Taxing times: the French and Germans made their opposition
to tax havens plain at the G20 summit Photo: Bloomberg
to tax havens plain at the G20 summit Photo: Bloomberg
The G20 summit last week held more significance than usual for offshore financial centres and their customers. It was agreed that those countries that refuse to pass information to foreign tax authorities to help catch potential evaders will face sanctions in future.
The governments of Jersey and Guernsey are not on the blacklist as they already comply with international norms. They signed up years ago to anti-money laundering conventions and also apply the European Savings Directive, aimed at curbing tax evasion in the European Union.The directive requires offshore banks to allow the exchange of information with tax authorities or to deduct a 25 per cent withholding tax from customers who live in EU member states.
Together with the Isle of Man, Jersey and Guernsey have been busy signing Tax Information Exchange Agreements (TIEAs) with the UK, France, Germany, Ireland, and other major states.
Investors planning to evade tax by using these jurisdictions can look elsewhere.
Jersey and Guernsey even believe they will benefit from a cracking down on rival centres. Jersey aims to have a Foundations Law on the statute book by June, which will provide for the setting up of continental-style versions of offshore trusts. Jersey claims its foundations will offer more transparency than those domiciled in other jurisdictions, notably Liechtenstein.
Guernsey plans to follow with its own foundation law later this year.
Alan Binnington, private client director at Royal Bank of Canada Wealth Management, plans to set up Jersey-domiciled foundations for bank clients once the new law is in place.
He said: "The main thrust of our private wealth business in the Channel Islands is the transfer of wealth from one generation to another. One of the interesting features of foundation legislation in Jersey will be the level of regulation. I think the new climate is a threat to some international centres but not all of them. Jersey has long believed in a level playing field and transparency."
Geoff Cook, chief executive of Jersey Finance, the island's finance promotional body, not only cites the signing of the TIEAs as evidence of Jersey's track record for meeting international standards, but also points out that some of these agreements may actually benefit clients of its financial institutions.
He said: "Jersey has signed 12 Tax Information Exchange Agreements to date including four with G20 nations – the USA, the UK, Germany, and most recently, France. The French agreement provides for certain property tax exemptions for people who own French property through Jersey companies and trusts."
Peter Niven, chief executive of Guernsey Finance, the island's promotional body, said: "We have now signed 13 Tax Information Exchange Agreements, one more than the benchmark set by the Organisation for Economic Co-operation and Development (OECD) for the most compliant jurisdictions on transparency."
A group of angry customers of failed Icelandic bank Landsbanki, Guernsey, have been lobbying representatives of G20 nations urging them to put the island on a tax haven blacklist as it is not a safe jurisdiction for savings.
They argue Guernsey has done "next to nothing" to recover their savings, after the bank collapsed in October last year.
An estimated 2,000 savers, mostly British expatriates, have received so far only 30p in the pound from the administrators, but there may be a further pay out announced later this month.
A spokesman for the Guernsey government said: "The return of deposits is a case for the court appointed administrators and the role of the Guernsey government is one of support."
Guernsey has now set up a bank deposit compensation scheme, with a similar £50,000 per individual limit to the Isle of Man, but it has excluded victims of the Landsbanki collapse.
source: www.telegraph.co.uk
