Update: The Turks and Caicos Financial Services Commission is proposing a new Trusts Bill, seeking comments by August 30th 2013.
I started this blog yesterday with the goal of monitoring the media in tax havens. My hope was to start to understand the different local political dynamics, and eventually identify opportunities to counter the powerful lobby of the financial sector in these locations.
The reason I think this could be useful is that secrecy jurisdiction policy decisions are still ultimately made at the local level by their ruling elites, with few or no critical voices to question them. As Nick Shaxson describes in his book Treasure Islands, in small island states anybody who attempts to go against the prevailing status quo runs the risk of being ostracized by the community.
Maybe I got lucky, but it’s day 2 of blogging and the Turks and Caicos Islands (TCI) are undergoing a review of their tax system, appointing a commission to provide advice to the government by September 30th.
This could potentially be an opportunity for what NGOs and campaigners call “advocacy”, meaning an opportunity for citizens to influence government policy.
But will there be anybody to take advantage of it?
Turks and Caicos: Fake autonomy and financial secrecy
The TCI are a British Overseas Territory, which is supposed to be governed autonomously by a democratically elected cabinet. However, in 2009 following an official inquiry which found multiple allegations of corruption, the TCI cabinet was removed by the UK government, and from then on and until 2012 the Islands were governed directly from London.
This incident showed that a) ultimate responsibility for the governance of the Islands lies with the UK and b) the UK will only intervene in cases of grave mismanagement.
The Turks and Caicos are ranked at number 38 on the Financial Secrecy Index and have around 15.000 foreign companies on its registry, which puts it just behind Bermuda. So TCI are not a huge offshore player in the secrecy market, although it may be worth mentioning that at the time it went bust Enron had 119 subsidiaries registered there.
The “Blue Ribbon Commission”
According to the Turks and Caicos Weekly News, a “Blue Ribbon Commission” has been appointed to advise the government on tax reforms by September 30th.
The 13-member Commission is chaired by the Minister of Finance, Trade and Investment Charles Washington Misick, and includes representatives of the Opposition, the tourism sector and chambers of commerce as well as:
- the Financial Services Association
- the Accounting Fraternity
- the Tax Policy and Tax Administration Adviser
So basically the elite of the Islands are having a get together, with even the opposition getting on board.
The overall remit of the Commission is:
” to provide advice to the TCIG on the various options available to address the weaknesses and strengths in the existing taxation and other revenue generation structures.”
The commission will also take into account the commitments of the TCI Government, which include:
* to keep the overall tax burden low
* to maintain competitive advantage to encourage investment with respect to other jurisdictions.
Maybe this is overly cynical, but the remit of this commission seems to be to find ways to boost government revenues by attracting offshore company registrations to the Turks and Caicos Islands. In particular the repeated references to “other revenue generation structures” are no cause for optimism.
And with no opposition, what is most likely a very weak local civil society, and lax oversight (or maybe even encouragement in this case) from the UK, it’s hard to see who will be around to question their recommendations at the moment.