Tax havens will cease to exist

Tax havens will cease to exist due to international scrutiny and reputational pressures on companies, according to Gibraltar’s chief minister, Peter Caruana.

The leader of a jurisdiction that less than a decade ago was still classified as a harmful tax haven by the OECD. Caruana said the centres were ‘not sustainable’ if they did not reform and become more transparent.

‘With the international community banding together to squeeze out those who they feel are raiding their larders, regions that haven’t changed will be hit and face the risk of disruption,’ Caruana said.

The chief minister added that international companies would shun territories that failed to become more transparent, as there was greater public and regulatory scrutiny on the tax affairs of business.

Gibraltar has taken steps to reform its tax system, but is still regard as a tax haven. Several companies are located there for tax reasons. Online gaming companies, such as PartyGaming, favour its regulatory and tax position.

Caruana’s claims were treated with scepticism by tax campaigners.

Richard Murphy, who has bitterly criticised Jersey’s tax arrangements in particular, said tax havens were ducking information arrangements rather than falling prey to them.

‘Tax havens are far from dead and buried. Steps taken by the OECD and international community to close them down have centred around information exchange, but tax havens have made sure that the information is not there to be found,’ he said.

US politicians, including presidential candidate Barack Obama, are currently hiking up the pressure on havens. The small centres routinely offer 0% rates and provide limited transparency. Tackling them is seen as a key priority by the OECD in particular.

But the problem has seemed intractable, with difficulties of sovereignty arising. HM Revenue & Customs scored a major victory in acquiring bank account details held in the UK for offshore jurisdictions last year, but other initiatives, such as the European Savings Directive, have proved less successful due to loopholes on trusts.