On February 18, the EU revealed that it has added the Cayman Islands, Palau, Panama, and the Seychelles to its list of non-cooperative tax jurisdictions, bringing the total tally to 12 from 8.
The European Council, which agreed the additions, stated that these jurisdictions had failed to implement the tax reforms to which they had committed by the agreed deadline; most commitments delivered upon by third-country jurisdictions involved a deadline of the end of 2019.
The Council also reported that it had amended its “grey list”, of jurisdictions cooperating with the EU to amend their tax systems. In light of their implementation of reforms in compliance with EU tax good governance principles within the required timeframe, the following jurisdictions have been removed from the grey list: Antigua and Barbuda, Armenia, the Bahamas, Barbados, Belize, Bermuda, the British Virgin Islands, Cabo Verde, the … Read More »
The US tax reform legislation might not be perfect, as anyone grappling with the transition tax and the alphabet soup of acronyms and abbreviations, such as BEAT, GILTI, and FDII, would attest. But if the repatriation of the huge pile of stock and cash accumulated offshore by US corporations was a major goal of tax reform, then it appears to have worked. At least, that ‘s the conclusion to be drawn from the United Nation ‘s latest report on global foreign direct investment flows.
For the administration of President Donald Trump and the Republican lawmakers who pushed the Tax Cuts and Jobs Act through, these statistics must have seemed like a godsend. As James Zhan, Director of the Investment and Enterprise Division at the United Nations Conference on Trade and Development, observed the agency had said back in early January that … Read More »
The Isle of Man’s coat of arms, as seen on its flag, features a curious three-legged symbol clad in medieval armor, known as a triskelion. The accompanying motto, in Latin of course, roughly translates to “whichever way you throw me, I shall stand” – quite appropriate for an offshore jurisdiction. For whatever the world seems to throw at IOFCs, or tax havens – whatever you prefer to call them – seems to just bounce off.
From reputational and economic hurricanes, including the OECD’s 20-year campaign against harmful offshore tax regimes, domestic political and fiscal strife, tax avoidance scandal after tax avoidance scandal, and the deepest financial crisis since the 1930s, to actual hurricanes, some of which have devastated many a Caribbean offshore territory in recent years, IOFCs have survived something of an onslaught, yet they remain thorns in the sides of the … Read More »
There has been further evidence in recent weeks of just how well offshore and low-tax financial centers are performing amid economic insecurity and regulatory change. Recently, we learned that the number of active companies registered in the Cayman Islands surpassed 100,000 earlier this year; that the Isle of Man’s e-gaming sector is going from strength to strength; that members of the Association of Bermuda Insurers and Reinsurers reported a strong 2015; and that the British Virgin Islands is of the belief that it is on the cusp of becoming the best-regulated financial services jurisdiction in the world.
Of this list, the last one in particular stands out. For it was the BVI that was found to be home to many of the corporate entities set up for those exposed in the Panama Papers, and the jurisdiction was consequently excoriated by the world’s … Read More »
It is possible to have sympathy for governments on occasion; there seem to be instances when they just can’t win. They’re constantly being told by the likes of the OECD and the IMF to eradicate special tax regimes, widen their tax bases, reduce income taxes where possible, and shift the tax burden onto consumption. Luxembourg is one country doing just that. Last year, the Government decided to phase out its patent box regime – exactly the sort of special tax regime the OECD sees as largely responsible for BEPS – and late last month it announced reductions in income tax for companies and low- and middle-income workers. These measures come after a 2 percent increase in the standard rate of value-added tax in 2015. Yet, according to the IMF, this is still wrong – the tax cuts are viewed as … Read More »
Malta is the smallest economy in the euro zone, yet is has come through the European economic storm in much better shape than many of its more economically powerful fellow member states, and this despite a number of handicaps that might have sunk a country of similar economic stature. For starters, its natural resources are limited, and it imports about 80 percent of its food and most of its energy. Doubtless aware of its economic vulnerabilities, Malta has been very proactive in the area of taxation, introducing various tax incentive schemes to attract foreign investors, including a citizenship for investment program. Indeed, it has sailed pretty close to the wind as far as the EU is concerned, because member states have to be very careful these days not to fall foul of state aid rules and other laws designed to … Read More »
In the beginning, when the internet broke out from its traditional role as a communications device for academics, college nerds, and the US military, offshore was predicted to be the center of the e-commerce universe. By locating websites offshore and in low-tax jurisdictions to carry out functions previously based in high-tax jurisdictions, businesses would be able to take advantage of low rates of taxation for increasingly substantial parts of their operation, or so the theory went. Indeed, in many cases, there’d be no need to have a presence “onshore” at all. Obviously, most internet-based businesses have taken full advantage of their almost ethereal presence to pay less tax in places like the US and Europe, and the world’s governments are only now starting to catch up. However, while many offshore jurisdictions talked the talk during the early phases of the … Read More »
Although Hong Kong’s liberal economic system is regularly praised here, this Special Administrative Region of China, as it is officially known, has not been shown in the best of lights on the world’s television screens over recent weeks as the authorities, both in the SAR and in Beijing, struggle to square China’s One Party mode of government with the democratic demands of Hong Kong’s citizens. Another worrying, but little-reported development came in the form of figures from the Inland Revenue Department last week, which showed tax revenue growth slowing to a virtual standstill thanks to lacklustre economic growth in 2013/14. So, Hong Kong could do with a timely boost, and perhaps it has just got two: the launch of the Shanghai-Hong Kong Stock Connect scheme, which will allow eligible Mainland investors to trade stocks listed on the Stock Exchange of … Read More »
So, in the great stand-off between Ireland and the OECD, Dublin has been the one to blink first, with the Irish Government having announced in the 2015 Budget new corporate residency rules that will put paid to the infamous “Double Irish” international tax planning technique so beloved of American technology and pharmaceutical firms. This is not really surprising, given the amount of pressure Ireland has been under from the international community with regard to its corporate tax regime. What was more unexpected was the speed with which Ireland has acted, especially since it has fought tooth and nail against the likes of the EU and the OECD for years to ensure that Irish tax laws are decided in Ireland. But ultimately, perhaps the Double Irish just wasn’t worth the hassle anymore. Physical investment on the other hand, is. Ireland is … Read More »
A bit of a theme this week: how the powerful like to bully the small and the weak. And we start with Spain, which, according to one senior figure in the Spanish Government, is deprived of EUR1bn every year in tax revenue as a result of Gibraltar’s low-tax regime. Gibraltar isn’t exactly a country. In fact its constitutional status confuses many people. Gibraltar is an Overseas Territory of the United Kingdom, but although Britain is responsible for its defense, foreign affairs and internal security, the Rock is self-governing based on a constitution written in the 1960s. It also has a sort of half-in, half-out relationship with the EU which it entered along with the UK while remaining outside of the common external tariff and EU VAT regimes, something which also probably irritates Spain. Essentially though, Gibraltar is a little piece … Read More »