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.
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