Britain’s network of overseas territories and crown dependencies have agreed to prime minister David Cameron’s request of signing up to an extended set of transparency rules that are aimed at a tax evasion clampdown.
The islands around Britain known as the Crown Dependencies, including Jersey, Guernsey and the Isle of Man joined by the British Virgin Islands, Bermuda, Cayman Islands, Gibraltar, Anguilla, Montserrat and the Turks and Caicos Islands, have agreed to support an automatic tax information exchange, which was started by the UK, Germany, France, Italy and Spain.
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The tax haven have agreed to sign up to the multilateral convention on mutual assistance in tax matters – an initiative led by the OECD, and to publish action plans around how they would force companies to reveal beneficial ownership.
UK, France, Germany, Italy and Spain started developing and piloting the multilateral tax information exchange in April 2013, which is based on a Model Intergovernmental Agreement to Improve International Tax Compliance and to implement FATCA developed between these countries and the US.
Cameron said: "It is important we are getting our house in order. It is a very positive step forward and it means that Britain’s voice in the G-8 and the campaigning on this issue around the world for proper taxes, proper companies and proper laws will be stronger.
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By GlobalDataTransparency push
The Isle of Man chief minister, Allan Bell MHK, had welcomed the letter from Cameron and said that as far as the Isle of Man is concerned, Cameron is "pushing at an open door".
The Cayman Islands Government, though, said it is prepared to commit to the Convention on Mutual Administrative Assistance in Tax Matters.
Stronger rules
Cameron said that UK will establish its own register of beneficial ownership.
"We need to know more about who owns which company-beneficial ownership-because that is how a lot of people and a lot of companies avoid tax, using secretive companies in secretive locations," he added.
The British government has also said it will introduce new domestic rules to combat tax evasion and money laundering, by forcing shadowy "shell" companies to throw off their cloak of anonymity and reveal who really runs them.
Counsel to the IFC Forum, Richard Hay, representing professional firms in British offshore centers, said: "Other major countries – such as the United States – do not collect beneficial ownership data and are unlikely to. Moving ahead of others risks an own goal for the UK as business migrates to the United States."
On 13 June, PBI reported that the European Commission proposed extending the requirements of the automatic exchange of information between EU member states, stressing that it will go further than FATCA in tackling tax evasion.
IHE, the organisation that represents Spain’s Inspectors of Inland Revenue, had said earlier in May that EU level agreements regarding combating fiscal fraud are "not enough", and has called for a mechanism to isolate countries that do not automatically provide tax information.
Step by step
On 30 May 2013, nine countries, including Luxembourg, Austria and Singapore, had signed up to international tax protocols at the Organisation for Economic Co-operations’ (OECD) week-long forum at its headquarters in Paris. More than 50 countries had agreed to automatically exchange tax information prior to that, to assist foreign nations to clamp down on tax debtors, and allow countries to conduct wide-ranging joint multiparty tax investigations.
Earlier in May, Austria had revealed it was ready to share data on foreign depositors by the end of 2013, in a meeting of EU leaders to discuss fighting tax fraud by lifting bank secrecy.
