Offshore Asset Protection BLOG - Bob Bauman

Offshore Freedom

Cabo San Lucas, Baja California Sur, Mexico: That's from whence I am reporting today, the second day of the four day Sovereign Society Offshore Advantage Seminar at the Westin Resort & Spa (below).

Located at the southern very tip of Mexico's Baja Peninsula, our resort hotel enjoys a dramatic site at Land's End, high above where the Sea of Cortes meets the Pacific Ocean. Looking out over the blue-green ocean in the late afternoon we have seen huge whales leisurely swimming along with schools of dolphins as escorts. Deep sea fishing is a major sport here. 

Los Cabos, as it is known, is unique in its impressive desert landscapes of pinks, reds and browns, its very dry climate, with endless cactus plants framed by cinnamon colored mountains, and bordered by miles of white sandy beach and clear, deep azure waters.

If I sound as if I am an impressed tourist, that's because I am. I have visited other Mexican resorts, Cancun, Puerto Vallarta and Acapulco, but Los Cabos exceeds them all in beauty and unspoiled grandeur.

So much for the location.

Here for Business

There are over four hundred people attending our seminar, including 330 attendees, plus professional speakers and staff. During four days the attendees learn from experts about every aspect of offshore activities -- banking, trusts, family foundations, foreign residence and second passports, investing, currencies and asset protection -- as well as how to comply with U.S. offshore tax and reporting laws.

While many of the attendees are U.S. persons, there are people here from as far away as Switzerland, Denmark, Germany, the Isle of Man, Panama, New Zealand, Australia, Hong Kong, Canada, Austria and many other nations.

Unusual Zeal

Professionals in attendance, attorneys, investment managers, bankers, foreign citizenship advisors -- all have remarked on the palpable air of concern and determination shown by all the attendees. I have seen and heard it in many conversations I have had.

These good people share my fear about what is happening to the United States -- Obama's march to socialized medicine, the ignoring of the Constitution by Congress and the executive, the piling up of trillions in deficit spending -- and these people are determined, for safety's sake, to place some of their assets offshore, if not themselves.

Unparalleled Concern

In the more than 10 years of the existence of the Sovereign Society I have never before seen people at our meetings as determined as these folks are to follow a course of action toward financial and personal safety -- and they mean to act now.

Yesterday the chairman of the Sovereign Society, Jack Pugsley, (left) and I both delivered addresses describing the perilous state of America and the world. Believe me the people here understand the threats to, not just their wealth, but more importantly, to their freedom and the futures of their children and grandchildren.

We made clear once again that we believe that…

• Individual liberty is a prerequisite to prosperity.
• Liberty exists when every individual has the right to keep, control and dispose of his or her justly-acquired property.
• Individuals and their assets are not the property of government.

You Can See & Hear It All

Now, in the past we've made audio recordings available for a fee. But this year, we're doing something completely different.
The management has decided to give you the valuable content of this seminar in Los Cabos FREE… not just for the 2009 Academy - but for every future event we hold.

I have summed up the details in this attached letter. Give it a look. That way, if you're interested, you can get a video/audio copy of all that occurs here at Los Cabos soon after the conclusion of the Offshore Advantage Academy.

British Labor Declares Financial War on U.K. Offshore Havens

Wallowing in trillions of pounds sterling of government debt, suffering an unprecedented recession prolonged by its leftist policies, with banks propped up by £1.2 trillion (US$1.7 trillion) in bailouts taken from angry taxpayers, the British Labour Party, now in its political death throws, has decided to destroy the United Kingdom's offshore financial centers.

In doing some hope that it may precipitate a constitutional crisis the gravity of which has not been since the abdication of Edward VIII in 1936.

Keep in mind that Jersey, Guernsey and the Isle of Man are not part of the UK but are self-governing dependencies of the Crown. This means they have their own directly elected legislative assemblies, administrative, fiscal and legal systems and their own courts of law. The Crown Dependencies are not represented in the UK Parliament and UK legislation does not extend to them.

