Offshore industry facing imminent crack down

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Tuesday, 10 March 2009 11:18

The Prime Minister has made it clear that the impending clamp down on tax havens must be part of a Europe-wide effort.
Speaking at a summit in Berlin at the end of February, Gordon Brown said “global problems need global solutions,” and called for a concerted drive to regulate money markets.

Other EU heads of state joined him at the summit ahead of the G20 meeting in London on April 2, and expressed support for the Prime Minister’s position.

French President Nikolas Sarkozy and German Chancellor Angela Merkel demanded tough action against jurisdictions who failed to comply with the new, more stringent regulations.

Merkel said: “As far as tax havens are concerned we need to develop sanction mechanisms. These must be concrete.”
But it is Brown’s actions that are the most surprising. The Prime Minster’s stance is a radical departure from his historic position of protecting the pre-eminence of the UK’s financial services industry. Britain has previously faced trenchant criticism from France and Germany on the grounds that like Switzerland, the country is an obstacle to a transparent financial system.

There is now mounting evidence that a blacklist of tax havens, including centres linked to the UK such as the Cayman Islands and Bermuda, will be published before the G20 meeting in London.

European developments mirror those unfolding in the US, where treasury secretary Tim Geithner has confirmed that President Obama will back the Stop Tax Haven Abuse Act, which is scheduled to appear before Congress shortly. The Organisation of Economic Co-operation and development is also poised to produce its own blacklist of secrecy jurisdictions.

The noose is starting to tighten around the neck of the offshore industry.