Despite Guernsey's appearance of an offshore financial centre which has got its act together, the island's bankers have been warned that threats of outside interference from the European Union, the UK government, the Organisation for Economic Cooperation and Development (OECD) and other bodies must be taken seriously and not with a pinch of salt.
Speaking at the local centre of the Chartered Institute of Bankers (CIB), Stephen Fern, chief executive of BPP Offshore (formerly OTC Training and Consultancy), stated that the attacks by outside organisations on tax havens would force Guernsey away from its traditional ways of conducting business.
He said ‘When we were planning our Project 2020 two years ago we thought we should be looking at just where the financial services industry will be in 20 years. Experience since then has clearly shown that where we thought we would be in 20 years, in reality, will be where we are in three years. We have to be looking at new ways of doing business. We are going to be driven out of our traditional ways by the EU, OECD and United Nations. We are going to have to face up to what we are going to be allowed to do in the future.'
' The message these organisations are delivering is that what Guernsey has done in the past has no place in the modern world.' One of the main areas Guernsey will need to tackle as a result of pressure will be disclosure. Certainly, Mr Fern and other professionals see full disclosure coming to Guernsey within five years.
It is true that pressure from external bodies such as the EU and the OECD must not be underestimated. Mr Fern cites Russia as being a powerful force behind efforts to clamp down on offshore jurisdictions. In his address, he talked of the pressure being put on the G7 countries by Russia, saying 'Russia needs offshore centres closed down so that it can take some tax revenues from its business people who are hiding their wealth away. The threat that, without cooperation, communism could return will be very effective.’
The issue of tax, and in particular OECD efforts to put a stop to so-called "harmful tax competition" in offshore centres, is much talked about in Guernsey and Mr Fern obviously has some very strong views on the subject. He said that essentially this was a case of inefficient governments with high tax rates trying to ensure that more efficient regimes raised their taxes to match those of the less competent:
‘In the past we have relied on three sorts of client. The one where efficient and expert tax planning legitimately reduced tax liabilities. Then there was the client who was helped to evade taxation. The third category probably accounted for about 70% of the business. This was the client who claimed that he was reporting his income back home and where a blind eye was turned to what was really going on. We will not be able to do any of that anymore.’
In spite of an acceptance of the inevitability of changes in Guernsey, Mr Fern outlined certain ways in which offshore financial centres should deal with pressure upon them. He said that island governments have a role to play but questioned just how far their political influence could extend, so organisations and professional bodies such as the CIB should become major lobbying groups.
Finally, he suggested that training was necessary to produce an industry entirely staffed by top-notch people. Comparing the situation in Guernsey to that in Mauritius, a small offshore centre but with a large financial services sector, he said 'There is a population of one million people. These people are highly motivated, hard working and well educated. What is more they are available at costs very much lower than here. At the moment the only advantage we have is complacency. People are comfortable living and working in Guernsey and Jersey and comfortable doing business here. That may be changed in the wake of big bank mergers which are going to be happening more and more.’
Mr Fern delivered one final blow to the CIB, saying 'The cushy
job, paying large amounts of money for mediocre performance, will
not be there in a few years’ time. That will come sooner
than most of us imagine.’
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment