The OECD tax haven list published tonight is here.
As I have written for the Guardian for tomorrow:
The black list is based on a jurisdiction signing sufficient of what are called Tax Information Exchange Agreements (TIEA). The problem with these is that it is incredibly difficult to make an information request under these agreements, and the tax haven can quite easily refuse the request. As a result Jersey has, under the terms of its agreement with the USA, which has been in place since 2001 delivered just five pieces of data in that time. There is a deterrent effect in knowing this is possible, but automatic information exchange would be vastly better, with all data on income earned by residents of one state in another state being automatically sent to their home tax jurisdiction. That would shatter tax evasion forever. This opportunity has not been grasped.
The bizarre consequences of this process are now being seen, The Crown Dependencies of Jersey Guernsey and Isle of Man are not on the list because they have signed a series of what can at best be called token tax information exchange agreements with places like the Faroe Islands.
And there is also the bizarre way in which Hong Kong and Macau are listed — for which I suspect the Crown Dependencies are excluded as a corollary. They were the bargaining chip.
This is going to create real political difficulties for the process — a quick straw poll at Excel tonight amongst people I did not know showed universal bizarre reaction to the exclusion of Jersey, Guernsey and the Isle of Man. And I have no doubt whatsoever that people from these places will crow on this site about their not being listed, but let’s ignore this problem for now. If they are the down side there are serious up-sides too.
Listing Switzerland, Luxembourg, Austria, Belgium and even the Netherlands (several of which will shock many people) is really significant. This indicates real pressure will be brought to bear in serious locations. That’s good.
The summary — the wrong criteria is being used for this process. That’s vey clear. I will argue for change in this — and am already aware I will be given the opportunity to do so. But although I won’;t disguise some disappointment there is also much that is welcome here.
And let me be pragmatic. In this new world we’re no longer demanding a process. We’re demanding delivery of a process. This requires some change in stance. I have to accept that when delivering compromise is necessary. There is a compromise I don’t like in here. That’s true. But overall we’re making some progress.
And there will be a lot more to say on how very soon.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Hopefully, Bermuda (which does not have an Offshore Banking industry) is not on the list. I’ve been told it isn’t.
Can you confirm?
SN
“The black list is…”
The OECD list is not a black list. The OECD already has one of those as you know.
While this might be the starting point for a new ‘black list’, it in itself is not a black list.
Actually Richy you are wrong again. The Netherlands isn’t on the “grey” list. If you read the list properly you will see that the Netherlands is on the list of countries that substantially meet the international standard. It is the Netherlands Antilles that is on the grey list.
Dear Mr. Richard Murphy,
I am a Chartered Secretary both in UK & HK. I see some very well establised financial institutions are set up subsidiaries or branch offices in Labuan Islands, Malaysia.
I just hear the TV news in HK this morning that Labuan is one of the focus black list tax haven.
I have a question why G20 take such action attack on Labuan (a very small island & not much companies incorporated there !)
What will be the tax impact on both Malaysia or Labuan Islands Offshore Company ?
Do you think it is the potical reason more than commercial/ tax reason ?
Have a nice weekend !
Patrick Shiu (from HK)
It’s good to see justice has prevailed over irrational views and that Jersey, Guernsey and the Isle of Man have been given a clean bill of health. They play no part in facilitating tax evasion and it is good to have this recognised by people without any bias.
Those of us who believe in a fair world, where small states are not bullied by big ones and where justice is dispensed on the basis of evidence rather than prejudice will see this as a milestone for justice and equality.
While humble pie should be eaten re: Crown Dependencies, I know you won’t bother.
Nice unbalanced piece for the Guardian re:Jersey only delivering five requests under its TIEA with the US. It would be more balanced if you included how many requests had been made and how many refused.
Furthermore, while a TIEA has indeed been established between the Faroes and the Crown Dependencies your stilted view fails to mention other TIEA agreements with the UK, USA, Germany, France, Sweden, Denmark, Australia, Ireland etc which is obviously lost on you, but thankfully not our more learned friends at G20.