Brown's Tax Haven Ploy

Earlier this month I gave you a detailed account of the shabby treatment the Labour government has accorded the U.K. offshore financial centers, even though these centers have led the way in offshore financial reforms well before the current OECD blacklisting attacks.

In the midst of the worst British recession in 30 years, faltering Prime Minister Gordon Brown (left) has been demanding “the end of tax havens,” demagogically blaming them for the global economic downturn which had its root causes in the City of London, in Wall Street and elsewhere.

Chancellor of the Exchequer, Alistair Darling, (below) announced a review of the Crown dependencies and overseas territories in his pre-budget report last year, three weeks after he made disturbing comments to a Treasury select committee about the Isle of Man being little more than a “tax haven sitting in the Irish Sea”.
 
No to the Cayman Islands

The anti-Manx action appears to be part of a larger plan of actin aimed against all U.K. offshore financial centers.

A few weeks ago the Labour government refused to assist the Cayman Islands, a British overseas territory (read colony), with a budget shortfall, in effect ordering the islands to sink or swim on their own financially. In the past London under both political parties has accepted a duty to support its colonial possessions in times of need. The Foreign Office refused the Cayman Islands permission to raise a £280m (US$459m) loan until it has levied new taxes.

Attack on the Isle of Man

Now comes Mr. Darling and announces that, without any negotiations, and with only 30 days notice, the Labour government is cutting the annual budget of the Crown dependency of the Isle of Man by 24%, causing what Manx leaders call an “unprecedented” financial crisis.

British observers saw this as one of Gordon Brown's harshest ways to deal with the Isle of Man's status as a "tax haven" and they said it has the potential to change life for the worse on the island in the future.

London slashed £140 million (US$229.5 m) off the tax haven’s £572 million (US$938 m) annual budget. And they did so unilaterally. The sudden cut eventualy could amount to about half the total Manx government budget. It also ended an existing Health Care Agreement that provided services to the island's people.

The island’s chief minister, Tony Brown, (left) told Tynwald, the Manx parliament, that the deal imposed by the UK was non-negotiable. Mr Brown added: “This situation is clearly extremely serious for the island and unprecedented."

Violation of 400 Year Old Treaty

This appears to be in violation of a 400-year-old customs revenue-sharing agreement between the Isle of Man and the UK. The annual payments by the UK are not a subsidy, but revenue sharing based on a formula that pays back some of the British VAT collected on the island. Locals claim that in the past the island has received less than it pays in VAT, and that certainly will be the case now.

Left-wing British anti-tax haven groups cheered Labour's abrupt action and claimed it would put an end to what they claimed, without proof, is massive tax evasion on the Isle of Man.

Credit Rating at Issue

Having suddenly lost 24% of its planned revenues, the credit rating company Moody's has placed the island’s credit rating under review. The current Triple-A status may be downgraded because of the 24% reduction. This could have a significant effect on life on the island and ultimately impact upon its status as a leading tax haven.

Banking, high caliber legal, accounting, insurance and other financial services are available on the island. In spite of their ancient history, banking on the offshore islands is modern, sophisticated and user-friendly. Total deposits in the 47 banks in the Isle of Man banking system in 2009 exceeded £98 billion (US$156.5 billion).

Good Record

Only recently I wrote an article here extolling the superior status of the Isle of Man and its management as an offshore financial center.

I noted that  the island's free market  approach had reaped rewards. The island has enjoyed 26 consecutive years of growth. It has no national debt, an unemployment rate of just 2.2% cent, and has avoided the global recession. Per capita income 24% lower than Britain’s in 1996, is 18% higher now at about $35,000.

What Brown is trying to destroy is a well-regulated and universally recognized high quality offshore center for financial services.

History

The Isle of Man came under English control in the 14th century. During this period the Isle was dominated by the Stanley family, who also held the title of Earl of Derby, who had been given possession of Man by King Henry IV. In 1703 the Act of Settlement secured peasant rights and marked the beginning of a move away from feudal government.

