I was pleased to note this report in the Guardian yesterday:
The European parliament is pushing for UK overseas territories including the British Virgin Islands, Guernsey and Jersey to be added to an EU tax havens blacklist after the conclusion of the Brexit deal.
Sending a signal that tougher action on tax avoidance was required in response to the coronavirus pandemic, MEPs voted overwhelmingly in favour of adding more nations and territories to the list of non-cooperative jurisdictions.
Their logic was absolutely sound:
The resolution, passed earlier this week by a vote of 587 to 50, included measures calling for the automatic inclusion on the blacklist of countries which use a 0% tax regime. Among these are the UK overseas territories, viewed by transparency campaigners as havens for tax avoidance.
I will ignore the BVI for now; when the UK had to announce that law and order had effectively broken down there this week their inclusion on this list was, I think, inevitable.
Instead I want to comment on old foes of mine, which Jersey and Guernsey are. It's hard to recall now how much they featured on this blog at one time.
When these two (along with the Isle of Man, whose non-listing is hard to explain, barring the fact that they have the reputation of being more cooperative) persist in running a tax regime for companies that was deliberately designed to undermine the EU's requirements in its Code of Conduct on Business Taxation it is hardly surprising that the EU has now moved against them given that their protector, in the form of the UK, has now exited the EU. I hope that they anticipated this; I certainly did.
The issue now is for the sanction to have real bite. Whilst the abuse persists the EU should require that tax withholding takes place on all payments to these places. Unfortunately, this need not be the case at present. Require that the withholding be at a sensible rate of, say, 20% and suddenly EU listing would impose a real sanction. Then, at long last the abuse of the UK's Crown Dependencies as corporate boltholes would really begin to come to an end.
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Tax avoidance helps people with money to undermine and corrupt democracy.
Guilty as charged, so agreed that the book must be thrown at them.
This is not class war or ‘envy politics’ in my view. I want a world ran by the power of democracy – not money.
Once again the alarm bell is being sounded for the Crown Dendencies and possibly the string of Overseas Territories too. Of course these places have been providing their dubious facilities for centuries and the London government has supported them. But as a resident of Jersey I wonder if any of your readers have any suggestions about future actions and responsibilities if the axe does fall?
I presume your own “Plan B” is no longer an appropriate or likely option but the mix of BREXIT, COVID and Climate Change could render tourism type activities an unrealistic saviour for many years to come. Does the “British” status infer a London liability?
I rather suspect that liability will be denied now
Plan B should have been pursued a long time ago
Times is reporting today that UK govt has gifted vaccine to the Caymans. Wonder whether it’s doing the same for all the tax havens? NB I begrudge no-one on this earth the vaccine, I just wonder why tax havens can’t buy it direct.
I know you wanted to ignore the BVI but I couldn’t resist copying this from the BBC News site:
“The judge will investigate allegations of misuse of taxpayers’ money, concerns about government procurement, political interference in public appointments and what has been called a climate of fear in public service.
There are also claims a £30m fund for families struggling with Covid has been channelled to politicians’ allies.”
Seems so similar to the corruption in Westminster that I wonder if Sir Gary Hickinbottom shouldn’t first be investigating a bit closer to home.
I onky ignored this because I had already commented on it a day or so beforehand
The coincidences are horribly uncomfortable
I thought this was only a recommendation?
So what is the likelihood of Jersey and Guernsey making it onto the Blacklist next month then?
This will not happen because we have been here before and once the powers in the EU learn once again what Jersey actually does they will back off and we will not appear on the Blacklist.
Richard knows this anyway.
I do not
And explained why not to the JEP ysterday
Richard the European parliament is an empty can.
They do not have the final say on who goes on the Blacklist and Financial professionals in Jersey already know Jersey will not be on it. If they know it then you should as well.
It is business as usual in Jersey and nobody gives this EU Blacklist nonsense a second thought.
Politely, I do not believe you or the JEP would not have called me
And the MEPs influence the Commission without a doubt
How many times has Jersey been here Richard? Must be the 3rd is it?
Well top people in the Finance Industry do not believe it will happen so maybe the JEP should have phoned them instead,
I would not give a ha’pence worth of credibility to top people in your finance industry
It looks like you cannot appraise post Brexit risk