With regard to the ‘straw poll’ presumably you conducted. What a load of tosh. Someone with a huge personal interest conducts a poll (across a representative cross section of people at G20? – I doubt!) presumably asking specific, loaded questions about the ‘bizarre’ result for the Crown Dependencies and getting ‘universal’ reaction. Your results have no credibility, but no doubt you will use them to give ‘authority’ to your position. I’m surprised you never mentioned this poll in your Guardian piece.
As the Murphy self-publicity machine rolls on I look forward to more spin on how you predicted the outcome and was influential in orchestrating it.
I will give you credit for predicting one thing and that is someone from a jursidiction not listed crowing on you website. Thanks for the opportunity. I’m looking forward to reading what other regulars to this site have to say.
IO
This is a very bias account – for your information the Isle of Man signed an agreement with France a few weeks ago – hardly a “token”
[…] the G20 are of dealing with it. The list is fiddled, the laws needed remain a remote possibility- Richard Murphy:- The Crown Dependencies of Jersey Guernsey and Isle of Man are not on the list because they have signed a series of what […]
Part of the reason why there are so few requests from the US under the TIEA is simply because any taxpayer in the US gets much more leniant treatment if they provide the information voluntarily before the US needs to formally make a claim under the TIEA. So the very fact of having a TIEA means that people are more likely to co-operate with the US because they know that if they don’t, Jersey will assist.
Jersey is a good global citizen: its time the hate campaign against it ended and people focussed their energy on the real issue, which should be the focus of the Green New Deal (which I wholeheartedly support).
Infrequent Observer
You have hit the nail on the head on a point which I have frequently debated with Richard and which has never satisfactorily been resolved.
Richard places massive weight on the fact that Jersey has only exchanged information 5 times with the US under the Jersey/US TIEA. Indeed, this is a pillar of Richard’s attack on the “weakness” of TIEAs. I have repeatedly said that this is very likely because Jersey financial institutions simply don’t do US-related business and don’t actually want it because its too difficult to deal with it in a compliant manner, and too risky for the financial institution to trip itself up in the process. So, as a result, Jersey does next to no US-related business and instead that business finds its way to other jurisdictions where the financial institutions or service providers offer a service of “total non-compliance”, so that there is then no risk ot them tripping up when trying to comply ! Switzerland is in my view the primary “beneficiary” of this situation, as borne out by the UBS affair.
So if the US-related business is not going to Jersey, why on earth would there be a large number of requests for information to be exchanged ? I can see the logic of expecting the figure to be high (“the US is a huge country and Jersey is a large offshore finance centre so the figures ought to be higher”), but ONLY if Jersey is doing lots of US-related business, which it isn’t !
So your question is an excellent one. How many requests for information from the US have been declined by Jersey ? Richard places great weight on his connections in the right places, so it should be easy enough for him to use those connections to find out these figures from the relevant US Treasury Department.
My prediction is that the US Treasury Department will confirm that a very low number or even nil requests by the US Treasury/IRS for information from Jersey have been declined, which in my view would blow a massive hole in the credibility of Richard’s ongoing argument against the value of TIEAs. Strangely enough, the G20 countries don’t appear to have a problem with TIEAs. They seem to think that they work, and that suggests that they aren’t getting regularly thwarted by requests for information being rejected.
It seems that Richard is the only one with the major problem with TIEAs, and that the very countries who want to benefit from them feel that they are indeed benefitting from them as intended.
Richard – over to you !
I would refer you to a statement released by the Malaysian government refuting the listing by the OECD of Malaysia (Labuan) being on the OECD classification of a “jurisdiction who have yet to commit to the OECD standard for tax information exchange”. Clearly, if Singapore and Hong Kong can be in the second classification, then so too must Malaysia.
http://www.bnm.gov.my
Martin
You’re whistling in the wind.
Plead innocent for as long as you like. The jury has convicted you.
Richard
Rupert
As ever utterly meaningless twaddle
And every informed commentator in the world agrees with the arguments I have put forward on this issue.
It is only those who wish to continue handling stolen money who argue otherwise.
Richard
Richard,
I don’t believe your very strong words against Rupert actually answer his (or my) question about the number of TIEA requests made by the USA to Jersey. (Quote source – not that I would think you would make it up to further your cause by the way)
Looking forward to a similar rebuff.
