Tax call: Jersey will not act in isolation » Business » News » This Is Jersey.
Classic pig headedness and unethical conduct from Jersey here:
JERSEY faces renewed pressure to disclose tax information about Island bank accounts to other EU countries.
The Foot Report into offshore finance centres has recommended that Jersey set a firm date for introducing the European Union Savings Directive (EUSD) — which would mean that the Jersey tax office would automatically disclose interest earned in Jersey bank accounts held by EU residents to their national tax authorities.
Both Jersey and Guernsey have opposed the move, saying that to sign up to the EUSD before their competitors could damage the finance industry.
Jersey’s current position is that it will do so when everyone else does — when there is a ‘level playing field’ — but the report states that Jersey should get on with it, and calls on the UK to put pressure on other countries to sign up too.
The European Union Savings Tax Directive has one objective: the ending of tax evasion.
The withholding option with no information exchange allowed as an interim measure under the European Union Savings Tax Directive permits continued tax evasion by the EU resident holders of bank accounts in Jersey. My information suggests at least 50% pof account holders deny their own government information on their income from Jersey bank accounts. It is inevitable that the vast majority will do so because they are tax evading. But Jersey will do nothing to stop this obvious criminal abuse of other countries' tax law.
This is classic secrecy jurisdiction behaviour. 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. They do 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 withholding option under the European Union Savings Tax Directive is such a veil of secrecy.
And then Jersey has the cheek to say it is transparent. The exact opposite is the truth - and it is not chance that is the case - it is deliberately so.
On this occasion Michael Foot and I are definitely on the same side.
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Jersey are backtracking! According to this article from June 2009, Jersey claim to be committed to automatic information exchange by 2011:
http://www.thisisjersey.com/2009/06/26/tax-information-new-era-of-openness/
The Isle of Man have agreed to exchange from 2011.
so where are the supposed avoiders heading from jersey after the directive is accepted by the island?
Richard
Your precious EU has 4 countries ahead of Guernsey in your FSI, 3 of which which currently have w/holding tax option under the EUSTD.
The ‘level playing field’ argument which you disparagingly term ‘classic secrecy jurisdiction’ behaviour is a valid pragmatic argument to protect the economic well-being of a ‘micro-state’. One that will willingly move forward in concert with other jurisdictions / countries in adopting automatic info exchange. Guernsey (and Jersey) does not need and definitely does not want tax evaders. (I am potentially criminally liable if I do not disclose suspicion).
Where does your 50% figure come from , surely on your logic it is 100%?
As an aside have you had chance to read the Hunt review on Guernsey banking published today?
The Hunt Review has much praise for the positive effect of the banking industry on Guernsey’s economy.
It says nothing at all about TJNs assertion that wealthy people hoarding their money in places like Guernsey has a hugely detrimental effect on poor people in poorer nations.
Richard
Your 50% figure is way out. I have spoken this evening to three MDs of major Jersey banks, al
well known to me, who confirmed that only around 10% of their clients had opted for withholding tax.
Manx Vicar
The Hunt review highlighted how Guernsey is dependent on an industry that has no basis in the real economy. Of course Guernsey people don’t want to lose their prosperity, and I think you’ll find that there are frequent reminders that the problem is not greedy ignorant locals, but very, very savvy players of games.
But the malaise of natural loyalty to ones terre takes over as soon as ‘foreign influence’ is mentioned.
This whips up this self righteous “hands-off”.
But I have to ask: have you looked at the theory of the effect of disproportionate wealth concentration outside of real society? The influence it has, the aura of Magnificence it spreads through aspirational manipulation. The acceptance that competition in the way that destroys innocents is acceptable because of the wealth created?
That is no Christianity I have known.
Arnald,
I wasn’t suggesting the the wealthy people hoarding money in Guernsey were Guernsey residents. I am fully aware as a Manx resident that the vast majority of people who live “offshore” are ordinary working people struggling to make ends meet. “Disproportionate wealth concentration outside of real society” is indeed an issue. The problem seems to be that much of that wealth is hidden in places like Guernsey and the Isle of Man by people who don’t live there. There is a large bank in Douglas whose customers consist almost entirely of account holders who are residents of South Africa.
Richard,
I strongly agree with Rupert. Your 50% figure is way wrong…
Perhaps the 50% you refer to is small investors, each with a average £10,000 deposit. The other 50% with an average of £1,000,000 savings are using methods to avoid the EUSD.
Mark
Not quite correct. A significant number of investors are actually allowing their tax information to be exchanged, rather than getting around the EUSTD.
Richard,
I have to agree with the sentiment here that your 50% guess is way off the mark. I can only give ‘evidence’ regarding Guernsey, however my dealings with Jersey banks seem to suggest a very similar trend and in fact I have come a cross a few Jersey banks that do not offer the withholding tax option to their clients.
Guernsey …. all the facts and figures available from gov.gg points to a maximum ratio of withholding tax customers of 27%
2007 figures:
Cash on deposit in Guernsey = £111.47bil
10% of this was from EU countries = £11.47bil
Assuming a low return of 4% = £390 mil
EU tax at 15% = £58.5mil
retention in Guernsey of 25% should be £14.6mil
Amount retained = £3.9mil
This would indicate a maximum retention ratio of 27%
This is a MAXIMUM ratio as it does not include interest income from Bonds, cash funds etc. Purely interest on cash.
[…] Island commentators on here — many of whom are, I suspect, paid to comment, came back strongly. Take this comment: Richard Your 50% figure is way out. I have spoken this evening to three MDs of major Jersey banks, […]
Why are Indians, Africans, and Australians allowed to earn interest tax free in Jersey, but not the hard working EU citizens.
I have never understood that one!
Billy
They do all owe tax – it’s just EU citizens have automatic information exchange to make sure they pay and the rest might be evading – which does not remove their liability – it just means Jersey hides it for them
Which is exactly what secrecy jurisdictions do.
Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also 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.
Richard
Richard,
Thanks for the reply.
The currently increasing interchange of personal data, decline of personal privacy, and stranglehold of taxation is frightening.
If I make an online purchase of SKYPE credit when I am in Africa or Asia I am charged VAT, even though I make the purchase outside the EU, and use it outside the EU. This is because I have a UK address. 😥
And things will get worse as the EU takes over control of more and more.
The EUSTD is an EU taxation initiative, leading to the details of all personal financial wealth, financial transactions, and lifestyle being centrally controlled by the EU.
And EU MP’s are nicely “tax exempt”.
Not forgetting that VAT is an EU tax.
Regards
Billy