In 1765 the British Crown secured greater control over the island paying a price of £70,000 without incorporating it into Great Britain, laying the basis for the island's status as a Crown dependency. In 1866 greater autonomy was restored to the island's parliament and a full transition to democracy began.

The Isle quickly developed as a finance center and tourist destination, becoming increasingly prosperous during the 20th century.

The Future

Perhaps the Isle of Man may wish to assert its constitutional independence in the face of this blatant violation of a 400 year old treaty -- especially since the Labour government has made clear its hostile intention to destroy the island's major source of income. 

Then too both the Isle of Man and the UK may be saved by the ascendency of a Conservative Party government in the 2010 elections. Labour is now trailing in all the polls.

The Isle of Man: First in Space?

I've had the privilege during my lifetime of visiting many countries of the world, from Europe to South Africa, from China to Latin America.

But one country, (or I should say, "Crown Dependency"), that I have yet to see first hand is the Isle of Man, a 32 mile long, 14 mile wide, 221 square mile island in the stormy Irish Sea off the northwest coast of the United Kingdom where gale force winds (30+ knots, 30-40 mph) blow an average 10-15 days each year.

No doubt, the other 360 days the sun shines bright in this island of centuries old mythical creatures, including fairies.

Friends Are the Reason

I've studied the Isle of Man, written about it, and had contacts with its financial community, but the strongest attraction for me has been my friendship with Colin and Judith Bowen, two delightful residents of the island I've have had the pleasure of knowing for several years.

Colin (right) is the Deputy Chairman of the Isle of Man Assurance, an independent insurance company formed in 1971 that offers a host of annuity, life insurance and investment products -- and Judith does her best to keep him in line.

The Isle of Man is known worldwide for its excellent insurance and annuity products. Many of these are popular with Americans, since under U.S. tax law, life insurance allows four key benefits: 1) tax-free build-up of cash value, including dividends, interest and capital gains; 2) tax-free borrowing against cash value; 3) tax-free receipt of the death benefit; and 4) freedom from estate and generation skipping taxes.

What got me to thinking about the Isle of Man was a recent Times of London article about the island and its steady and impressive financial progress, noting that: "This outcrop in the Irish Sea is a magnet for entrepreneurs, an incubator for new enterprises of the most surprising sort."

Manx in Space

Among the surprises: the CVI company that made the laser optics with which NASA’s Phoenix Lander (below) spotted snow on Mars last year. Another Manx company, Odyssey Moon, is competing to win the $30 million (£18.4 million).

Google Lunar X prize by putting a robotic landing craft on the Moon. A third, Excalibur Almaz, is developing space tourism. -- each attracted to the island by a special Manx tax provision that imposes zero income tax for space industrialization.

"Later this month the Isle of Man will officially join the space race. Nicole Stott, (left) wife of a Manxman, will begin her four months on the International Space Station. Ms. Stott’s husband, Chris, a space fanatic working for Lockheed Martin in the late 1990s, persuaded the island’s government to file for the orbital satellite space slots to which it was entitled.

In 2004 Allan Bell, the Treasury Minister, needed a headline announcement for his budget and declared a zero corporate tax rate for space activities. The response, he says, was "quite amazing".

"More than a dozen space-related businesses operate from the island, including some of the world’s biggest satellite companies. It has a director of space commerce, an honorary representative to the international space community, and an International Institute of Space Commerce. Manx schoolchildren attend NASA summer camps in Houston.

Gambling Center

A deconsecrated Methodist chapel in a narrow lane in Castletown hosts another surprise: the European headquarters of SBOBET, one of the world’s biggest online betting companies.

On a typical Saturday a dozen "liability managers" will be glued to computer screens in what used to be the church nave, constantly adjusting the odds on hundreds of live football matches as bets flow in at a rate of 200 a second. "The adrenaline level is quite amazing," says Bill Mummery, the executive director.

