Tax haven stand-off
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The last week of November could see a showdown between the British government and the tax havens over which it has ultimate control – islands such as Bermuda, the Caymans and the British Virgin Islands.
The likely row will centre around demands for the islands to be less secretive about who has money in their banks.
Ministers from the islands – which are collectively known as Britain’s Overseas Territories – are coming to London on 26 and 27 November for their customary annual meeting.
Growing international concern about the damage done by tax evasion, corruption and money laundering has increased pressure on the Territories to be more open.
Greater transparency is key to helping other countries detect and deter the tax evaders and other criminals who drain public services of billions in much-needed funding.
The global super-rich have $20 trillion hidden in tax havens, according to one estimate made by the Tax Justice Network.
In June, the British government announced that the Territories had agreed to sign up to an international law, which commits governments to share information with each other about money held in their countries by foreign taxpayers. The snappily titled ‘Multilateral Convention on Mutual Administrative Assistance in Tax Matters’ would enable revenue authorities to trace foreign accounts.
To date, the law is in force in around 30 countries (including Britain), while some 25 other countries are in the process of introducing it.
Among the Overseas Territories, only two – Montserrat and the Turks and Caicos Islands – had by early September been signed up (which is technically done by Britain on their behalf).
The other tax havens have yet to act. They fear greater transparency will harm their lucrative financial industries by causing tax evaders and other criminals to shift their money into countries which have not signed the Convention.
The reluctance of those Territories will increase tension with the government in London, which ultimately could force them to fall into line – although exactly how remains undefined.
A spokesperson for the British Treasury said ‘many’ of the remaining Territories planned to sign. That was expected to happen in the near future, she added, but could not specify when.