Bermuda Deputy PM: "The UK is a Tax Haven"

Bermuda Deputy PM and Finance Minister said it the way it is: OECD founder UK is actually a tax haven.   And Richards is no parochial nationalist: he has experience working at a pension fund, courses at the IMF and an MBA in Canada.

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'The UK is a tax haven' – Bermuda attacks plan to end financial secrecy 

Juliette Garside 

Monday 6 February 2017 15.32 GMT Last modified on Monday 6 February 2017 22.00 GMT

The government of Bermuda has hit back at British efforts to end offshore financial secrecy, claiming the UK itself is a “tax haven”.

Speaking ahead of a meeting on Wednesday between Theresa May and the leaders of Britain’s overseas territories, Bermuda’s deputy premier and finance minister, Bob Richards, pushed back against proposed legislation that would create public registers naming the owners of offshore companies.

Richards said the UK should get its own house in order before making demands from its dependencies.

“The UK is a tax haven,” he said, citing non-dom laws that allow foreign nationals to live in Britain without paying tax on overseas income.

“You have more billionaires resident in London than any place on earth. They are not here for the weather, they are here for the tax climate. We have a double standard going on here.

“We have a much more transparent, much cleaner system than the countries that promulgate these rules in the first place. The popular notion that somehow there is something nefarious going on in a small island that is relatively successful is false.”

From April 2017, however, non-doms will lose some of their advantages and foreign nationals will no longer be able to enjoy tax breaks indefinitely in the UK. Those resident in the UK for 15 out of the previous 20 years will be liable for inheritance, capital gains and income tax on their worldwide assets.

A cross-party group of 88 MPs, led by the tax campaigner Margaret Hodge, is backing an amendment to the government’s criminal finances bill that would force British territories to follow the UK in making public their company ownership registers by 2020.

“There is a thing in this world called privacy and at least in my island privacy still exists,” added Richards. “There is no public right to know anybody’s private business.”

The Panama Papers exposed how thousands of offshore companies have been used to help hide the proceeds of fraud, political corruption and tax evasion.

Unlike most tax havens, Bermuda does keep a central government record of who owns its offshore entities. This information is available to other governments on request, but not to the general public.

Deputy PM Richards

Richards told the Guardian he would resist calls, first made by David Cameron in 2013, to open up the register. “The register in Bermuda is there to protect the government’s reputation ... It is not the public’s business. We are not here to tell you who is doing business in Bermuda,” he said.

“There is a thing in this world called privacy and at least in my island privacy still exists,” added Richards. “There is no public right to know anybody’s private business.”

The Panama Papers exposed how thousands of offshore companies have been used to help hide the proceeds of fraud, political corruption and tax evasion.

Unlike most tax havens, Bermuda does keep a central government record of who owns its offshore entities. This information is available to other governments on request, but not to the general public.

Richards told the Guardian he would resist calls, first made by David Cameron in 2013, to open up the register. “The register in Bermuda is there to protect the government’s reputation ... It is not the public’s business. We are not here to tell you who is doing business in Bermuda,” he said.

The mid-Atlantic nation is a major centre of tax avoidance, with Google and other multinationals attracted by a zero corporation tax rate. Oxfam found that US corporations reported $80bn (£64bn) in profits in Bermuda in 2012 – more than their combined reported profits in Japan, China, Germany and France.

Bermuda should do what guarantees the future of its next generation.
Destroying its financial center will not provide jobs for the future.

“People are pressuring overseas territories because they feel we are defenceless, in some way easy pickings,” said Richards. “They are moving the goalposts on us almost every three weeks.”

The Bermudian premier, Michael Dunkley, has joined Richards in London this week for a series of briefings with UK ministers, with Brexit top of the agenda. Richards said his government was in listening mode but, if pushed, it would not hesitate to protect its interests.

He said last year he “would not hesitate to go for independence” if his country were threatened by Brexit. Bermuda’s last push for independence was in a 1995 referendum.

Richards said: “At the moment our interests are aligned but if that changes then we will have to think of ourselves. We must protect Bermuda’s interests. This amendment being proposed [by Hodge] is not in the interests of Bermuda.”

See full text in https://www.theguardian.com/business/2017/feb/06/uk-tax-haven-bermuda-financial-secrecy-offshore-companies

See also:

Bermuda Ministry of Finance https://www.gov.bm/ministry/finance

Bob Richards' bio http://www.parliament.bm/Bob_Richards.aspx

The 'who's who' of European tax havens

Will Germany, UK and Netherlands end up in the OECD "black list" of terrible "tax havens"?

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Forget about the Bahamas, Panama, Cayman Islands, or Fiji. If you want to avoid paying taxes and have no problem with dicey business practices, Europe has a lot to offer.

Europe is far from innocent in the international offshore tax evasion industry, as the Tax Justice Network (TJN) recently demonstrated. Many European countries, with their stable infrastructure and professional personnel, provide fertile ground for businesses or individuals to evade taxes.

Andorra

There are more than a few gaps that need to be filled in Europe, according to Markus Meinzer of the TJN. He helped paint a picture of who's who among European tax havens.

The independent mini-state of Andorra in the Pyrenees, which is not a part of the European Union, offers a secretive place for those in neighboring countries to stash their money. Particularly attractive is the personal service offered by banking advisers there. It's also easy for Spaniards and French to simply drive there to deposit cash. Afterwards, one can always tank up and buy cigarettes there - tax-free, of course.

Austria

As a country sharing borders with Germany, Hungary, Slovakia, Slovenia, Italy, the Czech Republic and Switzerland, Austria draws foreign capital by promising secrecy to account holders. It caters especially to Europe's German-speaking population, Meinzer said. But he also said that he knows of Argentines who, for example, combine investing in Austrian bonds with the advantages of bank secrecy. Due precisely to the lack of financial transparency and its geographic location, Austria has also attracted wealth from Arab world dictators for decades.

