As the FT has reported:
Bermuda's political and business elite is responding to the G7 push for a minimum corporate income tax as it would to the approach of an Atlantic hurricane. Officials are looking to ride out the storm – and keep intact a 19th-century revenue regime that leaves company profits untouched.
They note Curtis Dickinson, the island's finance minister, saying:
We have a system in place for 200 years. It's not perfect. It does require some adjustment. But we would like to do that on our own and not have someone tell us to change our system to fit some global initiative . . . I would say it's a sovereignty issue.
He is right, in a way. The campaign to tackle tax haven abuse, in which I think it fair to say I have played a part, has always been about sovereignty, or rather the abuse of the sovereignty that a country should have to choose its own tax system that tax havens have always deliberately and knowingly undermined.
As part of that campaign I realised that the term tax haven was insufficient to define the problem we were addressing. Tax havens came in too many firms for the description to be useful. So, I defined secrecy jurisdictions instead. I defined these as :
places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain with that regulation being designed to undermine the legislation or regulation of another jurisdiction and with the secrecy jurisdictions also creating 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 term has been very widely used since I defined it, not least by the OECD.
Using this widely accepted definition Bermuda has for decades been seeking to impose its tax will on other countries. It has deliberately permitted itself to be captured by a financial services industry elite to effectively be part of a direct attack on the democratic freedom of countries to tax as they will. Bermuda hoped to always get away with this, even though in the article it is admitted that the result is a deeply regressive tax system in Bermuda that hits the poorest there hardest (not that, I suspect, the financial services elite much care about that).
And now Bermuda are complaining that their sovereignty is being impinged. You literally could not make the hypocrisy inherent in that claim up.
I doubt there will be anyone, anywhere, with sympathy with Bermudan on this. Or Jersey, Cayman, the Isle of Man, or anywhere else of similar ilk. For them the game of peddling abuse is nearly up, and not a moment too soon. Mr Dickinson needs to shed his tears in private. The world will not be taken in again.
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Tax Havens??
How about calling them something like ;–
Greedy, Unjust, Tarnished, Tax Evasion Regime countries
Or GUTTER countries
“the abuse of the sovereignty that a country should have to choose its own tax system”
Switzerland is a sovereign country.
So presumably it can choose its own tax system.
But you seem to think that’s wrong. “How dare the Swiss have a different tax system than the British. It undermines us”
What makes British sovereignty more important than Swiss?
Any country can choose its own tax system
It may not undermine that of another country
By imposing a ‘minimum rate’ world wide, that would undermine a country’s sovereign right to choose it’s own tax system.
Who gets to decide counts as being “undermined”? A sovereign country decides on it’s tax system. Another country says they don’t like it and uses bully-boy tactics to force the other country to change? And that’s OK by you as you side with the bullies. Countries that can’t run their economies without taxing the heck out of their citizens get to force their ideology on countries that democratically chose another path.
” Any country can choose its own tax system
It may not undermine that of another country”
So it can only choose its own tax system if Richard Murphy approves of it. How very colonial.
The minimum tax does not force a country to change, or collect tax against its will
It charges a minimum tax rate on a company headquartered in a country with a tax rate above that minimum. That is all. There is no threat to sovereignty in that, at all.
This is interesting.
So suppose the UK did introduce a wealth tax as you advocate and another country did not have a wealth tax. That would undermine the UK’s position as the wealthy could relocate – or at the very least wealthy people might decide not to come to the UK.
You think that would give the UK the right to demand that the other country impose a wealth tax?
And suppose the USA were to increase taxes, they should be able to force all other countries to increase their tax rates as well?
Who decides which countries sovereignty trumps all others? Is it a case that the big economies can force small economies to do their bidding? Colonialism and Empire by another route?
I have not suggested a wealth tax
I argue against a wealth tax
I argue for higher taxes on income derived from wealth
So you made your claims up. That seems to be a common problem with you trolls this morning. Others doing so will be deleted
I did not make a claim, I asked a question. OK I will rephrase.
So let us suppose the UK did introduce higher taxes on income derived from wealth as you advocate and another country did not have impose those taxes. That would undermine the UK’s position as the wealthy could relocate — or at the very least wealthy people might decide not to come to the UK.
And the rest of my question remains. Now please be courteous and answer. It still seems to be that you are advocating for world-wide tax polices to be decided by those with the most power. A small country willing to forgo taxes on a company in order to attract it to create jobs would not be able to do so. How is that not the rich and powerful countries dictating to the small and weak?
