9th January 2001
OECD Barbados Conference Pressures Caribbean Jurisdictions To 'Commit', by Mike Godfrey, Tax-News.com, WashingtonWith the active assistance of senior officials from the United Nations, the IMF and the World Bank, the OECD has spent the last two days at a conference it called in Barbados trying to get a number of Caribbean jurisdictions to 'take the pledge' and issue 'commitment letters' agreeing to its slate of requirements for a cleaned-up set of banking privacy and tax laws. Its new secret weapon: money! Although no details were publicly available, it is thought that the 29 members of the OECD have secretly agreed to buy off the miscreant offshore islands rather than allow them to continue posing a threat to rich-country tax collection. But the bribes will be dressed up as regional assistance to be provided through the IMF and the World Bank.
On the margins of the conference, however, politicians and bankers from the jurisdictions expressed resentment at the behaviour of the 'first world' calling it 'racist' and 'bullying'. There is talk of getting together in a coalition of offshore jurisdictions which could put up a united front against the OECD fiscal stormtroopers.
The OECD asserts that a further four jurisdictions have now agreed to issue commitment letters, but would not divulge their identities. It is thought however that they include the Bahamas, which has been particularly energetic in trying to remove itself from the OECD's blacklist.
20th January 2001
Within days of President George W Bush's conciliatory inauguration address, Paul O'Neill, Treasury Secretary appointee but still awaiting his confirmation hearing, gave a press briefing in which he said that he expected Congress to reach a compromise on the tax-cutting package favoured by the President which would include some additional social and health-care spending. Asked about America's attitude to international taxation, Mr O'Neill said that he was in favour of competition in tax as in everything else.
3rd February 2001
The diminutive Caribbean territory of Antigua and Barbuda, which has been emitting pitiful shrieks of pain for months due to the loss of offshore business caused by the 'advisories' issued by the US and the UK, has announced that it is to sue the British Government in the High Court in London for damages. Antigua has repeatedly said that it long ago cleaned up the problems that had caused the advisories to be issued, and that it was now unfair and discriminatory of the UK to maintain them.
A senior legal official in the Antiguan administration said that the UK was being targeted rather than the US, because word had been received from Washington that the new administration would lift the US advisory within weeks, while the UK kept piling on more and more requirements. Lawyers in London said that while unusual, it was not unheard of for former colonies to sue the British Government, under wording in the agreements reached at independence.
Antigua said that it had not decided on the level of damages, but that it was losing more than $1m a day as a result of the advisories.
5th February 2001
Frank Walker, president of Jersey's Finance and Economic Committee, confirmed yesterday that a meeting between senior figures from Jersey, Guernsey and the Isle of Man had taken place at which a limited economic federation between the three jurisdictions had been discussed.
Senator Walker denied rumours that a full integration of the three economies had been mooted, let alone the creation of a common government, but he said that there were many areas in which co-operation made sense. For instance, the Isle of Man would like access to the Guernsey Stock Market, and it was ridiculous for three legislatures to keep on passing three sets of nearly identical legislation on financial services supervision. The Senator agreed that it was the OECD's demands that had brought on the discussions, but said that the need to develop a strong e-commerce platform to compete against Bermuda was another major factor.
A back-of-the-envelope calculation suggests that total financial assets in the banking, fund management and trust sectors of the three jurisdictions amount to approximately £800bn. To put this in context, it compares with Cayman Islands banking assets of $500bn, and UK Gross National Product of just over £1 trillion.
15th March 2001
It was billed as a meeting of minds, but the reality of this weekend's get together of Maltese and Cypriot ministers with their Gibraltar colleagues at Nicosia's Hilton Hotel seems to have been more of a dog fight. The meeting was intended to build a consensus between the three jurisdictions which they could use to draw a line in the sand during the EU accession process, and which would give Gibraltar more strength in its ongoing effort to be an independent force in the EU; but the competitive aspects of the situation seem to have triumphed over the co-operative ones.
The final communique was bland in the extreme, asserting a unified desire to be 'communautaire' and to work with the EU authorities to smooth out any remaining 'offshore' difficulties. But unofficial commentators say that little was agreed, and that the meeting won't have strengthened the ability of the two applicant countries to impose their desires on the negotiation process. In truth, Gibraltar seems to have little to gain from helping Malta or Cyprus to retain 'offshore' aspects, when it has gained for itself a quite privileged position within the EU; and why should Malta or Cyprus want to help the other when they are really competitors in many sectors?
