Thousands including Pakistani businessmen to be exposed
LAHORE: In what could be dubbed as a desperate bid to defuse pressure over his tax affairs linked to the Panama Papers, Prime Minister David Cameron has announced in the House of Commons that the British police will soon be able to penetrate through the secrecy of certain tax havens.
Cameron’s announcement came a week after Labour leader Jeremy Corbyn had stated that the government should consider imposing “direct rule” on the 14 British overseas territories and three Crown dependencies if they failed to comply with the tax laws.
This would expose thousands of Pakistanis, Indians, Bangladeshis, Europeans and others who have stashed their undeclared riches in the "under fire" low-tax jurisdictions in Britain. In its fairly recent April 11 report, an international news agency had revealed that the United Kingdom was compiling a list that would unveil the individuals who exactly owned and controlled investment in shell companies, even if they were being held in the name of other persons.
According to this report, Premier Cameron told the Lower House of the bicameral British Parliament that all British crown dependencies and overseas territories, except Anguilla and Guernsey, had already signed up to furnish the information.
Research conducted by the "Jang Group and Geo Television Network" shows that Cameron had asked all British Overseas Territories and Crown dependencies in 2014 to set up an open register of firms and individuals with investments registered in their jurisdictions, but by the time of the Panama Papers leak in April 2016, only Montserrat and Gibraltar had agreed to do so.
(Reference: April 5, 2014 edition of The Sun)
Coming back to the recent development, incumbent British Premier, however, did not provide a timetable as to when the British police would be directed or allowed to pierce through the secrecy firewalls of the tax havens.
The report had further said: "These include areas such as the Cayman Islands and British Virgin Islands, which are hot spots of offshore activity. While information from the so-called register of beneficial ownership will not be made public, it will be available to police and law enforcement agencies in Britain and other countries, Cameron said in a statement to parliament."
It had quoted Cameron as viewing: "There's no doubt that in some of these jurisdictions and countries there are some very bad things happening... and that's why we want our authorities to go through everything they can."
The 72-year old French media house, acknowledged as the third largest global news agency after the Associated Press and Reuters, had also quoted eminent British charity "Oxfam" as saying: "Cameron needs to do better than this. The prime minister has said that sunlight is the best disinfectant when it comes to corruption. Unless the registry is public, it will be impossible for wider society -- especially people in the world's poorest countries -- to hold businesses and governments to account."
The news agency had more to say: "Britain is also pushing for other countries around the world to commit to similar transparency measures. Next month, Britain's government will host the world's first international anti-corruption summit in London. Cameron was making his first appearance before MPs since it emerged that he held an investment in a Bahamas-based offshore trust set up by his stockbroker father, a client of the law firm Mossack Fonseca at the heart of the Panama Papers scandal. Cameron sold the units in the trust before he became prime minister in 2010."
Interestingly, as mentioned above, British Premier David Cameron has said that all British crown dependencies and overseas territories, except Anguilla and Guernsey, had already signed up to furnish the information.
So, let us see and explore the least-heard British overseas territories of Anguilla andGuernsey.
While Anguilla is located in the Eastern Caribbean, Guernsey is situated in the English Channel.
Anguilla is one of the 14 British overseas territories.
In 2013, according to the "BBC News," the British Prime Minister had written a letter to 10 overseas territories, including Anguilla, whereby urging them to "get their house in order" and sign up to international treaties on tax.
On April 5, 2015, the prestigious British media house had reported: "They had agreed to sign up to the Multilateral Convention on Mutual Assistance in Tax Matters - an initiative led by the Organization for Economic Cooperation and Development. They also agreed to publish national action plans on beneficial ownership, detailing the true owners of so-called "shell" companies."
The "BBC News" had asserted: "Downing Street says it has asked three things of the overseas territories and Crown dependencies: the automatic exchange of tax information; a common reporting standard for multinational companies; and central registries so people know who owns companies. It says they have all delivered on the first two, so now they must deliver on central registries. Gibraltar, Bermuda and Jersey have already done so. A spokesman said the government is close to agreement with Guernsey and Isle of Man."
