Offshore financial centres are feeling the pain of tighter tax reporting laws and are accusing some countries of trying to squeeze them out of the market.
Traditionally, many British Crown Dependencies, Territories and former colonies have stood accused of aiding tax cheats by providing secret banking and investment services.
The US Foreign Account Compliance Tax Act (FATCA) and tax information treaties between Britain and former tax havens like the Cayman Islands, Channel Islands and the Isle of Man have forced the governments to reassess their financial model.
Most have agreed to life the veil of secrecy and share financial details of offshore customers.
However, the Bahamas prime minister Perry Christie has complained to the United Nations that larger nations are trying to impose tax reporting laws on smaller nations who rely on wealth management, banking and financial services for a large proportion of their annual earnings.
Held to ransom
It’s clear Christie is taking a swipe at FATCA and Britain – as the Caribbean sunshine islands of the Bahamas are a former British colony seized in the 18th century when piracy was a scourge of trade on the seas.
In an address to the UN General Assembly, Christie protested nations like the Bahamas were being held to ransom by larger nations.
“We interpret their actions in developing a global network to govern financial services as part of a continuing program of economic aggression of developed nations against small offshore economies specialising in financial services,” he said.
“This is especially at work in the Caribbean, of which we are a part.”
The reference is mainly at the Cayman Islands and British Virgin Islands, two of the region’s largest offshore financial centres and focus of British efforts to bring into son-of-FATCA, the UK’s version of the US laws to monitor automatic tax information sharing.
Powerful nations
“These powerful nations have acted alone or in groups to impose their will, while arguing accumulating wealth in offshore centres is immoral or sinister,” said Christie.
“The result is many of our economies will be harmed, disrupted or even destroyed even though our regulators are more effective than those in many of the nations taking such action.”
Christie called on the UN to take over formulating global governance of the offshore financial sector.
He also protested that if offshore financial services economies failed, jobs would be lost and many well-off middle class workers in the sector would ‘slip back into poverty’ or move overseas.
Currently, the Organisation of Economic Co-Operation and Development (OECD) is leading the charge against secret banking and wealth management.
