The British Overseas Territories and Crown Dependencies
should no longer be considered 'tax havens', according to
UK prime minister David Cameron, but Fiona Le Poidevin of Guernsey
Finance wonders whether this will be the death knell for that
The debate surrounding international finance centres (IFCs) at
the G20 meeting in St Petersburg in September was largely
overshadowed by discussions regarding the crisis in Syria (see my
last blog preceding the summit: Lights, camera, action). This is
not surprising given the gravity of the situation and even less so
when we consider that the IFC debate didn't really unearth
The G20 leaders reiterated support for the OECD's action
plan and road map on base erosion and profit shifting (BEPS) - what
it describes as "legal tax avoidance" - and a global
model for automatic exchange of information, the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters,
which is more directed at (illegal) tax evasion.
This didn't really move the debate any further forward from
the G8 summit, which was held in Northern Ireland in July, after
which Guernsey, among the other British Overseas Territories and
Crown Dependencies, committed to adopting the convention. Indeed,
perhaps the most significant outcome from the G20 meeting came a
week afterwards in the House of Commons in London.
Responding to a question from Labour MP Fiona O'Donnell,
following his statement on the summit, UK prime minister David
Cameron said: "I do not think it is fair any longer to refer
to any of the Overseas Territories or Crown Dependencies as tax
havens. They have taken action to make sure that they have fair and
open tax systems.
"It is very important that our focus should now shift to
those territories and countries that really are tax havens. The
Crown Dependencies and Overseas Territories, which matter so much -
quite rightly - to the British people and members have taken the
necessary action and should get the backing for it."
Those comments followed two letters from the prime minister. In
the first, written to the leaders of the British Overseas
Territories and Crown Dependencies, he recognised their right to be
"lower tax jurisdictions". The second one was addressed
to Guernsey's chief minister, Peter Harwood, and praised the
island's leadership in meeting international standards of
transparency and exchange of information for tax purposes.
Of course we welcome these comments and, in particular, the
reference in the House of Commons that the island should no longer
be considered a tax haven. However, it is our belief that the tax
haven label has not applied to Guernsey for quite some time.
Indeed, I mentioned in my last blog that in Northern Ireland
'national action plans' about beneficial ownership were
agreed, although Guernsey has had equivalent standards in place
In addition, while some jurisdictions are only now moving
towards automatic exchange of information, this is something that
Guernsey has embraced since 2011 under measures equivalent to the
EU Savings Tax Directive. Guernsey has also agreed in principle and
is well down the path to signing a Model I agreement with the US in
relation to the Foreign Account Tax Compliance Act and a similar
equivalent agreement with the UK.
Guernsey also meets the European Commission's criteria for
what is not a tax haven. It says that a third country cannot be
considered a tax haven if it implements the international standard
for transparency and exchange of information and does not operate
tax measures that are considered harmful in business tax matters.
The island satisfies these criteria and, therefore, is clearly not
a tax haven in the view of the European Commission.
So, although we give a qualified welcome to the prime
minister's comments, it remains to be seen how much impact they
will have in the longer term. We would be naďve to think that
the media and the wider public will now stop referring to us as a
tax haven and indeed, we may struggle to ever escape the tag
completely. But this is a start at least and is something on which
we need to build.
The financial crisis has provided the catalyst to the
re-emergence of what is a dangerously short-sighted view of IFCs,
such as Guernsey. The island is highly reputable and our financial
services industry facilitates investment and employment in the UK
economy. We are part of the solution. We are part of the fabric
that helps to drive forward our British society.
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