Channel Islands

The British Channel Islands Jersey, Guernsey and Sark are home to hundreds of financial institutions and insurance companies drawn to their simple and low taxes. While Jersey probably "hides the most dirty business," according to Meinzer, Guernsey is the most innovative.

With its so-called self-protected companies, an apparent single company is organized into cells with protective legal walls between them. And on Sark, according to British newspaper The Guardian, there are 24 companies registered for each of the approximately 600 inhabitants.

Cyprus

Cyprus is the perfect example of what can go wrong with depending on such dubious business models. It was particularly oriented toward former Soviet countries, and acted as a hub for them. Transactions over letterbox companies brought money into Cyprus, then back to countries like Russia - thus avoiding Russian tax authorities. But since the Cyprus bailout , in part by the EU, the Mediterranean island will have to come up with a new business model.

England

England, with London, represents one of the largest hubs for tax evasion and capital flight. Meinzer described London as "the mother of all tax havens" since the zone, which does not answer to the crown, has developed a network that continues to bring money back to the capital of the former empire. Money flows from there to British Channel Islands, such as Guernsey, Jersey or to the Isle of Man, then overseas to British territories in the Caribbean, such as the Cayman or Virgin Islands - or in Europe, to Gibraltar. London, is the seat of many dubious "letterbox companies," which only exist on the Internet.

Germany

Frankfurt is a great place for foreign investors to earn tax-free interest

Germany protects the data of foreign investors, who also don't have to pay taxes on interest.

Only Germans, or foreigners resident in Germany, have to actually shell out a flat rate withholding tax on interest income, Meinzer said.

Information on such yields also rarely flows out of Germany, he added: "Foreign investors with German accounts are protected with a certain degree of anonymity."

That's why Germany ranks ninth in the world for financial secrecy, according to TJN.

Gibraltar

At the southern tip of the Iberian Peninsula, Gibraltar has specialized in allowing such letterbox companies, called "trusts." The structure of such trusts means there is no real owner of the company. They are often used to add a layer of secrecy to letterbox companies, Meinzer said, which is particularly good for money laundering.

Meinzer cited insider information in calling it "the dirty end of the spectrum" for bringing money back into financial markets. The presence of many gambling casinos there also comes into play.

Ireland

It's called the "double Irish" in the financial world: A company founds two subsidiaries in Ireland with its business tax rate of 12.5 percent. Then, one claims to be based in a different tax haven. (Comparable taxes in the United States, for example, are around 35 percent.)

This is completely legal in Ireland, and therefore an optimal location for companies such as Google, Apple or Amazon.While the one company does business in Europe, it pays the other patent fees. Profits vanish, as costs and income equal out on the balance sheet.

Although other countries like the Netherlands offer similar models, Meinzer said the difference is that people do actually work in Ireland, which at least creates some jobs and a bit of growth in the country.

Isle of Man

Taxes are kind of an afterthought on this island between England, Scotland and Ireland. Inheritances and capital gains aren't taxed at all, while the highest level of taxation lies at 20 percent. Corporate tax is nonexistent. It's especially loved as a hidey-hole for British millionaires.

Luxemburg

Luxembourg is the second-largest financial hub in Europe, after London. Innumerable investors and around 150 different banks enjoy a lenient tax framework in Europe's stocks and bonds center. Luxembourg's status as an EU member makes it particularly attractive for European companies and the international market, Meinzer explained. "If I want to get around German laws, for example, I could go through Luxembourg," Meinzer said, adding that 40 German banks do business there.

With its low tax rates, Malta, like Cyprus, has long drawn foreign capital. Although corporate taxes are around 35 percent, companies can get most of that refunded.

It's a favorite among German companies, which earn a higher profit if based on Malta. Meinzer said that while it's clearly a tax paradise for companies, it's not clear if that's also the case for individuals.

Monaco

The Principality of Monaco continues to be home to the rich and famous, being surrounded by France. Millionaires happily set themselves up there due to the fact that they pay no income or inheritance taxes. The city-state also does not prosecute financial crimes committed abroad. Businesses, however, must pay taxes there - at rates of around 33 percent. France, though it doesn't play an active role, lends a protective hand, Meinzer said.

Netherlands

What Luxembourg is for private investors, the Netherlands is for large corporations. Business taxes are incredibly low, with many tax advantages for interest and licensing income.

With the "Dutch sandwich," a parent company has a subsidiary in the Netherlands, which it uses as a cheap tax base to develop its European business.

Switzerland

Although there are supposedly no more completely anonymous bank accounts in Switzerland (and neighboring Liechtenstein), it continues to draw large sums of money due to its strict banking secrecy. Considering the volume of money in Switzerland, it made first place on the TJN's Financial Secrecy Index.

Full text in http://www.dw.de/

UK-Panama Double Taxation Convention signed in London

Double Taxation Convention

A first-time comprehensive Double Taxation Convention between the UK and Panama was signed in London on 29 July 2013 by The Rt Hon William Hague MP, Secretary of State for Foreign and Commonwealth Affairs and H.E. Mr Fernando Núñez Fábrega, Foreign Minister of Panama.

The Convention generally follows the OECD Model Double Taxation Convention. Important features include exemption from withholding tax on certain dividends and low withholding rates on interest and royalties. The Convention also includes the latest OECD exchange of information article.

The Convention will enter into force once both countries have completed their legislative procedures.

HM Revenue & Customs
29 July 2013

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UK-Panama Double Taxation Agreement 2013

http://mire.gob.pa/noticias/2013/07/29/reino-unido-y-panama-firman-tratado-para-evitar-la-evasion-fiscal

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