What is the advantage of the wealthy moving to the UK?
WHat is so good about wealth – which need not, of course, follow the wealthy?
Why would we want people here who can buy their way out of our tax system?
Why would we want to create inequality?
Why would we want to push house prices higher?
Why would we want to increase rentierism which is what they are associated with?
And why would we want to perpetuate the regressivity of the tax system we already have?
But most of all, what evidence is there that those already wealthy create jobs?
So you think British sovereignty over-rides Swiss sovereignty.
Why?
That is not what I said
I said sovereignty should be mutually respected
You made your own claim up
You’re contradicting yourself. First you say that countries can’t ‘undermine’ another’s tax policies, then you say they should respect each other’s rights to decide their own policies.
So should the British should respect the sovereign right of the Swiss to decide their own tax policies, even if, in the view of the British, it undermines theirs? Or not?
And at what point does this ‘mutual respect’ stop and who gets to decide what that point is?
We must respect the Swiss right to have a tax system of its won
But we have the right to protect our own tax bases
We can use country-by-country reporting to help determine corporate tax bases
And residency rules to determine others
It really is not hard. This issue has been long resolved in international tax
The only problem has been the non-compliance if tax havens
You are wasting my time with pointless questions
Do not expect to get another go
Surely the issue here is the “secrecy” part of a sovereign’s tax system. Where money is simply transferred into a country to avoid tax and no business really exists then this is an abuse of the sovereignty of others. The concept of a fixed minimum tax regime means that businesses that say do business in Africa or any other country will be obliged to pay to those countries an amount of tax based on the business conducted in those countries rather than using the tax system and business rules to shift profits out of that country to say a country that imposes a zero rate of tax and zero accounting transparency for the sole purpose of applying a small amount of fees. The so called business in the zero rate country does not exist and the “profits” moved to that territory are simply shifted out again for the benefit of individuals abusing the system to avoid paying the legitimate corporate taxes where the trading is actually being carried out. To say that this abuses the sovereign rights of say Switzerland to impose whatever tax rate it wants is spurious. Switzerland can have a zero rate tax for trade carried out within its sovereign borders if it so wishes. What it cannot do is extract profits from another country where a trade exists and tax it at a low or zero rate. That is in effect theft from the profits from trade in another country.
Even one of your advesaries agrees:
A certain partner in a magic circle law firm posted: ‘This is more serious for Bermuda than a sovereignty issue. Even if Bermuda doesn’t change its laws, the profits of Bermudan MNE subsidiaries will still get taxed – but by other countries, and not by Bermuda.’
https://www.linkedin.com/posts/danneidle_its-a-sovereignty-issue-bermuda-digs-activity-6813733279867392001-dasT
Do you think the Big 4 and other law firms, consultants etc will now pull out of tax havens?
No, because most of their business in those places still relates to personal clients, their trusts and personal servo9ce companies
Countries in which tax-minimising multinational corporations are based (e.g. the US) will continue to encourage the those corporations to dodge tax in other countries in which they operate (e.g. almost everywhere else) in order to maximise the amount of they they pay in their home country. It will be their patriotic duty.
Those corporations and the low tax jurisdictions they use will therefore carry on much as now and the US treasury will be in clover.
Biden knows what he is doing and it has nothing to do with international cooperation. It’s just good old-fashioned financial imperialism.
But ignoring for the moment whether we have the right to tell (eg) Switzerland what their tax rates should be, how do we enforce it? We used to use gunboats, but Switzerland is protected by mountains. We caused a lot of trouble when we used literal gunboats to over-ride Chinas’s soverinty to force them to trade the way we insisted they should do did.
Jersey is primarily involved in Funds which are unaffected, so no idea why you keep on peddling this doomsday rubbish.
See today’s JEP
Read it and it is the same old negative rubbish. Remember you predicted that Jersey would go bust by 2015. The island will simply adapt to the fiscal changes and life carries on. Nobody in the Finance Industry is remotely concerned.
Nonsense: they know I have always been right and I am quite sure I am now
You are the only person online who keeps on banging on about the end of Jersey’s finance Industry when it is booming more than ever. Then you seem to be making predictions upon your own assumption that all the Finance Industry does is rely on 0-10. There will be no reaction to your JEP article because we have heard it all before and until something ‘actually’ happens – people have no time for your doomsday nonsense.
Of course, that’s why they asked me…..I did not offer