Many of the world’s most secretive tax havens, ranging from Anguilla to Uruguay, are set to open their books to foreign tax by 2017. A year later, dozens more, including Belize, Hong Kong and Singapore, are set to follow suit.
Among them is Switzerland, abandoning a tradition of secrecy that dates back at least as far the 18th century when it safeguarded the riches of aristocrats fleeing the French Revolution. The same is under way in Singapore, Dubai and Monaco, which are also popular destinations for undeclared cash.
There are some holdouts: Bahrain, the Cook Islands, Nauru, Panama and Vanuatu, but they are unattractive to most investors. Fiona Fernie, a partner at Pinsent Masons, a law firm, says:
“Eventually the only places to hide your money are the places you wouldn’t want to go because they are so politically unstable.”
Robert Palmer, head of the anti-money laundering campaign at Global Witness, a campaign group, says:
“If your choice is between the Cook Islands and Labuan (i.e Tax Havens), it is a lot less attractive than a choice between Switzerland, Hong Kong, Singapore and London (i.e. International Finance Centre – IFC). It is more difficult, risky and a more costly business.”
There are limits to the new era of transparency. When last October finance ministers hailed the agreement on automatic information exchange as a watershed in the battle against tax dodgers, the Tax Justice Network said they were “right to claim historic progress” but pointed to potential loopholes. The campaign group was concerned about the risk that low-income countries would be excluded and the scope to cherry-pick other countries with which they would exchange data.
There is another, even more striking, exception. The US is still seen as an attractive place to hide money because of the lack of transparency about corporate ownership. The country has announced plans for its tax authority to collect beneficial ownership information — detailing companies’ ultimate owners — but there are doubts, fuelled by a long history of inaction, about implementation of the policy.
Source: FT (Financial Times)