17th March 2001
The composite tax bill which gained bi-partisan support in Congress after last week's special negotiating session trimmed $250bn in cuts over 10 years, while adding the same amount of Democrat 'wish-list' health and social spending, passed the House today by 300 votes to 110. Senate leaders have said they will follow suit, so it seems that the President has won $1 trillion of his cherished tax cuts over 10 years. Set against latest estimates of the non-pension surplus of $2.8 trillion, the cuts look sustainable.
20th March 2001
90 days after it was set up, a WTO dispute resolution panel yesterday ruled that the new legislation passed by the last Congress in its dying days to replace the banned Foreign Sales Corporation rules still constitutes an illegal trade subsidy, and that the EU is therefore entitled to proceed with the trade sanctions it had laid before the WTO last December.
The disputed US proposals involve a repeal of the FSC scheme (originally part of the Tax Reform Act 1963) and its replacement with special income tax rates for both export and non-export foreign sales by eligible manufacturers, which would include qualifying foreign companies.
Although the WTO ruling appeared to hand victory to the Europeans, both sides were at pains yesterday to avoid confrontation. Treasury Secretary Paul O'Neill said he understood that the only further change now needed to the legislation was to reduce the US content requirement from 50% to 30%, and he did not exclude this as a possibility, although it may be tough to get such a measure through the divided Congress.
For his part, Pascal Lamy, EU Trade Commissioner, said that the Union was anxious to avoid exacerbating trading relationships with the US, when both the banana and beef dossiers were at last nearly resolved. He believed that the Americans would eventually succeed in getting WTO approval with a change in the content requirement, and that the EU would 'hold its fire' in the meantime.
27th March 2001
UK Chancellor Scraps Betting Tax, Puts 20% On Gross Profits, by Jason Gorringe, Tax-News.com, LondonOne of the less-noticed aspects of yesterday's give-away pre-election budget won't have garnered the Chancellor many votes among the betting fraternity. Yielding to insistent appeals from the betting industry (if its UK remnants can be called that any more) Gordon Brown abolished betting duty of 9%, but replaced it with a levy on gross profits of 20%.
On a strict calculation, assuming that bookies are on average 20% 'over-round' this would amount to a halving of the tax take - but Gordon 'Stealth' Brown has included profits from all sources in the tax, meaning that a bookmaker who is doing half his business through the Internet or from offshore sites will face just as much tax as before.
A spokesman for the Betting Office Licensees Association said that the trade was very disappointed. 'They haven't listened to us, and now they will find that their golden geese will fly away'. It's estimated that offshore and Internet betting with UK-based firms is now three times as large as 'territorial' betting, and for most bookies, it will be cheaper and better to move offshore altogether than to pay 20% on gross profits earned through their sites.
It's difficult to understand how the Treasury can hope to gain from this piece of legislation.
20th April 2001
Charles Schwab, leading US brokerage, and one of the world's three top e-brokerages, has established a Bermudian company to hold all of its non-US operations.
In a bare announcement yesterday, Schwab said that no changes to national operations or personnel would ensue. Charles Schwab (Bermuda) Ltd was being established with a capital of $350m but would have access to loan capital exceeding $4 bn allowing it to acquire the international subsidiaries from the parent company.
Tax experts said that Schwab was acting when a number of its international operations were close to profitability, and thus would shortly start incurring tax charges in the countries where they were established. It was therefore a logical moment for the company to bring them under an offshore holding structure which would allow very tax-efficient management of international tax liabilities. The purchase of existing subsidiaries was at book value and would not be likely to incur capital gains tax liabilities in the US, they said.
10th May 2001
The English High Court Rules For Antigua Against The Government, by Jason Gorringe, Tax-News.com, LondonIn a written judgement, the High Court has ruled that the UK Government stepped outside its permitted role in relation to ex-colony Antigua and Barbuda, and infringed the implied contract in independence documents that it should support and assist the economic development of the tiny jurisdiction. The judgement, which is sure to be appealed by the British Government, results from Antigua's complaints about a financial 'advisory' which it says has cost the country more than $500m in lost business. Damages are due to be assessed in a separate hearing, but they will be academic until the appeal process is completed.
If the ruling is upheld, and it may take years to pass through the various appeal stages, it is dynamite for the attempts of the rich countries to control the behaviour of small offshore jurisdictions. Prominent jurists were saying last night that it was inappropriate for such a fundamental aspect of relationships between countries to be decided by a court in one of them, and that a new international tribunal should be created to oversee such disputes.
11th May 2001
In an unexpected response to ASEAN's moves towards 'variable trade geometry', New Zealand has announced that it plans to create an 'onshore offshore' free trade zone which will encompass the whole of one of its major cities. Ministers are being tight-lipped about just which city they have in mind, but it seems that Wellington is the likely candidate.
The chosen city will imitate a typical offshore jurisdiction, with a liberal tax and regulatory regime for companies that trade only externally, as well as for their employees.
