The Guernsey Press has published an article in response to the Maunday Thursday letters. It says:
Even when the OECD gives the Bailiwicks a clean bill of health, it is not good enough for either the UK’s Chancellor or Prime Minister. Still the drip-feed of animosity continues, still the same reference to ‘tax havens’.
In many respects, where we are is worse than before the G20 summit. Then, there was a chance that the islands would, indeed, be found wanting. What is now clear, however, is that there is an underlying element of malice aimed at the offshore dependencies and it emanates from Downing Street.
As the Financial Times reported last week, Mr Brown wants the Crown Dependencies to go beyond the current minimum standards of regulation and transparency, begging the question, what standards are we trying to achieve?
I’ll ignore the vitriol that disguises Guernsey realising that notice has been served on the abuse that it facilitates. I’ll suggest instead that this is what is needed:
- All company data on public record: beneficial owners, real directors, real trading address, full accounts, a constitution.
- All trusts to be registered with Guernsey authorities with a copy of the trust deed, full details of the settlor, beneficiaries, trustees, side letters of wishes, enforcers and other management arrangements that the trustees might be accustomed to comply with.
- Guernsey authorities to require submission of annual accounts by all companies and trusts, even if the latter may not as yet go on public record. That can wait until the UK requires this.
- End of the EU STD withholding tax option for Guernsey account holders.
- Abolition of Protected Cell Companies and related corporate forms.
- Abolition of all trust arrangements that might allow retention of powers by the settlor.
- Banning of foundations.
- Offering information sharing agreements with all who request them unless genuine risk of human rights violation can be shown to be a concern.
- Support adoption of the new EU STD.
- Demand full automatic information sharing.
That will do for starters.
Then we’ll believe you’re serious about tackling tax evasion and avoidance. We won’t until you do this.
And do it quickly, or expect sanctions. The world’s poorest people will expect them to be imposed.
Jersey and the Isle of Man — please take note.
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:
They’re already lining up to discredit Brown because of his coterie, and so lead people to believe that anything he says is lies. Guernsey doesn’t like its politicians much, but its view on the UK is mainly sourced through the Mail and the Sun, with a dabbling of Telegraph. So alll Lyndon Trott has to do is wave his TIEAs and suddenly all is well. Peace in our time.
If Brown wants to make an impression next May he could do no worse than listen to Prem Sikka. Or Compass. At least fight an election on ideological grounds rather than how much more one can appease the rich than the other.
Where in the world are these standards currently used? I would wholeheartedly agree with them if they were applied everywhere but the fact is they aren’t.
This once again shows Richard is not interested in reducing reducing tax evaision or avoidance but his underlying aim is to destroy any competition the UK has in finance, and destroy the lives of those locals in the Crown Depencies.
It’s strange how he or Brown never states the UK should implement these changes first.
Who did you say TJN’s primary donor was?
The Guernsey Press is at it again
http://www.thisisguernsey.com/2009/04/15/a-challenge-for-finance/
This time it’s even more misguided.
So long as Guernsey – & the other Crown Dependencies – avoid facing up to Richard’s 10 point list then ‘Middle Britain’ will go on paying for everything.
However, now ‘Middle Britain’ is shouting ‘enough’s enough!’ as there is fast growing resentment & anger about how the wealthy are using places like Guernsey to escape paying their fair share of taxes.
1. Yes, when the UK, US and all EU and G20 countries, as well as all other offshore finance centres do it.
2. Do you mean with the GFSC or the Guernsey tax authorities ? The former already have access to this information on their annual visits. The latter has no interest in that information as no local tax liability is at stake.
3. As per 1 above.
4. Its inevitable at some point but only when all other EUSTD signatories including Switzerland do likewise. But a pointless exercise until Singapore, Hong Kong, Panama, the Bahamas and Dubai etc sign up as all offshore capital will simply migrate there with no extra onshore taxes collected. But why on earth will those jurisdictions sign up to the EUSTD?
5. Why, if total transparency is to be in place ? Last I heard the UK and probably the US are enacting PCC legislation !
6. Not fussed either way. Many Guernsey trustees already use better trust legislation in Cayman, BVI or Bahamas. It would have no effect.
7. Foundations law is not yet enacted. Personally I am against a civil law entity in a trust law jurisdiction. Its far simpler to use Panamanian, Bahamian or Liechtenstein foundations law and to administer them from Guernsey.
8, 9 and 10. As per 1, 3 and 4 above.
Rupert, my understanding is that Gordon Brown is expecting Guernsey, Jersey and IOM to take a lead so your point 1 is irrelevant. I expect Guernsey et al will behave like a badly behaved child kicking and screaming and resisting. Being a spoilt little brat you wont let go of your lovely toys and share with less fortunate children..be nice, play fair and share..you may like yourselves better for it !