IO
Richard,
If the jury has ‘convicted’ Malaysia, it follows that all charges against the Crown Dependencies have been dropped. That is to say we (along with every country on all lists) were charged with the same offence, tried by the same judge and declared innocent by the same jury.
IO
Richard
Your post number 12 above avoids my question completely. You have a habit of doing this whenever you are put on the spot to justify your stance. My point is a totally valid one and you have not answered it. Why not ? Have the US made more than 5 applications to Jersey for exchanges of information under the TIEA ? You know that you can get access to the answer so why don’t you do instead of ducking the issue ?
You’re the one who makes all these allegations and now you have a chance to actually prove your position but you don’t seem very willing to do so. You can’t pick and choose which battles to fight when you’ve become such a high profile “celebrity”. This is a really big point as its so pivotal to your overall stance against Jersey and the offshore world, and to the contents of this entire website.
I’m sure I’m not the only one who will be intrigued by the statistics that you obtain from Washington, assuming of course that you will actually share them with us.
I have managed to get my savings out of my bank in the Isle of Man before it collapses under the debacle of the Kaupthing bank collapse where 10,000 ordianry joes put their savings & now stand to only get back 60p in the £. The Isle of Man is cocking a snook at Gordon Brown’s policy (vis: “every government should vouchsafe savings & deposits in its banks”). For its part HM Government will not help because Alistair Darling says: “IoM is a tax haven in the middle of the Irish Sea” and it has to paddle its own canoe.
The IoM Government has been busy trying to get rid of the label ‘tax haven’.
Now after the g20 the IoM has been entered on the Organisation for Economic Co-operation & Development’s (OECD) list of compliant tax havens! How did the IoM qualify to be able to drop the pejorative tag TAX HAVEN? Simple! In signing up to compliance Allen Bell was not swearing on oath that the Isle of Man’s financial services industry was now & henceforth transparent & squeeky clean in every respect.
Look closely at what The IoM actually signed up to. The devil is in the detail of Article 26 which on close examination is empty rhetoric, because in reality it is a toothless tiger. No country should have any problem signing up to it because it only applies to the man in the street with a named account (ie: you, me & every other joe). It does not apply to a mega rich person with a numbered ’shell’ account, or to trusts set up with the deliberate intention to evade paying taxes, or any other jiggery-pokery financial device serving the same purpose. Also it does not apply to illicit business bank accounts.
What is more, someone has to report a named account that they believe to be designed to evade paying taxes. Now how on earth is that going to happen? Exactly who is going to do this ? For a start a ‘number’ is digit not a name ! No wonder Switzerland & Lichenstein no longer have a problem in principle to signing up to the Tax Convention. They just need to get assurances around the ‘privacy’ issues & they will sign up! What a farce!
The G20 has made it look as though the OECD now has an orchard full of nice, clean apple trees but it has not addressed the issue that many of the rosy apples they produce are all still rotten to the core.
It is illicit business as usual for the Isle of Man. It continues to be a tax haven where those who are mega rich can obtain a secret & secure account that stands way outside the OECD’s tax evasion net!
I believe the OECD has not gone far enough in this whole issue of tax evasion through places like the IoM. Is it because it is influenced by vested interests in high places to ensure that the secret mechanisms of tax evasion continue to operate in such places which are now on the white list?
“It continues to be a tax haven where those who are mega rich can obtain a secret & secure account that stands way outside the OECD’s tax evasion net!”
Richard, it ill behoves your blog to allow people to print downright lies.
Paul
It ill behoves you to deny the truth
Jersey, Guernsey and the Isle of Man remain places that deliberately and knowingly facilitate tax evasion.
The EU STD withholding option proves it.
Richard
Jim, the Kaupthing bank (IOM) debackle is firmly with the British Government who immorally used anti terrorism legislation to steal the funds from Kaupthing IOM, as the British branch was no longer solvent and then went no the offensive when the IOM asked for the money back, claiming publically that the heinous tax stealing, baby murdering Manx wanted the British gov to over their insured deposits.
