellow prosecutor of those prosecuting murder.
And my comments were not provocative or indeed subjective. they were calm, rational statements of fact, proven by evidence.
There is not a shadow of doubt, not one iota of room for alternative opinion: tax havens have been used to facilitate corruption in developing countries, have been used to facilitate capital flight from developing countries, have been used to abuse the tax systems in developing countries, and are being used to undermine the democratic foundation of developing countries. This is not a chance: this is deliberate. I lay the charge of callous indifference to development against those who work in the financial services industry in tax havens.
But what is most ludicrous is your argument that the Isle of Man helps keep the money flowing around the world. Have you noticed the world’s banking failure? Are you aware as to why the banks will not lend to each other? They do not trust each other’s balance sheets. Why not? because they all know how much they have hidden inside their own balance sheets in their offshore structures.
Tax havens have not helped money flow around the world: they have helped undermine the whole basis of our banking system.
You in the Isle of Man like to think that you’re doing the world a favour: the rest of us would rather say no thanks. Favours do not come with a considerable cost attached
Richard
I find it very hard to follow your logic – money gets deposited all over the world for all sorts of reasons, tax efficiency being one of them. However places like the Isle of Man have had to be very conscious about transparency and compliance with international law than so they were not tarred with exactly the type of accusations that you make. It is very difficult to pass the KYC requirements in the Isle of Man, people are also very aware of political at risk registers and political sensitivity. I live in the Isle of Man and my children were not even allowed to have cash when they closed down their little savings accounts to move to another bank becasue this conflicted with anti-money laundering legislation. In truth, if you wanted to take money away from developing countries (and I assume you mean theft) then it would be far easier to place this in the UK or the US than the Isle of Man – banks here run away from risk becasue they are generally not as greedy as their bigger counterparts and generally operate on a personal basis with their customers – if they don’t know them then they won’t deal with them – why would they need or want to take the risk.
Finally, you need to consider the fact that UK offshore jurisdictions cooperate fully with any enquiry that comes through an official source – places like Caymen and Switzerland specialise in secret accounts – this disappeared in UK Offshore jurisdictions decades ago – this cooperation is what you mentioned yourself in your preamble. Picking on one place and tarring with a single brush is a very dangerous policy becasue you drive things underground into the places that don’t make so much effort to regulate etc and make the visibility of these matters worse.
On the money movement front again you are not really understanding how things like this work. Places like the Isle of Man are generally deposit takers and therefore they have to place cash in other banks etc to make a turn so that they themsleves can pay interest to their depositors. The islands are not big enough to sustain this themsleves as there is not enough demand for loans locally so they have to place this money in other jurisdictions – therefore they are funding the money market in places such as the UK. If you want proof of this then look at the demise of Kaupthing Singer & Friedlander. The UK govt put the UK part of this into administration and froze the assets to stop money going back to Iceland. Unfortunately the Isle of Man part of KS&F (a quite seperate and independent company) had placed £550m of depositors money with the UK company as ‘money market’ loans – the UK Govt have refused to accept this as a liability and so the company in the Isle of Man is about to fold becasue it has no liquidity – the Isle of Man Govt (and all the other banks) have to foot the bill under their own independent depositors scheme – so IoM investors and IoM taxpayers and IoM financial businesses are all being asked to fund the UK govts problems by not asking for it’s money back. Now here’s the real irony – most of those depositors were normal everyday UK citizens saving for their retirement, not in IoM really becasue of tax but more becasue the rates were better…
Undoubtedly there are a lot of bad people out there with a lot of money that they want to misappropriate but that is not a factor of offshore jurisdictions, especially the highly regulated and transaprent ones such as the Isle of Man. As the US is very often saying you have to decide who are your friends and who are your enemies – the Isle of Man is a friendly player in what is a worldwide game – there are a very substantial number of worse places, many of who are mainstream. I don’t think there are such things as tax havens in the developed world any more. If governments try to categorise and attack in such a strong manner then you have to consider their motives – whatever you say I don’t think that the G8 governments really give a damn about the effect of offshore jurisdictions on the developing world because I think the UK offshore jurisdictions are not major participants in dirty money.
