Jersey is slowly moving towards clearer tax transparency as politicians seek the views of the secretive Channel Island’s money men about sending financial details of British taxpayers to HM Revenue & Customs.
Jersey has fiercely protected the financial details of clients for decades but is coming under increasing pressure from the UK, US and Europe to come clean.
A new disclosure agreement with the UK government would see the era of secret banking coming to an end.
That’s because Britain wants to introduce rules similar to the US Foreign Account Tax Compliance Act (FATCA) which is aimed at revealing the offshore assets of American taxpaying citizens.
A number of countries around the world have already signed up to FATCA, and now the UK has put together legislation which will compel financial institutions in territories and Crown dependencies to reveal financial information about the holdings of UK taxpaying clients.
Cost concerns
The law, dubbed ‘Son of FATCA’, is hugely controversial in the Channel Islands because of the massive impact making the revelations might have on their financial services industry.
Now, the Jersey government has asked Jersey Finance, the island’s financial trade body, for the views of members as part of a consultation about signing up for the law.
Geoff Cook, the chief executive of Jersey Finance, said: “This is an important and complex matter that we believe should be developed and agreed by a process of constructive consultation between all parties.”
He said there was still a lot of work before settling on a solution, and that the island’s financial industry was worried about the potential costs of complying with the new law.
Many in the industry were also worried about the effect of the law on Jersey’s international competiveness.
Information exchange
He added that the organisation was encouraged by the fact that the Jersey government is still negotiating with the UK about how the automatic exchange of information around the world would work in practice.
Jersey is in a tricky position since many countries back the idea of exchanging financial information on offshore accounts including the most famous tax haven of all, Switzerland.
The Isle of Man has also recently inked a deal with the UK to comply with the rules and Chancellor of the Exchequer, George Osborne, has made clear that Britain is determined to clamp down on those who hide their money in offshore accounts.
The likelihood is that should Jersey agree a deal that there will be an opportunity for UK taxpayers with offshore assets on the island to make a declaration to HM Revenue and Customs to pay any outstanding taxes without penalty or fear of prosecution.