“Never a frown with Gordon Brown”
Interesting how Richard seems totally incapable of answering either Rupert or Paul in a coherent or sensible manner.
Jack et al
I have answered the question so many times it is not worth bothering
I do not know how many request Jersey got
As I hve proven Cayman (which is likely to have more US business, I agree) is budggeting on 120 requests a year
The point is not that Jersey is not complying – which you people seem to think I’m making – it is that the model itself is utterly useless so that it is almost impossible to get the data needed to make a valid request – precisely (and this is where I blame you) because of the secrecy you deliberately create to facilitate the handling of stolen property – which tax evaded funds are
Even the Economist seems to agree with me today
Debate over
You like making the point endlessly – but I won’t repeat my answer endlessly.
Richard
Richard,
I never expect you to give a straight answer to a straight question, but now we, the Crown Dependencies, UK, US, in fact all G20 nations are in the same club, I’ll let it go. We can’t bicker now we have a common goal (enemy), we should and will march shoulder to shoulder going after the tax havens. Gib, Monaco, Netherlands all need to be invaded as they are stealing money from our jurisdictions. As for those countries below Tax Haven status, the so called ‘Other Financial Centres’ don’t start me on them.
Let me know how I join the TJN and help stop the scandal. You are no longer a lone voice, you have mine and all probably many more from your new club members.
Keep up the good work.
IO
@Paul
Hi Paul — why should a whilstleblower tell us lies? I have evidence that thousands of accounts have been moved from the IoM to enable the Treasury Minister to deny that they were ever there!
@creg
Hi creg – no they didn’t use anti terrorism legislation in respect of the Kaupthing IOM bank. That legislation was used in respect of Lansbanki. Receivership legislation was used by the UK Treasury to freeze (under sealed High Court Order) £550Million of savers assets which had been transferred to Kaupthing UK from KSFIOM ostensibly to protect it from being grabbed by Iceland! It was that which caused the collapse of KSFIOM because this act deprived KSFIOM of its liquidity, as a consequence of which it had its licence withdrawn.
@Patrick Shiu
@Patrick Shiu
Patrick,
Yes Labuan is small, but don’t judge by the island size, their banking and businesses in Labuan is actually the KEY to malaysian business and banking. It can be said as ALL big sum of overseas money: if they want to enter Malaysian Bank, they MUST go through Labuan Offshore Bank/ Account.
Otherwise, if they directly TT to Malaysian Inshore Account, that money will be freezed, the owner cannot withdraw it, and if not solve the matter after 3 years, that’s it, your money now belongs to “government”.
The advantage of account in Labuan Offshore Bank, they are represented by block of accounts (i.e. in one block of accounts, there are numbers of individual accounts belong to corporate or individual, either clean or uncluean one, who knows). Every individual or companies to open the account MUST also open an Offshore Companies with suffixes (Sdn. Bhd. = Malaysia; Limited = HK, BV, they may choose one).
Patrick,
Yes Labuan is small, but don’t judge by the island size, their banking and businesses in Labuan is actually the KEY to Malaysian business and banking. It can be said as ALL big sum of overseas money: if they want to enter Malaysian Bank, they MUST go through Labuan Offshore Bank/ Account.
Otherwise, if they directly TT to Malaysian Inshore Account, that money will be freeze, the owner cannot withdraw it, and if not solve the matter after 3 years, that’s it, your money now belongs to “government”.
The advantage of account in Labuan Offshore Bank, they are represented by block of accounts (i.e. in one block of accounts, there are numbers of individual accounts belong to corporate or individual, either clean or unclean one, who knows). Every individual or companies to open the account MUST also open an Offshore Companies with suffixes (Sdn. Bhd. = Malaysia; Limited = HK, BV, they may choose one).
When authorities request for the info on accounts/funds, they will be presented as block of account and funds (i.e. total sum of funds from those sub-accounts), then the detail of every individual accounts are concealed, and cannot be Taxed, until they enter individually into Malaysian Inshore Bank. From that account, they can be TT to other accounts anywhere in the world.
That is actually safe haven to do transaction of unclean money from/to unclean individuals/ companies.
