Panorama's John Sweeney
Jersey: Tax haven or international finance centre?
Jersey has been the subject of a not altogether flattering BBC documentary. BBC Jersey gauged reaction and discussed the island's status with two prominent local experts.
It is fair to say that governments don’t pay much attention to what banks are up to when times are good.
But with the implosion of the UK’s banking industry and tax revenues drying up, the financial world is now the subject of intense scrutiny.
The fall-out has resulted in prominent world figures – most notably President Barrack Obama – pledging to investigate so-called “tax havens.”
According to one estimate tax havens cost the UK revenue at least £18.5bn every year.
Jersey status as a financial centre was recently investigated in a BBC documentary, Panorama – Tax me if you can.
BBC Jersey talked to local figures on both sides of the argument.
“Veil of secrecy”
Director of Tax Research LLP, Richard Murphy, was one of the advisors on the Panorama programme.
Speaking to BBC Jersey Mr Murphy said the term tax haven was misleading.
Mr Murphy said: “We call them secrecy jurisdictions. They are places which deliberately pass legislation that undermines the rules of another state.
“They create a veil of secrecy to ensure that people who use its rules cannot be discovered to be doing so by the country they’re are actually based in.
“Jersey is without a shadow of a doubt in this group. It is the leading tax haven to service the city of London.”
Chief Minister Terry Le Sueur
Mr Murphy challenged Chief Minister Terry Le Sueur’s assertion that Jersey was transparent and well-regulated, describing such statements as “a joke.”
He said: “You can't find out anything about what happens in Jersey regarding corporates because the information doesn’t have to be put on public record.
“Jersey bluntly refuses to voluntarily exchange information under the EU savings tax directive.”
“The island has got to fundamentally transform itself to become a part of the international financial community.
It has to fully embrace the EU savings tax directive and put all the information on companies based in the island on public record.”
One body that disputes the term tax haven is Jersey Finance – the organisation that promotes the island's finance industry.
Jersey Finance’s Technical Director, Robert Kirby, condemned the Panorama documentary as too one-sided.
Robert Kirby said: “Jersey has applied a number of measures over the last decade to ensure we meet international standards.
“For example, we have complied to the third EU anti money laundering law to make sure money here isn’t used for tax evasion. This is the EU standard, which is applied by 27 other member states.”
“We have also complied with the EU on tax competition. We were challenged over our tax regime and that’s why we have introduced zero-ten.”
Mr Kirby said that despite income tax and GST Jersey was still a low tax island.
Jersey - Tax haven?
“When you look at our overall tax rate, which is 20 per cent plus 3 per cent GST, and compare it with the rest of Europe we are quite a low-tax place.
“In the UK you pay up to 45 per cent tax pus 15 per cent VAT.”
Mr Kirby said Jersey has worked hard to shake off the tax haven label, but didn’t agree the island needed to do more.
Mr Kirby said: “We also believe the UK and EU member States should help promote Jersey’s reputation as an international finance centre, not a tax haven.
“I don’t agree that Jersey needs to do more. We have met international standards and we have had good, albeit informal, feedback from the International Monetary Fund.
“We expect their final report to consolidate our position as an international finance centre.”
Have your say
What do you think? Is Jersey a tax haven, or is it simply a place that is geared towards international finance? Does it need more transparency, or should it be left to get on with it?
Maybe not a tax haven but along with other offshore tax centres we helped facilitate the shadow-banking industry which led to the "originate and distribute" model of reckless lending. These structures get around normal banking controls and have been the driver of much of the credit boom of the current decade. Certainly not something to be proud of but then we were all caught up in it.
Mark G - St Saviour
Is Jersey a Tax Haven? Yes
It does not matter how much regulation is in place the mega rich and large multi-national always find a loophole.
If Jersey is so regulated then why are we now seeing in the news of various companys and banks who have been found out regarding thier involvement with Tax evasion.
The issue here is not about the off shore banking but about local governments losing out on billions of tax revenue. If the UK or USA want to reap this back then why not introduce new laws in their own country to stop this happening?
Marx - St Saviour
The fact is, business come here because they know they will pay less. Forget what the definition of a tax haven is, what we are doing is immoral.
Ordinary poreletariat folk are having to pay more taxes, because the bourgiousie, who have more money then they could ever care for, are selfish.
Jersey will keep doing it, because its beneficial for us, but they don't realise its detrimental to other people! But when has the Jersey government ever cared about anyone but themselves...
Michael - St Saviour
Richard Murphy is incorrect about compliance with the EU Savings Directive; Jersey has legislated to ensure that from 2005 new accounts opened by EU residents will be subject to an Information Exchange (IE) with their domestic tax authorities, whereby their income details are reported. Existing clients had/have the option of IE, or they may pay a withholding tax that will periodically increase over the next few years. Although their details will remain confidential, tax is collected and distributed to their domestic tax authorities. However, WHT will increase to such a rate that it will eventually become more efficient for account holders to declare their income under the IE scheme.
If Obama wants to shut offshore centres, I suggest he starts with Delaware.
Paul - St Helier
The show was so poorly put together. Jersey is a finance centre playing by the rules.. has agreements with many countries including Germany and the US.
On the other hand you have Switzerland - that still has numbered bank accounts to start with!
Yes there are some dodgy tax jurisdictions - British Virgin islands, Cook Islands etc.
I thought there was a law about peoples privacy... can we see on public record who owns a car if we know its number plate? Can you in the UK? No - so why should we know who owns a Company? Talk about moving the goal posts!
last updated: 04/02/2009 at 11:09