Spread over an area of 35 square miles, the tax haven of Anguilla, formerly known as the "Snake Island" due to its shape, had first levied income tax on its citizens in 2011 after it was faced with a mounting deficit.
Of the companies handled by Mossack Fonseca which were included in the leaked data, British Overseas Territory the British Virgin Islands had topped the list.
The notorious Panama-based law firm had managed to incorporate 113,000 of the nearly 215,000 companies in British Virgin Islands of the selected tax havens.
Anguilla was seventh on that list.
Before 2011, Anguilla had never imposed any direct tax of any sort on real estate or profits of individuals or corporations.
Having witnessed two revolutions in 1967 and 1969, Anguilla's financial system comprises at least seven banks, two money services businesses, more than 40 company managers, over 50 insurers, some 12 brokers, more than 250 captive intermediaries, more than 50 mutual funds and at least eight trust companies.
Now, coming to the Guernsey Island, this jurisdiction is not part of the United Kingdom. However, defence and most foreign relations are handled by the British Government.
Financial services, such as banking, fund management and insurance etc account for about 37 per cent of its GDP, while tax revenues contribute another 18.2 per cent.
Apart from operating in tax havens including Switzerland, Cyprus, the British Virgin Islands, Jersey and the Isle of Man, Mossack Fonseca also operates in Guernsey.
(Reference: The Guardian)
Guernsey's Commerce and Employment Minister, Kevin Stewart, was recently quoted as saying that the Panama Papers data leak was an opportunity for the island's finance industry to prove its transparency.
He had added: "We have had legislation in place for 15 years. We actually regulate that part of our industry that most other jurisdictions do not do. It's an opportunity for Guernsey to demonstrate how we not only comply, but in many cases exceed some of the global requirements for regulation."
Meanwhile, Guernsey’s Chief Minister, Jonathan Le Tocq, has written a letter to the UK Prime Minister on April 4, whereby highlighting the island’s record on tax transparency.
He had written: "I write to set out Guernsey’s active and practical commitment to the international anti-corruption agenda and, as part of that, to signal our clear intent to further strengthen law enforcement co-operation between Guernsey and the UK."
(Reference: Various reports of British media house ITV News)
Guernsey’s Rothschild Trust Limited is among the 10 banks that had requested the most offshore companies for clients.
More than 500 banks, their subsidiaries and branches registered nearly 15,600 shell companies with Mossack Fonseca, according to ICIJ’s analysis.
British charity "Oxfam" has called upon the United Kingdom to take a lead in cleaning up the tax system.
The "Oxfam" statement had read: "The UK is in a unique position to help clean up the murky world of tax havens - starting by ensuring that the real beneficiaries of shell companies registered in the UK's Crown Dependencies and overseas territories are revealed ahead of May's anti-corruption Summit in London."
In 2013, there were over 31,000 people employed in Guernsey, with 3,000 being self-employed. There were some 2,038 employing businesses, of which 20 per cent were related to the finance industry.
Like all tax havens, Guernsey levies no capital gains, inheritance, capital transfer, value-added tax or general withholding taxes on businesses operating within its jurisdiction.
Crown dependencies:
The April 5, 2015 edition of the "BBC News" had maintained: "Crown dependencies are not part of the UK or the European Union but self-governing dependencies of the crown. They have their own directly elected legislative assemblies, administrative, fiscal and legal systems and their own courts of law. Its citizens are issued with British passports. The three Crown dependencies are the Bailiwick of Jersey, the Bailiwick of Guernsey and the Isle of Man. Within the Bailiwick of Guernsey there are three separate jurisdictions: Guernsey, which includes the islands of Herm and Jethou; Alderney; and Sark, which includes the island of Brecqhou. The Queen is their head of state and the islands' lieutenant-governor is Her Majesty's personal representative."