Robbie
Take a step back and look at the bigger picture. What is the objective of all these anti-offshore initiatives? Why, its to reduce tax leakage from onshore jurisdictions. If the whole world does not follow the same rules then its obvious that offshore capital currently held in the Crown Dependencies, over which the UK has a degree of influence, will simply migrate to jurisdictions such as Hong Kong, Singapore, Dubai, Bahrain, Panama and Switzerland, all fiercely independent and under no influence whatsoever from the UK, the US or the EU. Even Richard has accepted this point on a previous thread. So what is the net result. The Crown Dependencies go bust and no more tax revenues are generated onshore. In fact, onshore tax revenues would fall as capital is moved to totally non-compliant countries who couldnt give a stuff about the UK, the US or the EU. So what’s the point? Isnt it better to have a hand on the tiller than to drive capital underground ? Why on earth would the Crown Dependencies take the initiative to start the drive underground ? Its not difficult to deem a proactive move by the Crown Dependencies as being totally reckless if capital is driven underground before these very obvious boltholes are closed.
But here’s another point to ponder. Assume that a tax-compliant structure is currently administered in Jersey for a client who is UK-connected. Let’s call it a trust settled under English law with a Jersey trustee, with an underlying Bahamas company which has a Jersey bank account. The directors of the Bahamas company are residents of Jersey who are regulated by the JFSC. Everything is run out of Jersey and all UK trust tax returns are filed.
Now let’s assume that Gordon Brown doesnt want Jersey to do this any more. So the Jersey trustee resigns in favour of a New Zealand or Singapore trustee. The directors of the corporate trustee are three professionals resident in Hong Kong, Singapore and Dubai. The Jersey directors of the Bahamas company resign and are replaced by directors resident in any or all of Hong Kong, Singapore and Dubai, who also are the sole bank signatories for a bank account which has been moved from Jersey to either Bahrain, Dubai or Singapore.
But the new directors and trustees are wanting to outsource the bookkeeping, accounting and company secretarial work to somewhere where such skills are on abundance, and they note that there are lots of people with those exact skills in the Crown Dependencies, so they choose to outsource to a Jersey-based business. Ironically, they choose the same people who previously managed the structure. By those people are no longer regulated in Jersey as they are not now providing any fiduciary duties. They are merely acting as bookkeepers and accountants and providing corporate secretarial services, none of which are regulated activities. They aren’t required to provide any tax information to any third parties as that’s no longer their responsibility. The trustees on the other side of the world now have that responsibility.
With modern communication facilities all of this is 100% possible and I have no doubt whatsoever that its exactly what would happen if necessary. The Crown Dependencies would still have a vibrant service industry, yet the ability to enforce the EUSTD and TIEAs will have simply disappeared.
Not a dollar or pound or euro of extra tax is collected as a result. So what exactly has been achieved ?
Its also worth
All of these demands are quite insulting and hypocritical. You can only push so far.
Tom
We can push criminals just as far as we like
Please don’t use this site to excuse criminal behaviour.
Richard
Rupert
You really do live in cloud cuckoo land.
We now have a G20 policy on tax havens and the major govenemtns (as you rightly note) singing in unison on their need for tax revenues – needed to bail out the banks who facilitate abuse through the Channel Islands and the other places of whom you sing praises.
All have committed to reform.
I believe the demand for information sharing is real, and will spread.
Let’s look at the EU STD for a start – now so far advanced in its new form that I undertsand no further amendments are possible, and likely to be approved soon.
The reality is that this will look through every structure you create for EU residents and will, when the withholding option goes (and it will) destro your offshore sector.
Sanctions on other states will achieve the same result. Don’t presume they won’t happen. The economic imperative will require them. They will happen.
You live a fantasy. I live a reality. Not one that will hapen overnight – I concede, but one that is inevitably on its way. The people of the world will demand it.
You’re very, very outnumbered.
Richard
Richard
You have missed my point. Perhaps I didnt make it clearly enough. Of course an extended EUSTD would catch many structures created for EU residents, but ONLY if any of the service providers are themselves within the reporting scope of the EUSTD. If the entire structure does not use any vehicles or service providers from jurisdictions which are a party to the EUSTD then there is a gaping black whole in the entire process, and until that hole is plugged, putting a squeeze on the Crown Dependencies etc is a pointless exercise.
Singapore, Hong Kong, New Zealand, the UAE and Bahrain are not a party to the EUSTD and have to date shown no interest in signing up to it. Actually, let’s add the US (Delaware) to that list as it could also play quite a useful role. Who is going to pressure these countries to sign up to a European directive and, more importantly, even if they do, when will it be ? The timing of it would be crucial because the immediate effect is that global wealth gravitates there.
Its not cloud cuckoo land at all. Its the real world. Why do you think it is that three of the fastest growing banks in Singapore are the subsidiaries of UBS, Credit Suisse and Julius Baer ? Could it be as a response to client demands to move funds from Switzerland ? Of course it is, and how much bigger will that shift be if Switzerland has to give up the option to withhold under the EUSTD ?
I will stress my point again. Until every jurisdiction in the world signs up to the EUSTD, then it may have the effect if hitting those jurisdictions who are a party to it, but will only benefit those jurisdictions who are outside of its scope. It will not result in more tax being paid onshore. You have already previously accepted that this is a vital hurdle to overcome but how do you propose that it is dealt with ?
@Rupert
There already is a ‘black hole’ with trillions of dollars & Pounds Sterling which are outside any international ‘accounting’ protocol. This is a significant factor in the international financial crisis as the books simply can’t be balanced. A global solution to the world’s economic problems need an international consensus to set up accounting structures that brings that vast wealth in the ‘black hole’ into a visibility and fiscal accountability. I don’t pretend that this will be easy, just that it is necessary for a variety of reasons, including the fact that we live with a minority of the world’s population living in luxury whilst the majority live in dire poverty.
Richard
Tax avoidance is not a criminal activity, tax evasion is. Guernsey does not indulge in tax evasion. Furthermore, the tax avoidance industry within Guernsey is relatively small when compared too the commercial and law industry.
@Tom
😯 😯 😯 😯
I presume, sir, that you must be living on some other island called ‘Guernsey’… 😛
Jim Justice
Re your 12.51 post, I agree with you, but the only wealth which is outside of the system is the undeclared wealth which, by definition, is not “in the system”. The tax-compliant wealth, using properly disclosed structures, is not a contributor to that figure because by definition that wealth is “in the system”.
Every effort possible should be taken to catch the illegal undeclared funds, and recent initiatives will go a very long way to achieving that. But the lawful tax mitigation structures which are in place and which are run totally in accordance with tax reporting obligations and anti-avoidance provisions are not adding to that problem. If countries like the UK need to improve their own anti-avoidance legislation, as they have done constantly, then that’s absolutely fine. It always has been. But this unilateral attempt to deem lawful tax avoidance to be unlawful is a different tactic altogether.
Tom
I agree with Jim
If you don’t do tax evasion why do you allow the EU STD withholding option – whose only purpose can be the facilitation of tax evasion with your government’s willing consent?
Richard
Rupert
When tax avoidance is declared illegal how does it remain avoidance and not become evasion?
Richard
How can tax avoidance be declared illegal when it is, by definition, legal?
Tax evasion means breaking the law. Tax avoidance means arranging your affairs lawfully so as to reduce the amount of tax you pay.
Any country is free to change its laws to levy the taxes it wants. And any person liable to tax is required to comply with the law.
Richard
Re your comment, we all know why the withholding option was adopted by Jersey, Guernsey and the Isle of Man was offered by the EU. It was all part of the level playing field argument, knowing that Switzerland in particular was not going to agree to automatic exchange. But the real reason for it being offered to the Crown Dependencies was not because Switzerland wouldn’t play ball, because its clear that Switzerland could somehow have been forced into it, but because three full EU member states, Belgium, Austria and Luxembourg, also insisted on it. Sorry – but its impossible for the EU to force something on non-member territories when it cannot even force its own full member countries to agree to it.
In hindsight, aligning the Crown Dependencies with Austria, Luxembourg and Switzerland was a mistake. It implied that the Crown Dependencies felt that they were competing with those jurisdictions. In reality, we weren’t (although you will no doubt dispute that), but we feared the loss of all types of business, not just the stuff that shouldn’t have been here but also the Middle Eastern and Far Eastern business wanting non-tax privacy, to Switzerland, Singapore, Dubai and Hong Kong. That remains the case today, and it will inevitably happen unless those jurisdictions are simultaneously tied into the EUSTD. But nobody has yet been able to tell me when that might happen, as there is absolutely no sign of it. It may just be the price that the Crown Dependencies have to pay, but lets be reasonable here. Please don’t criticise the Crown Dependencies for committing to enter into precisely what we are asked to enter into, with the agreement of the EU. If the EU wasn’t happy with that withholding tax arrangement then it shouldn’t have agreed to it. Who negotiated that agreement with the EU on behalf of the Crown Dependencies ? Yes, you’ve guessed it…good old Gordon Brown. Call me a cynic, but that’s a tad two-faced if you ask me. How do you answer that one ?
Richard
Something is either illegal or it isn’t. At the moment, it isn’t. The UK statutory and case law is crystal clear on that. Once something is illegal, then it becomes a crime and then of course it becomes tax evasion. But the mechanism of achieving it isn’t exactly clear. It would be a remarkable piece of legislative drafting which deems any transactions with the Crown Dependencies to be unlawful, when the same transaction with other jurisdictions is not unlawful. I think its fair to say that such a law would be bounced around the courts for many years to come. Would it get through the House of Lords ? I doubt it very much.
If on the other hand it takes the direction of clearly defining “acceptable tax avoidance” and “unacceptable tax avoidance”, then the UK has always had that capacity anyway in each Budget. But that’s not an attack on the constitution of the Crown Dependencies, its an attack on “unacceptable tax avoidance” and I think that’s an entirely separate issue altogether as its non-discriminatory. Of course the UK can try to enact new anti-avoidance legislation with greater bite. It may or may not succeed, but that’s totally within its own powers and always has been and no doubt always will be. That’s fair game isn’t it ?
Rupert
I have tried to mail you and have discovered (twice, on separate days) that the email you give is false
All further postings from you will be blocked.
Richard
Richard
Apologies. I had not logged in to that email address within the specified period to keep it active. I only use it for blogging. I have activated a new email address as above and will keep it active. If you resend any emails they will be answered within the next 24 hours.