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Offshore centres hit back

Posted by CaribShout on September 28, 2009 at 9:00pm

Offshore jurisdictions in the Caribbean have hit back at what they called a 'witch hunt' against them, even as they sought to be removed from an international list of non-compliant tax havens. Financial centres in the region and elsewhere have been told that they face sanctions if they fail to comply with international tax regulations. The warning from French President Nicholas Sarkozy, came as G20 leaders met in the US city of Pittsburgh on Friday. Mr Sarkozy's warning follows an announced crackdown on tax havens announced at the G20's April summit in London, when a so-called 'grey list' was drawn up. The United States claims that is loses $100 billion a year to offshore tax havens. Its efforts to track down tax dodgers have gained pace as the Obama administration seeks to collect more revenues without raising tax rates, to offset its vast and growing budget deficit. But some Caribbean officials, including the leader of the Cayman Islands, McKeeva Bush, branded the criticism by the world's most powerful countries as hypocritical and accused them of trying to shift blame away from their own failed policies and lax regulation. "It's the fault of the onshore centres who taxed their own people ... Money is running away from them now," said the leader of the Cayman Islands, McKeeva Bush. Undisclosed agenda Bermuda's Finance Minister Paula Cox said she suspected that the G20 may be seeking "extra-territorial solutions to their economic, fiscal and financial challenges." "There is now a strong suspicion that the G20 has an undisclosed agenda item to drive forward a global corporate tax policy, which may fly in the face of a nation's sovereign right to set down its own tax policy," she said. Bermuda and the Cayman Islands are among 11 countries that have been placed on the 'white list' of the The Paris-based Organisation for Economic Cooperation and Development (OECD) since being shamed in April. Others in the Caribbean include Aruba, the British Virgin Islands and the Netherlands Antilles. On Friday it became the latest country to be white listed after signing a tax information accord with Qatar. The G20's talks in Pittsburgh were expected to take stock of progress by offshore centres that have not fully implemented global taxation standards. The Bahamas and St Kitts and Nevis have begun negotiating similar accords in an effort to be dropped from the non-compliance list. Eleven Caribbean nations are still regarded as uncooperative tax havens by the OECD. Effective implementation The organisation's secretary general, Angel Gurria, has warned however, that signing agreements is only one step and they are awaiting effective implementation by all countries. While Caribbean nations have been seeking to regulate their financial services sector, they are also trying to keep their economies afloat after taking a battering from the global financial crisis. Jamaica Beach

Tourist arrivals have dropped as a result of the financial crisis "Fewer tourists, lower tourist and consumer spending, the squeeze on business profits, redundancies and lay-offs are all the result of the global recession," said the Bermudian Finance Minister Paula Cox. The British territory has also has also lost the services of global insurance broker Willis Group Holdings. The company announced this week that it is transferring its headquarters from Hamilton to Ireland, citing economic factors. But the islands are confident that they will ride out the current challenges. Some experts in the Bahamas suggest that the offshore sector should ensure its future by wooing new clients in emerging powers like Brazil, China, India, Nigeria and Russia.

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