Reuters reports that Colombia has added Panama to its tax haven list, along with several other countries.
In his latest book the Finance Curse, Nick Shaxson shows how the financial services industry – often led by the big 4 accounting firms – captures the state in small jurisdictions with large offshore sectors.
As mentioned in yesterday’s blogpost, the government of Barbados this week presented an economic plan in which promotion of the country’s offshore sector features prominently. The summary of the plan was provided by KPMG, followed by a breakfast meeting at which the local PWC director of tax and legal services said that the “measures show promise“.
In less than two weeks, the G20 will be meeting again in St Petersburg: its priorities for 2013 include strengthening financial regulation. In the meantime, the OECD is proposing a new action plan for international taxation.
But do the G20 countries and international organizations really have enough leverage (not to mention moral authority, given that several major tax havens are in G20 countries) to impose policy changes on 70+ secrecy jurisdictions around the world?
As Jason Sharman of Griffith University says in this week’s edition of the Economist: “The idea of becoming tax haven “will always loom large” for small states with few other options for economic development”. Despite some recent advances in response to international pressure, the Barbados example shows that offshore decisions are still to a large extent driven by local politics. And that offshore local politics are still dominated by big finance.
Bermuda: 2400 job losses predicted in 2013, 500 of them in the International Company sector.
According to a table in the article, the offshore financial sector (International Companies, Business Services and Financial Intermediation) provides over 27% of total jobs in Bermuda.
British Virgin Islands: Signing up to FATCA while attracting Russian money, in a context of political corruption
The government of BVI will be starting talks with the US to comply with FATCA (Foreign Account Tax Compliance Act).
At the same time, Quartz is reporting that the amount of Russian money heading to the BVI has jumped from under USD 5 billion in the last quarter of 2012 (still a huge amount) to USD 31 billion in the first quarter of this year. Hat tip: Global Financial Integrity daily email.
All this in a context in which a local social commentator says that “Too many people are expecting pay for their votes” and that “The political atmosphere in the British Virgin Islands now is one of corruption”. Several of the comments below the article confirm his views.
Barbados: government plans to revitalize economy mainly by promoting offshore sector
On August 13th the Minister of Finance and Economic Affairs of Barbados, Hon. Christopher Sinckler, presented the Financial Statements and Budgetary Proposals of the Barbados Government.
KPMG has provided highlights of the proposals. The first items all focus on attracting offshore investments, including:
– Providing multi-year licenses to International Business Companies for up to three years, “to assist with the burden of renewing licenses annually”.
– Creating a Business Facilitation Unit to add efficiency to the International Business Sector
– Increasing the budget for Marketing and Promotion by 7 million dollars to attract foreign direct investment