New Zealand's move may be an effective reply to the growing tendency for individual ASEAN countries such as Singapore to create a web of bilateral treaties which subvert the ASEAN process. Unlike NAFTA or the EU, ASEAN has come to look like a busted flush in trade and political terms, delivering a lot more hot air than real trade benefits.
The WTO may be a problem for New Zealand, if one of its competitors chooses to attack. One of the WTO's strongest tenets is that there should not be discriminatory trading regimes inside a country - this is the basis of the EU's ongoing action against the US's Foreign Sales Corporation legislation. The New Zealand government will have to be very careful to frame the rules for its mega-free-trade zone so that it doesn't transgress.
20th May 2001
The Cook Islands Government yesterday made it clear in an off-the-record press briefing that it had no intention of signing an OECD 'commitment letter'. Officials mentioned in particular negative comments made by US Treasury Department officials and leading Republican Congressmen about the EU's information sharing agenda, and the UK High Court's judgement in favour of Antigua. 'What chance does the OECD have of getting all this in place by 2005?' said one official.
The Antiguan judgement seems to have been the most important factor. Since the judgement, no country has signed the letter, whereas between January and March the OECD had added ten more jurisdictions to its existing 'bag' of eight.
The judgement seems to have been a signal that unleashed widespread international efforts to create a satisfactory international forum in which international 'tort' disputes between nations can be adjudicated. No agreement has yet been reached on the form of such a forum, but it doesn't take a rocket scientist to see that if 'sanctions', 'advisories' and the like carry the risk of retaliatory action then large countries are not going to shoot from the hip any more, and organisations such as the OECD will lose much of their power to 'bully' small countries into submission.
24th May 2001
Barclays Bank yesterday announced an agreed purchase of OM Gruppen, owner of the Swedish Stock Exchange and part owner of Jiway, for a cash consideration of £400m. The offer, which represents a 37% premium to OM Gruppen's share price at yesterday's close, has been irrevocably agreed by more than 90% of OM's shareholders, and is unconditional.
OM unsuccessfully bid for the London Stock Exchange last year, and has had only moderate success with Jiway, its pan-European e-trading stock exchange, so it had been seen for some time as a potential target, although there had been no mention of Barclays as a possible bidder.
There must now be intense speculation as to the behaviour of Morgan Stanley Dean Witter, OM's partner in Jiway, especially since the Swiss Stock Exchange successfully acquired the LSE last month and merged its new EuroTop 300 electronic share-dealing service into its Virt-X trading subsidiary, creating a strong competitive force for Jiway. Morgan Stanley Dean Witter is one of the part-owners of Tradepoint, SWX's partner in operating Virt-X.
20th June 2001
A press release issued simultaneously yesterday by the Governments of Jersey, Guernsey and the Isle of Man announced that the semi-federation of the three offshore dependent territories would take place on 1st January 2002. Responsibility for different aspects of the NAFOZ's economies would be shared out between the three governments. The Isle of Man would have charge of e-commerce in all three jurisdictions, Guernsey would control the fund management sector, Jersey the trust and banking sector, and so on. There would be one parliament, which would meet by rotation in the three capitals.
It's presumably no coincidence that the announcement comes only days before the OECD is due to publish its revised blacklist on 1st July. Since the OECD said in January that it was 'minded' to remove Jersey and Guernsey from the list (the Isle of Man was taken off when it signed a 'commitment letter' last December) there has been a curious silence from Paris on the subject of the UK's dependent territories. Spokespersons were being coy yesterday, and ministers couldn't be reached for comment, but it is understood unofficially that the three Governments have reached a consensus on how far they are prepared to go, and are going to sit on their hands even if Jersey and Guernsey remain on the list.
It is likely that the three jurisdictions are comforted by the noises issuing from Washington in support of tax competition. Although no official action has been taken, it is thought that the administration has severely cautioned the OECD and other international bodies, and will not support any further sanctions against offshore jurisdictions in other than really egregious cases.
Another encouraging factor for the jurisdictions will have been the High Court judgement in Antigua's favour, making the OECD's threat of sanctions against errant offshore jurisdictions much less credible.
10th July 2001
The Dog That Didn't Bark: Why Hasn't The OECD Re-Published Its BlackList?, by Jason Gorringe, Tax-News.com, WashingtonThe eighteen 'blacklisted' offshore jurisdictions that haven't signed up to the OECD's commitment process were all agog on 1st July: would the OECD publish its list again? Would they be on it?
They waited . . . and waited . . . and waited. And nothing happened. Calls to the OECD's Paris headquarters were met with polite stone-walling; the organisation's normally highly communicative press office was unaccountably silent. 'She's out to lunch.' 'He's on vacation'. 'They're in a meeting'.
