Guide to Tax Havens

General overview

In what seems like a concerted global push to target tax evasion, the US, UK and Europe have all announced various measures and tactics to target individuals and companies who they believe are flaunting loopholes and flouting laws and subsequently avoiding taxation.

They are not specifically turning their attentions on expatriates living in their nation nor on their expatriates living abroad, who often have the means and the right to make the most of tax saving opportunities that become possible once they move overseas. Rather they are looking closely at the activities of their resident citizens, some of whom they suspect are perhaps being less than honest with their accounting.

The Germans are putting pressure on Europe to do more to prevent tax evasion, the US are looking at specific European financial institutions and how they may be assisting Americans to evade tax, and Britain is apparently to begin targeting offshore accounts held by up to 25 institutions.

Jersey, Guernsey, Isle of Man, Bermuda, Cayman Islands, Gibraltar, Turks and Caicos Islands, British Virgin Islands, Anguilla

The principal British crown dependencies. An independent review into British offshore financial centres was announced at the Pre-Budget Report in December 2008.

The review will look at the immediate and long-term challenges facing British offshore financial centres in the current economic climate, including: financial supervision and transparency; taxation, in relation to financial stability, sustainability and future competitiveness; financial crisis management and resolution arrangements; international cooperation.

The Government has been clear that the variety of existing constitutional arrangements in place across these territories will continue to be respected, including their independence in fiscal matters and the setting of their own rates of taxation.

Cape Verde, Belize, most offshore Caribbean locations

Currently subject to very little control, but will inevitably fall within the remit of the impending review to be conducted by President-elect Barack Obama. Widely perceived not merely as offshore centres to be utilised for tax evasion, but also as locations for money laundering and other forms of criminal/terrorist financing.

Europe

Liechtenstein and Switzerland are both highly secretive and discreet offshore locations. Subject to very little outside oversight, control or transparency. The rest of Europe is much more tightly regulated, with Germany currently pushing for even more stringent measures.

Middle East

Very little regulation. Salaries are inevitably tax free, though there is a huge disparity between western finance and IT professionals with substantial earnings and a large pool of unskilled labour from Third World countries surviving on subsistence wages. Has weathered the latest economic downturn better than other regions of the world, but has by no means remained immune.

Far East

Variable. Singapore is tightly regulated and controlled, which many find makes it a stable place in which to do business, and has remained less affected by the global economic downturn than many other locations. Hong Kong is less tightly regulated and has more from the prevailing market conditions than Singapore. Australia is on the point of initiating a more stringent regime similar to what is being recommended by Germany in a European context.