"It is one of about 30 e-gambling companies that have set up in the Isle of Man, attracted by a maximum gaming tax of just 1.5% and state-of-the-art telecommunications. Businesses have long used the island as a testing ground for new technologies.

Others firms include PokerStars, the world’s largest on-line poker room, and two gambling software companies, Microgaming and Playtech. E-gambling has created more than 500 jobs.

World's Oldest Parliament

The Isle of Man’s 1,030-year-old Tynwald, (below) which is the world’s oldest parliament, is thought to have been the first to give women the vote.

That innovative spirit lives on. The government runs what will soon be the biggest offshore register for corporate and private jets, and another for super yachts, which generates hundreds of jobs for lawyers, insurers and tax experts.

In 1995 the Government decided to develop a film industry. It offered to pay 25% of production costs in return for a share of the profits. In the 14 years since, 91 films have been made on the island, and the government has earned £3 for every £1 invested. Islanders talk nonchalantly of seeing Renée Zellweger jogging along the beach, or Johnny Depp in a pub.

Freedom to Flourish

"Freedom to flourish," is the island’s marketing slogan. Aside from handsome tax breaks it offers entrepreneurs friendly legislation, ready finance, a nimble bureaucracy, and easy access to politicians; their numbers are in the telephone book and Tony Brown, the chief minister, works in his electrician’s shop on Saturday mornings.

DOUGLAS, Isle of Man's capital city.

It is an approach that has reaped rewards. In spite of grumbling from London about its tax haven status, the island has enjoyed 26 consecutive years of growth. It has no national debt, an unemployment rate of just 2.2% cent, and has avoided the global recession. Per capita income 24% lower than Britain’s in 1996, is 18% higher now at about $35,000.

"It’s the greatest economic success story nobody has ever heard of," says Chris Corlett, head of the Department of Trade and Industry. The island does not flaunt its new-found wealth but it is apparent from the Mercedes, Porsche, Morgans and Bentleys and from the conversion of dilapidated hotels into sea front apartments.

Even old timers agree that life is better: the young no longer have to leave to find work, the Government pays for islanders to have medical treatment or university educations in Britain, and it is planning to give every schoolchild a free laptop.

Tax Haven Name Change

The Isle of Man no longer wants to be called a "tax haven" (does any place?) but it is a "low tax economy" with no capital gains tax, wealth tax, stamp duty, or inheritance tax and a top rate of income tax of 18%. The rate of corporation tax is 0% for almost all types of income, the only exceptions are that the profits of banks are taxed at 10%, as is rental (or other) income from land and buildings situated on the Isle of Man.

Offshore banking, manufacturing, and tourism form key sectors of the economy contributing to the Island's GDP of about US$3 billion.

The financial sector is the largest single sector, employing more than 20% of the total work force of nearly 40,000. More than 40 licensed banks (including many international banks) offer comprehensive, discreet and confidential, services that compare favorably with the banks in Switzerland or Liechtenstein.

In addition to banking, high caliber legal, accounting, insurance and other financial services are available on the island. In spite of their ancient history, banking on the offshore islands is modern, sophisticated and user-friendly. Total deposits in the 47 banks in the Isle of Man banking system in 2009 exceeded £98 billion (US$156.5 billion).

Welcome

It is one of the few low-tax international financial centers actively encouraging new residents. Work permits are easily available. Many thousands of international business corporations are registered here as well, attracted by the zero tax policies. There are more than 200 licensed corporate and trust service providers and the island has excellent. modern trust laws. There are also nearly 40,000 companies and partnerships and about 40,000 trusts under the administration of these local service providers. The investment industry has expanded with US$82 billion managed on the Isle of Man.

And if you're wondering about that unusual Manx symbol on its flag, called a triskelion, the three legs refer to the island's motto (adopted late in the symbol's history): Quocunque Jeceris Stabit, traditionally translated from Latin as 'Whithersoever you throw it, it will stand', or 'Whichever way you throw it, it will stand'.

