Second US Tax Haven Bill Less Punitive For Channel Islands

by Jason Gorringe, Tax-News.com, London

24 March 2009

The second draft bill on deterring offshore tax evasion filed in Washington earlier last week contains less draconian measures and would be more favourable to Jersey than its predecessor - Senator Levin’s Stop Haven Abuse Bill, underlines Jersey offshore tax specialist, Stephen Platt.

Stephen Platt, chairman of the BakerPlatt Group, believes there is no doubt Washington will act against offshore tax havens but at present there is no consensus amongst policymakers about how to proceed.

“The Stop Tax Haven Abuse Bill, instigated by Senator Carl Levin, has to-date only found support from four senators out of 100 in the Senate and 62 co-sponsors in the House of Representatives, out of more than 450, and is therefore losing some of its momentum,” said Platt, adding: “Its progress has been further disrupted by the announcement of an alternative bill by Senator Max Baucus, Chairman of the Senate Finance Committee.”

“For Washington to take no action is not an option. There are two distinct proposals on the table and my instinct is that the Baucus alternative is preferred. Senator Baucus is close to the administration, he is a leading democrat and he heads an extremely influential committee.”

It has previously been announced that the Levin Bill would have a blacklist of so called ‘offshore secrecy jurisdictions’ which would include Jersey, Guernsey and the Isle of Man, despite their track record of high regulatory standards and international co-operation in combating financial crime. Platt believes that should the Stop Tax Haven Abuse Bill progress, it will not be possible for any location to have its name removed from the black list until after the Bill is passed into law.

Platt however is of the opinion that the momentum is moving away from the Levin Bill and that the Baucus alternative is more likely to be the preferred option of the Obama Administration.

The Baucus alternative avoids the compilation of a black list of offshore secrecy jurisdictions, but still includes some strong measures in the fight against offshore tax evasion and gives additional powers to the Internal Revenue Services (IRS). It would therefore be the better option for offshore jurisdictions, such as Jersey, Platt concluded.

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