The reality of using tax havens is that they involve a risk. They are lightly regulated at best. Their capital is limited. Their financial services sectors are vastly over-extended. Their ability to withstand shock is very low. And so you end up with Cyprus.
Wealthy U.S. families that have or are considering offshore accounts are watching Cyprus closely.
"I think families are suddenly looking under the hood of these countries more closely," said Stephen Martiros, a Boston-based, independent consultant to individual investors and family offices. "People want to do a real scrub down in all these jurisdictions to make sure they understand the risks."
There's a simple answer: don't do it. The risk's not worth it.
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If Cyprus makes the wealthy think twice then that is good.
Tax havens promote and maintain inequality. It doesn’t matter how they dress themselves up. The “democratically” elected politicians in Guernsey can witter on about being well regulated…. yada, yada, yada. You can put lipstick on a pig, but it is still….
This is from wikipedia on Guernsey
“Financial services, such as banking, fund management, and insurance, account for about 37% of total income.[19] Tourism, manufacturing, and horticulture, mainly tomatoes and cut flowers, especially freesias, have been declining.”
“Guernsey also has a thriving non-finance industry. It is home to Specsavers Optical Group, which manages the largest optical chain in the UK and Ireland and also operates in Scandinavia, the Netherlands, Australia, New Zealand and Spain. Healthspan also has its headquarters in Guernsey.”
wikipedia on Cyprus
“According to the latest International Monetary Fund estimates, its per capita GDP (adjusted for purchasing power) at $28,381 is just above the average of the European Union.[89] Cyprus has been sought as a base for several offshore businesses for its highly developed infrastructure. Tourism, financial services, and shipping are significant parts of the economy. Economic policy of the Cyprus government has focused on meeting the criteria for admission to the European Union. The Cypriot government adopted the euro as the national currency on 1 January 2008”
Cyprus has followed the same basic template as Guernsey. Now of course they’re suffering the backdraft from the Greek financial crisis..
Wow.The amount of Russian money in Cyprus is staggering! Aside from the taxes being avoided and evaded, one wonders how much of this is crime money.
No wonder the legislators in Cyprus knocked back the government’s demands.