The international clampdown on ‘offshore tax havens’ has been a well reported feature across the press in the last few months, and indeed, one of the main talking points following the recent G20 summit. But where does Gibraltar sit within this international whirlwind of public opinion, and what are our views on the current developments?
Following on from the London meeting of G20 leaders, the Organisation for Economic Cooperation and Development (OECD) published a report on 82 financial centres assessing their progress towards the ‘internationally agreed tax standard’ which effectively requires exchange of information on request in all tax matters for the purposes of administering and enforcing domestic tax law. The report created three separate categories into which the 82 jurisdictions in question were classified. A white list (jurisdictions which have substantially implemented internationally agreed tax standards) which contains most of the larger economic powers, a grey list of jurisdictions that have committed to the international tax standard but have not yet substantially implemented it (i.e., that have not yet signed at least twelve Tax Information Exchange Agreements (TIEAs)), and a black list of non-compliant jurisdictions that have not committed to the standard. The obvious advantage of such a system is that the G20 leaders have noted the OECD standard of exchange of information on request as a legitimate criterion on which to judge all finance centres, whether they exist onshore or offshore. Gibraltar currently sits on the grey list but has already signed its first agreement with the United States (the largest OECD member). This agreement has allowed, in the words of Chief Minister Peter Caruana to “signal at the highest level that we (Gibraltar) are a mainstream quality finance centre”. The recent agreement also shows clear support of measurements to increase global standard to a level that we are already operating, by virtue of our EU membership. Chief Minister Peter Caruana also said: “We look forward to co-operating with the United States under this agreement. As part of the European Union, Gibraltar already complies with EU standards of financial regulation and exchange of information.”
The jurisdiction is well placed on the international scene from both a regulatory and compliance point of view. People who read the headline articles of today’s press could be forgiven for thinking that AIG and Lehman Brothers were companies located in the Cayman Islands or the BVI while the truth of the matter is that the gravest international fiscal issues have arisen in the most ‘regulated’ jurisdictions. While President Obama leads the fight to combat tax evasion, and jurisdictions such as Gibraltar are more than happy to fully co-operate perhaps we will also see similar requirements imposed closer to home. A recent investigation by Jason Sharman, a professor of the centre for governance and public policy at Griffith University, Australia, attempted to set up shall companies in 22 countries finding that the easiest place to retain secrecy was the US and Britain. Sharman attempted to set up anonymous shell companies on 45 separate occasions. In 17 cases there was no information provided on the ultimate beneficial owner. Seven of these were provided in Great Britain, four in the US, one in Spain, and one in Canada.
