There are those who are arguing that they aren’t tax havens
Of late we’ve heard it from Jersey, Guernsey, Switzerland, the Isle of Man, Bermuda, Cayman and Bermuda.
As Geoff Cook of Jersey Finance has said:
No one can define [‘tax haven’] meaningfully
He’s right of course. No one can. Which is why we prefer the precisely defined term ‘secrecy jurisdiction’.
And yet not being able to define something is not an impediment to the use of a term. As Lord Justice Stuart Smith said in the Court of Appeal in 1998:
This seems to me to be an application of the well known elephant test. It is difficult to describe, but you know it when you see it.
Quite so. The above places are on just about every list of tax havens published in the last thirty years. People know they are tax havens. The fact that they are sticking their heads in the sand and sticking a few feathers on does not make them ostriches, (or international finance centres) as they seek to claim. Only they are persuaded by that.
The elephant test says they are and remain tax havens.
For those of us on the Clapham omnibus (I would stress, a legally recognised concept — as is the elephant test) that’s good enough.
It will be for the G20 as well.
Don’t waste your time protesting guys. Spend it reforming what you do.
PS for a list of references to places claiming they're not tax havens see here.
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Richard Murphy,
are you seriously suggesting that Obama and Brown, with their access to top government lawyers are setting out to hunt tax havens i.e. jurisdictions which, er, are doing vague things which they think might not be in their best interests and, er, have a vague, hardly definable, existence?
Or is it that it is not the tax havens that are vague?
Best regards,
David Cranch
David
No, I’m not suggesting that
Politicians know they are chasing secrecy jurisdictions.
Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
The term tax haven suits those in secrecy jurisdictions who want to confuse and obfuscate the issue.
My argument is even that does not work – they only convince themselves
I have no doubt that France / Germany / USA and maybe UK know what they want
Richard Murphy
Thanks for the reply, Richard.
If you are right that it is a secrecy hunt, why is it described as a tax haven hunt?
Is it the politicians or the media who are calling the elephant a giraffe?
David
Take note, that Bermuda’s regulation works! Contrary your previous comments.
http://www.globalreinsurance.com/story.asp?sectioncode=5&storycode=377246&c=2
Bermuda safe from new anti-tax haven law, says ABIR
5 March, 2009
Bermuda not affected by Stop Tax Haven Enforcement Act, says The Association of Bermuda Insurers & Reinsurers
Insurance and reinsurance companies based in Bermuda would not be affected by new laws against offshore, said Bradley Kading of The Association of Bermuda Insurers & Reinsurers.
“There may be some Bermuda corporations affected by the bill,” said Kading. “We don’t believe it affects the global insurance and reinsurance companies based in Bermuda.”
The Levin bill (Stop Tax Haven Enforcement Act), which has received the support of the Obama adminsitration, is “focused on US multinational corporations and US citizens,” he said. “It is focused secrecy and financial reporting concerns.”
There is not common definition of “tax haven” Kading said, and he listed four criteria that are often seen:
1) is there an income tax, or a low rate of taxation?
2) is there secrecy with regard to financial information of banks and other financial institutions?
3) is there a lack of cooperation with other countries with regard to tax law, money laundering or other enforcement matters?
4) is there an actual economic substance to the companies operations located in the country?
“Bermuda does not meet three of these four tests,” Kading said. “Bermuda is not a bank secrecy jurisdiction. We have tax information exchange agreements with the US, UK and with other countries. Bermuda willingly enters into such agreements. Bermuda recently signed an additional law enforcement cooperation agreement with the US. Bermuda is cited by the US Treasury and the OECD as a cooperative jurisdiction with regard to tax law enforcement. Our members in Bermuda perform substantive underwriting in Bermuda and most have their headquarters staff in Bermuda.”
Bermuda’s government has never had an income tax. The government has two primary sources of revenue: tariffs on all imports (the island requires large amounts of imports) and a payroll tax largely paid by companies on behalf of their employees.