Offshore Centres Seek FATCA Truce with US

Lisa Smith, BA (Hons), CeFA
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Three major British offshore financial centres are eager to sign up to the FATCA agreement with the US aimed at halting offshore tax management.

Guernsey, Jersey and the Isle of Man have all announced they want to work within the US Foreign Account Tax Compliance Act, FATCA for short, which comes in to force in phases from January 1, 2013.

FATCA requires foreign financial institutions to report information about earnings and assets held overseas by US taxpayers.

Britain has already signed a two-way FATCA agreement with the US that offers HM Revenue & Customs (HMRC) similar information about the financial holdings of UK taxpayers in the States.

Other countries are also negotiating favourable terms with Washington to join the FATCA tax exchange network, including France, Italy, Germany, Spain and Australia.

Tax commitment

Any agreement with any of the Crown Dependancies would need ratification by each island’s parliament.

Jersey’s Chief Minister Ian Gorst said: “This is also the course being adopted by many other countries, and it has industry support.

“This announcement is intended to provide certainty for our industry as they prepare for the Foreign Account Tax Compliance Act.

“Entering into this type of arrangement will also highlight and confirm our commitment, as a well-regulated jurisdiction, to the international principles of tax transparency and exchange of information.”

Guernsey’s Chief Minister Peter Harwood said: “Entering into this type of arrangement highlights the cooperative approach of the Crown Dependencies to international tax matters and confirms Guernsey’s commitment to being a well-regulated, internationally co-operative tax transparent jurisdiction.”

Charm offensive

Meanwhile, Guernsey politicians have launched a charm offensive at the Conservative Party Conference in Birmingham to try to persuade ministers and leading Tories that the island is not a haven for tax evasion, but an open, well-run financial centre with no secrets or intentions to undermine HMRC.

Chief Minister Peter Harwood and Commerce and Employment Minister Kevin Stewart are leading the mission.

Guernsey in particular has suffered at the hands of the British government this year as a VAT loophole letting companies import cheap CDs, games and videos to the UK was closed and new rules banned more than 300 QROPS (qualifying recognised overseas pensions) on the island from taking new business.

Wealth management firms in Jersey and Guernsey have also come under attack recently for aiding celebrities and sports stars in paying less tax through complicated financial schemes.

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