The Isle of Man asks and seeks no favours but it is very disparaging to a lot of hardwoking people to essentially accuse them of bleeding the world dry. The greatest cost to the world to date has been a somewhat interesting US foreign policy that defends national interest above all other considerations, human rights, global pollution, lives, democracy, freedom (Guantanamo Bay?) etc.
Please consider very carefully what you are saying – I live in a place with no party politics, with no crime, no unemployment, excellent public services and the sort of social conscience that meant we spent £1m of taxpayers money 8 years ago to retrieve the bodies of a boat full of scottish fishermen that sank off our coast to send them home to be buried – why? becasue it was the right think to do…
What you are suggesting is that this wealth is done on the back of developing nations – poppycock – it’s doen on the back of offering good and solid services in a transaparent manner and with a personal knowledge and service that is inprecentend elsewhere – the grab anything you can get and don’t ask questions is actually just about as far away as you can get from the truth here.
At best I do find your attidude to be narrow minded and bigotted and does seem to be with some motive. Free speech is a wonderful thing and you are entitled to your opinion (as am I) but gross generalisations are what makes this world turn against one another rather than work together – thr Isle of Man is part of a global system that has its act togegether and has much more of a social conscience that many places in the world – why pick on us – where do you live – what is better about there – let me know…
Kurt
I regret I do not recognise the place you describe.
I recognise the place described by Carl Levin
I recognise a place that refused to participate in information sharing under the EU STD – the sole and only reason for that choice being to support those using the IoM for tax evasion – no other explanation is possible.
I recognise a place that has abused the EU Code of Conduuct on Business Taxation
I recognsie a place that does not require any meaningful information on companies registered in its domain to be placed on public record
I recognise a place that was the main focus of the massive Irish tax enquiry on evaded money
I recognsie a place that played a major role in the simialr UK enquiry – where tens of thousands of people have been proven to be using the IoM for tax evasion
I recognise a place that still has no menaingul information exchange agreements – sorry, but that’s what senior tax officials in the places you have agreements with tell me
I recognise a place that is happy to delude itself about how good its financial services are when in practice they survive on just one attribute – the deliberate secrecy you create to facilitate abuse
You can protest for all you like – but answer these points, explain why these are your policies – explain why and how so much evasion takes place through your banks – explain why you refuse information exchange under the EU STD – and leave all the emotional heart tugging stuff for which there is no evidence aside for later
Richard
PS Also justify why you rely on the Uk to supply your excellent public services – half of your government’s revenue is paid by UK taxpayers – something I doubt will survive Alastair Darling’s review, so you might also like to explain why you offer tax abuse when taking UK taxpayer’s money while you’re at it
On another note – if you are going to quote references then here are number from the OECD – have a read about the tax information exchnage agreements, commitments to eliminate harmful tax practises as early as 2005. As a tiny jurisdiction more effort has been put into this aspect than pretty much any other developed ‘country’
http://www.oecd.org/searchResult/0,3400,en_2649_201185_1_1_1_1_1,00.html
Your first point was about taking money away from developing countries and now it is about supporting tax evasion – which is it to be? I would not know of any circumstance when requested information has been refused in an investigation – that was really my point – it is the nature of people to look to put their money somewhere – you have to decide where that is to be – in a place that is on the same side or other places that have no relationships and make no attempt to cooperate – take your informer and shoot him in the head…
You really do have an axe to grind and I would really like to know what that is. I have no agenda, I live and work in the Isle of Man and therefore feel compelled to defend what is a gross slur on a lot of poeple who do their jobs and operate within the law and within moral boundaries. There is transparency is anyone asks – but with the resources available to the large governments then why should their job get done for them – if UK citizens are evading tax then that illustates a problem with the source not the target.
On the Irish question it appeared that there was an endemic problem that eminated in Ireland where the Irish banks tehmselves were using subsidiaries to move money away and hence why a lot of them closed these down when investigated IN IRELAND. The statistics about Irish tax evasion through the inernal balck economy are staggering anyway – so not a good example and where does all this EU related stuff fit into the ‘developing world’ scenario’?
If you read dispassionately then what I am saying is looking for balance – everything you level at the Isle of Man you could level in exactly the same manner to the UK, which, until recently has been considered as a ‘tax haven’ within the EU, not becasue of practises but because of lack of tax harmonisation.
As for the UK funding the Isle of Man I assume you are talking about the VAT arrangement – I think you will find you are a couple of years out of date.