I’m Robotic Engineer, and off course this is not my field of expertise, but, many BUSINESSMAN, businessman wannabe, and POLITICIANS very well understood about these procedures, and widely used by them especially when dealing with unclean transactions.
I advise you, if you really want to know more, you should do thorough study on this LABUAN OFFSHORE banking topic. Finally, I”M GLAD OECD has come out with the list, hopefully the TRUTH will prevail for the sake of justice and democracy.
“The Crown Dependencies of Jersey Guernsey and Isle of Man are not on the list because they have signed a series of what can at best be called token tax information exchange agreements with places like the Faroe Islands.”
Jersey has signed agreements with the UK, France and the USA (amongst others) and these countries are “places like the Faroe Islands”??
I suggest you try to be more accurate if you wish to be taken seriously.
SOME REAL THOUGHTS AND NOT BANTER!
I suspect that all this will come to nothing more than tax information exchange! You cannot enact financial terrorism on other sovereign jurisdictions without self-implications. There is a new world order called “Globalization”. In this context, moving this any further then information exchanges makes no sense… One reaction will result in other consequential reactions, which in the end will make things worse.
First of, the UK has been the biggest tax haven for wealthy individuals around the world (nomads). Under the current context, and based on some new tax rules, they are are now burdened and now leaving the UK. This has economic consequences and eventually tax consequences. The US has also the same hypocritical position, i.e. I can think of Delaware for example. The two biggest proponents of bullying smaller countries called “tax havens” are in fact the largest “Tax Havens”. Forcing STTH will eventual lead to closing tax loopholes at home. This will have unintended economic consequences as well.
What the proponents of STTHA legislation fail it too realize is the domino fact this initiative will have; even in terms of the impact on capital movement, risk transfer, etc.; and particularly on their own economies. Much is unthought, and largely by people who don’t understand globalization, are only linear in their understanding (politically motivated) and are tinkering on the verge of protectionism. Yes, you must get your own financial houses in shape. Simply stop spending more than you can afford; but that should NOT be achieved by overtly attacking other jurisdictions, i.e. threat of financial sanction et al. At least not without an well thought out perspective on the implications.
No doubt, more academics need to weigh in on this issue. Here are some thoughts from some of the academics I’ve read following discussions on current tax rhetoric:
: US or other top financial centers will not remain the top banking centers if such countries start over taxing wealthy bankers/banking industry. There are plenty of other places in other more business friendly European, Americas or emerging countries banks will/can move to. Banks are now global institutions! Capital can originate from anywhere. For example, although the US are unhappy about their trade deficit with China, China is the biggest financial supporter of the US debt. So why hasn’t the US placed trade sanctions on China? What would be the implications for the US economy if they did?
: Overtaxing businesses will only result in the increase cost of business, and in the globalization context, the flight of capital to lower tax/cost of business centers/regions. Those countries who put up protectionism barriers (who do not currently view the world as a village, but merely domestic) will help to create very tense economic and inter-country relationship. One only has to think about the last World War.
:The G8 in the next 5-10 years will experience a new World order. In fact, the G8 will dissolve or lose its significant standing. China will become the largest economy in the world (as it was back in the early 18th Century). The current treatment of STTHA will become a mockery as China flouts its muscle. In the context of globalization and the “village” et al; all this talk further than information exchange becomes meaningless.
: Forcing STTHA will eventual be a UN topic on fair and balance, treatment, unless the advocates do the same at home.
So, bantering on without understanding the new world context; in my opinion, is dangerous and can result in unintended consequences. Economic and tax policies have and are now becoming more complicated; and less linear. One can only look at the current financial crisis as an example. Policies are further reaching then within the boundaries of one’s own country; and can have an opposite and equal reaction from that intended. All policy making must now be perceived in this context.
In this context I predict OECD, which excludes the largest emerging economies – China, Indian, Russia and Brazil will have some very significant challenges ahead. The playing field is leveling or not?
SN
P.S. I also see the US & EU undergoing a prolonged decline as capital truly becomes global. As global companies serve many markets, redomiciling to a preferred country/region will become a more frequent occurrence. The wrong tax policy will only spur this on! Tax policy can no longer only be viewed from a domestic perspective.