It's thought that the US has been putting pressure on both the EU and the OECD to backtrack on 'information-sharing' and 'tax competition' initiatives; and the increasingly sharp exchanges taking place between high-tax and low-tax countries have put the role of the OECD and FATF into doubt. If non-members of the OECD don't accept the legitimacy of the organisation (and what rule of law says that they should?) then it becomes useless as an instrument of economic change.
Indeed the OECD was never designed as an instrument of economic change, but just as a talking-shop, as a commentator. At this it has been extremely good; but the attempt by G7 finance ministers to use it as an instrument of tax imperialism has backfired so badly that the whole organisation is compromised.
20th September 2001
The annual joint meeting of the IMF and the World Bank in Washington has never been so exciting. The suppression of the OECD had been widely trailed, even if nothing official had been said, but it was anyone's guess until the very last moment whether its role would go to the IMF or the World Bank. In the event James Wolfensohn's greater authority and experience seems to have been the deciding factor.
The OECD had seemed redundant for almost ten years. Once the battle for economic orthodoxy had been won in the early 1990s, it seemed to have lost its role, and the final nail in its coffin was hammered in when the left-leaning governments of the late 1990s combined to subvert it in the interests of their anti-offshore, pro-tax agenda.
It made an effort with its 'TAG' (Technical Action Groups) and some of them did some useful work. The EU is to blame for sidelining the OECD in this respect, especially over its ill-fated e-commerce taxation initiative, which effectively aborted the Ottawa process.
When the OECD failed to re-publish its 'blacklist' of tax havens in July, the writing was on the wall.
14th October 2001
United Nations Resolution Calls For World Economic Court, by Mike Godfrey, Tax-News.com, New YorkDespite threats from Russia and China that they would veto such a resolution, in the end a form of words was found that was acceptable to everyone, and the UN resolution calling for the creation of a world juridical forum is now in place.
It's one thing for the UN to lay down a resolution, but it's another for that resolution to have an effect, as many oppressed minority nations have found to their cost. But in this case the omens look good.
All members of the G7 have committed themselves to the necessary level of funding, and all that remains is to choose between enlargement of the WTO or the establishment of a wholly new institution. The odds are that the WTO will be chosen: it has experience of dispute resolution between countries, and has been in need of strengthening ever since the abortive Seattle meeting last year failed to get another trade round underway.There will be a special G7 summit in January at which the decision will finally be taken, and the World Court is expected to be operational from mid-2002. Its initial case-load will consist of a number of pending appeals such as Antigua's damages action against the UK Government, which will be transferred out of their existing fora into the new court.
Antigua's initial success in the High Court, which awarded damages of £500m, was reversed on appeal, but the case is now due to go to the House of Lords. The Lord Chancellor's office said yesterday that the case would be put on hold, with the agreement of the plaintiff (Antigua), pending transfer to the new Court.
1st November 2001
In a remarkable move, a consortium of Morgan Stanley Dean Witter, Charles Schwab and the Bank of Bermuda has offered $60bn for Barclays Bank, the UK's third biggest bank. The bid, which is thought to be unwelcome, represents a premium of only 10% over Barclays valuation at close of trading last night in London. The shares had risen 8% in active trading after the news hit the market.
A spokesman for the consortium said that the intention was to break up Barclays, putting its on-line financial services division under Charles Schwab (Bermuda) and merging it with the existing Schwab operations in the UK and some other markets. Barclays' investment banking and asset management operations would be merged into Morgan Stanley, while remaining parts of Barclays would be sold on or possibly re-packaged for flotation as a conventional 'bricks and mortar' banking operation.
Charles Schwab (Bermuda) and Bank of Bermuda would raise $5bn and $1bn respectively through ADR placements in New York, and the remainder of the deal would be financed by Morgan Stanley with a mixture of cash and stock. It was expected that Morgan Stanley and Bank of Bermuda would become equity partners in Charles Schwab (Bermuda) although the levels of shareholding had not yet been determined.
Analysts said that the deal had been driven by Morgan Stanley's determination to become a global leader in the developing on-line stock-trading sector and its problematic situation as a part-owner of Jiway after Barclays purchase of OM Gruppen in the summer. Morgan Stanley is now expected to dispose of its interest in Virt-X through Tradepoint, in which it is effectively competing against itself.
It is far from certain however that Morgan Stanley will get away with this audacious bid. Although Barclays has not recently been seen as 'in play', there was a long period in 1999 and 2000 while it struggled to find direction under a succession of chief executives, and several global financial groups are known to have been ready to bid should a contest have started. They will now be dusting off those plans.
.
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