What’s your solution – that the Isle of Man should become a UK Island that you have to pay 100% of the costs of, that it does not have a banking system, that it harmonises with UK taxation that is crippling the populace and is due to get worse, that it falls under the UK regulation regime that actively encouraged greed and mismangement that came close to bankrupting it (and may still), that we let the deposits go to seedly parts of the world where it can do real damage and also cut off any chance of this hitting the money markets in the UK so the UK financial system loses billions of capital – where is the sense in that? As for cooperation with the EU – there are many flavours of that and again a huge number of flaws in that institution – how much has the money piled into that detracted from assisting developing countries – things really do need to be put in context.
Please please please reveal your motivations – if you truely believe that the Isle of Man is the core of evil relative to the entire rest of the world then explain why? What about all the other places in the world that are far far worse? As someone else mentioned before there are rotten apples in every barrel but there are also some very good ones – destruction of anything leaves a void and you have to consider whether what will fill that void will be better or worse – taking out what you may consider to be a bad thing is not best done when you take out the best of those bad things first – it means the worst of those bad things become stronger.
And please god let me know that there are some other people out there that have some common decency to accept the fact that the Isle of Man can be a decent place where people are working for a living doing business and not methphorically raping the financial world.
Kurt
Now get me data on how often any of those so-called tax information exchange agreements have ever been used, and how much data has actually been exchanged.
The fact is that we know that the US – Jersey TIEA, which is just about the longest extent of these things, and which existed before the IoM got around to signing any has been used just four times.
That is not an information exchange agreement. That is a political whitewash necessitated by George Bush blocking any meaningful progress in the attack on tax haven abuse.
And in the meantime the abuse has gone on. But you may have noticed we no longer have a Republican in the White House: we have a man committed to stopping that abuse.
You will now be required to exchange information, which he has said you do not, or you will face sanction. Why is he threatening that if you do all you claim?
Maybe he doesn’t think you’re quite telling the whole story in the way you put it, but then he has a lot more information than I do, so I couldn’t possibly say that.
Richard
Kurt
Yes I have an axe to grind: I’m glad you’ve noticed.
I hate corruption. I hate the secrecy that facilitates corruption. I hate the undermining of democracy. I dislike those who claim they believe in free markets and then ensure that free markets cannot operate by facilitating the misallocation of resources through tax havens.
But I have no axe to grind against the IoM except for the fact it is a secrecy jurisdiction – or tax haven if you wish. You just choose to take it personally, but I say the same of Jersey, Guernsey, Cayman and Vanuatu come to that.
I campaign for reform of the UK’s tax haven activities – which I dislike just as much.
But it’s easier to conduct business honestly in the UK than the IoM, of that I am sure. Much as I dislike our dependence upon financial services, at least we can gainfully employ the money here and have a proper commitment to information exchange. We do not rely (much) on tax abuse to facilitate our funding. Our government even funds itself unlike yours (and my data is bang up to date – to be blunt, I’m right).
So whilst the UK is far far from perfect in this regard, it has far more integrity than the IoM. That’s some indication of how bad things are, I think.
But I stress, you’re not alone. I have the same axe to grind with scores of other places. But they have one thing in common: the Big 4 accountants and the world’s biggest banks are all there. They’re as culpable. Is that any comfort?
Richard
Don’t worry Richard – I have now taken the time to read your website and can perfectly see where you have been coming from for a number of years. But please be honest enough to say that the motivations you have are to get money going back to the developed countries by cutting the opportunities for people to evade local taxes by placing their money elsewhere – note that this is their choice and they are not encouraged to do so. Also please accept that there are a lot worse places than the Isle of Man or the Channel Islands for that matter.
I am a UK citizen and I am dismayed at the mess that exists in the land of my birth, and the wider EU. Like many hundreds of thousands of British citizens each year that move away perhaps we are instituting the ultimate in UK tax ‘evasion’. If you want to be a ‘tax collector’ then that is, as I said, the Isle of Man is not there to police citizens from other countries, that it seems is your job.
Words at your level can affect the lives of people who have done nothing to you – as what appears to be a very informed and educated person you do need to look at the effects on real people. I know you think that is what you are doing but that assumes that money put back into govt hands is used well and that is more often not the case is it?
