From The Voice of Russia

A Jersey-based finance company says David Cameron is playing politics over tax havens ahead of an international summit. The PM has invited representatives from Jersey, the Cayman Islands and other tax havens to London on the eve of the G8 meeting. VoR’s Vivienne Nunis reports.

The central theme of this month’s G8 Summit in Northern Ireland is tax avoidance.

Britain’s chairing the summit and chose the topic – so it’s no surprise David Cameron has decided he better be seen to be to doing something about it at home.

Focus on tax avoidance

The prime minister has summoned the leaders of Britain’s overseas territories and crown dependencies – including Gibraltar, Jersey and the British Virgin Islands – to London, in a bid to convince them to sign up to an existing OECD convention that allows for tax information to be shared between jurisdictions.

Nicholas Shaxson is the author of Treasure Islands – a book about offshore tax havens.

“The OECD Convention is part of a bigger picture. It is an information-sharing mechanism, it’s better than some information sharing mechanisms, it does have some weaknesses.”

But Geoff Cook, the CEO of Jersey Finance, has dismissed Mr Cameron’s motives.

“There’s a lot of public political posturing for the sake of the press in the lead up to the G8 so he can go there and say, ‘We’re committed to this change, by the way we’ve looked at it and we’re going to do it and we’ve looked at our crown dependencies and they’re all going to do it too.’”

No power to sign

He says the crown dependencies like Jersey don’t have the constitutional power to sign up to an international agreement such as the OECD tax covenant.

“We need the UK’s permission to sign overseas treaties, or at least their approval, and they haven’t actually yet granted that approval, so this is absolutely ridiculous really, when you say we’re being asked to come to London to sign a treaty, which actually the UK hasn’t given us the empowerment to sign.”

The campaign group ActionAid says it wants the prime minister to ensure the three crown dependencies and seven British overseas territories that are recognised as tax havens, do sign up to the OECD agreement.

The group says nearly one in every two dollars of large corporate investment in developing countries comes via a tax haven. And 98% of FTSE 100 multinationals have companies based there.

Jersey

I asked Nicholas Shaxson to explain how places like Jersey are helping people avoid paying sufficient tax.

“There are various categories of income upon which there is zero tax levied, there are various secrecy provisions, it’s hard to find out a lot of things that happen in Jersey. Jersey does sometimes provide on-request information, but it’s a trickle not a flood. Of the fledgling international initiatives to crack down on this, some jurisdictions like the Cayman Islands have agreed to certain somewhat more open forms of information exchange but Jersey has been one of the more recalcitrant jurisdictions.”

But Geoff Cook from Jersey Finance defends the island’s tax practices.

“I absolutely deny that it’s a tax haven in the sense that it encourages and supports and abets tax evasion, it doesn’t – it fights against it very strongly. Is there any country in the world with a 100% fail safe system? There isn’t.”

He says Jersey will sign up to the OECD covenant, which currently requires countries to share data on request. He says Jersey will even sign up if the agreement is strengthened, making the sharing of tax data automatic.

“If they move to fully automatic as the global standard and introduce stronger data collection requirements on beneficial ownership, which incidentally we already meet, then we will sign up to that. We have said publicly again and again, we will meet or exceed international standards.”

US approach

Nicholas Shaxson says the OECD covenant is not as strong as a recent American initiative known as FATCA, which requires financial institutions to deliver information to tax authorities directly. But the author says there are now plans to merge the two systems together.

And he’s optimistic there’s international momentum to address the problem of tax havens.

“And we are now at a point where we can start to see the possible outlines of a truly global, multilateral system where information is exchanged across jurisdictions and tax havens will be required to allow information to be shared. At the moment they’re very, very cagey about the information, I mean there are trickles of information that do come out from various tax havens depending on the tax haven.

“But I think it is possible within the next five or 10 years we will see, for the first time in history, a sort of multilateral information exchange procedure which will penetrate some of this secrecy that the world’s been suffering from so much.”

The tax summit is due to be held in London on June 15, two days before leaders from the G8 countries meet in a lakeside resort in County Fermanagh.

For more on this story go to:

http://ruvr.co.uk/2013_06_06/Jersey-tax-haven-C8/