I think I have to give up at this point I have an ordinary life to lead and an ordinary salary to earn so I can pay my normal mortgage and buy christmas presents for my kids. Would you believe that I’m not a fat cat sitting on the profits of defrauding the world governments of their deserved income so they can help their citizens in a benevolent manner…
You think the IoM is more corrupt than the UK and the UK is more transparent. My ex-postman is my ‘MP’ here and I have lived all over the world and have never come across a place with such a moral fibre and community commitment. How does the off balance sheet loan commitments of the UK banks that hid the sub-prime losses away – something that had been stopped as a practise 10 years before in Spain which is why Santander is now still strong. I’m afrais the UK and US are run with a streak of greed – money talks there much more than it does here.
I used to own a communications company in the Isle of Man and I could easily have hid behind my jurisdiction when the UK security services came knocking on my door on a weekly basis. My approach was that I had a duty to protect the information of my clients from speculative enquiries and so established a procedure with them where they made they requests officially through the local police special branch. We were commended on the speed with which we then responded to requests by the UK. However, I would not have allowed speculative ‘trawls’ of my data – for any banks offshore that I have worked for and with this has been the general approach – the UK hovers on the brink of invading basic human rights to privacy at times and then makes it worse by throwing private data into the public domain when it does have it. I know this is straying into what seems like a different domain, but certainly there is an underlying current that we have a duty to protect invasion of privacy – this is not quite the same as being secret – its a matter of ‘ask the question and it will be answered’ but you have to ask for relevent information.
I’m not saing that this is the case right across the board but I take things as I find them and that is my own experience. I would also say that now much more money is repatriated to UK parents than is moved from parenets offshore. The big UK retail banks used to do this in the past to do internation treasury – buit consider the fact that this was corporate policy encouraged by people like KPMG where you came from. Now the differencial in corporate taxation doesn’t really make this worth it – proving that harmonisation is the key to this and that may not be about the Isle of Man moving upwards but others moving downwards?
It’s been interesting…
Kurt
I accept – of course there are worse places than the Isle of Man
But please answer my point – why won’t the IoM engage in proper information exchange under the EU STD if it claims to be transparent and claims it wants nothing to do with tax evasion?
Unless you can do that your case does not stack – and however pleasant life is there the taint of corruption will remain
Richard
A couple of links for you to consider:
1) The effect of the ‘open and honest’ place to do business that the UK Government promotes. KS&F (IoM) had £550m in KS&F (UK) when the UK Govt ‘annexed’ all it’s assets using anti-terrorism legislation. The Isle of Man Government has pledged £150m (30% of it’s annual revenue) to assist depositors and the other banks will eventually put in more – please take time to read the comments and tell me honestly that you can hold your stance that these people are tax dodging criminals…
http://www.iomtoday.co.im/politics/KSF-40IoM41-winding-up-is.4738984.jp
2) A very good article on the demise of the US Investment Banking regime via the sub-prime debacle – let us not forget that it is greed right up to the political level that allowed this to happen when people (as shown here) were predicting this exact event as far back as the 80’s
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
The Offshore jurisdictions seem to have managed themselves very well with limited resources relative to the big countries – perhaps they should be invited to run the financial community.
Many thanks for sparking an interest in the subjects and moving my pattern of research in wider areas than my usual mix of It strategies and technologies.
Where is my last entry which showed how the IoM does ‘conform’ to EU STD via withholding tax even though it is not in the EU (just like the USA). I went through an IoM bank account application and a UK account application last night and the IoM one was very specific about tax jurisdiction and domicile and the fact that tax emeptions had to be proved – Uk one said nothing – also the R105 HMRC tax exemption request is a joke – state the main residential address is the only question defined – what about domicile (excluding the way the Uk allows non-doms to live full time in the UK and not be taxed on worldwide income) and all those other tricky tax questions – perhaps the role of UK banks is not to define tax obligations becasue they are not qualified to do so – so why should offshore banks be any different?
You should put your own house in order before other parties are going to trust you and it is also undemocratic to switch assertions to presuming guilt (which is what you are asking offshore jurisdictions to do) – would you advocate this in the UK? If so I think you must be delusional about the benevolent nature of the UK government – if you want to chase money I would not assume that places like the Isle of Man are easy targets – they could cost you your conscience….