Colin at Los Cabos

You can meet Colin Bowen in person at the Sovereign Society's 3rd Annual Offshore Advantage Seminar: A Beginner’s Guide to the Offshore World, November 4, 2009 – November 7, 2009, at the Westin, Los Cabos, Mexico. Colin will be among 21 of the world’s most respected offshore masterminds. Sign up now. Remaining spaces are going fast.

In the meantime, contact Colin Bowen, Isle of Man Assurance, Ltd., IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP, Tel.: +44-1624-681-200; E-mail: colinb.ioma@ioma.co.im Web: http://ioma.co.uk

Twelve (12) (XII) -- the Magic Number!

Alleluia! Praise the Lord (or Allah)!

We are informed today that Switzerland has initialed a double taxation treaty with Finland, what the Swiss media unrealistically calls "the final agreement needed for the Swiss to be removed from a 'gray list' of uncooperative tax havens." Freedom at last! (Don't bet on it.)

The Swiss finance ministry said the deal meets standards set by the Organization for Economic Co-operation and Development (OECD) for tax information exchange as described in that group's infamous Article 26. (Click on the LINK if you really want to be depressed about what that means).

No one is dancing in the streets of Zurich, but this is Tax Treaty Number 12 signed by the Swiss in the last four months, (including one with the United States), supposedly bringing the world's leading offshore financial center into compliance with the arbitrary number of required tax treaties set by the G-20 major nation bullies and the OECD at their April London meeting.

Bankers Dozen

Why 12? Why not 10? May be 20? No one knows. Spin the wheel and see what comes up!

These once sovereign nations just roll over and do what the OECD says. Anything to get off that damnable gray list of OECD-designated "bad" countries that don't automatically tell all when confronted by foreign government tax inquiries.

To their credit, Switzerland has made clear that it will not allow automatic exchange of tax information, but will squeal only in response to specific requests with supporting proof of likely tax evasion. (At least, that's what they say now).

Appeasement

The classic definition of "appeasement" is to yield or concede to the belligerent demands of (a nation, group, person) in a conciliatory effort, sometimes at the expense of justice or other principles.

Think Nevil (peace in out time) Chamberlain and Adolf (no further demands) Hitler, at Munich 1938, carving up the Sudentenland. With the Rhineland and Austria already under Nazi control, six months later Hitler took all of Czechoslovakia; six months more, he took Poland by military force, and within a matter of weeks after that, most of western Europe. No further demands, indeed!

No sane and sensible Swiss leader (or banker) can possibly believe that the signing of 12 tax treaties is going to appease the voracious tax collectors of the G-20 major welfare states, or their puppet propaganda machine, the OECD.

These black, gray and white lists are all part of a charade, just more steps towards Hitler-like subjugation of sovereign nations, all in the name of curbing supposed offshore tax evasion.

Handwriting on Walls
 
But don't count on the tax collectors to stop now.

The bellicose German Finance Minister Peer Steinbrueck (left) told Der Spiegel that he wants countries like Switzerland to reveal  the names of all their account holders "even when there's no concrete suspicion of tax evasion."

U.K. Prime Minister Gordon Brown and French President Nicolas Sarkozy have called for sanctions to be imposed on tax havens beginning in March 2010, including punishing recalcitrant tax havens by withdrawing financial aid, forbidding investments and imposing taxes on fund held there.

Said Brown, himself a walking cliché of a left-wing Col. Blimp: "The world should be in no doubt that the writing is on the wall for tax havens wherever they may be."  (Where they may be is most of the U.K. Overseas Territories!)

Brave Front

The new chairman of the Swiss Bankers Association (SBA), Patrick Odier, (left) valiantly vows to preserve banking secrecy. Odier insists that Switzerland is serious about increasing its transparency to foreign tax authorities, but said he draws the line at the automatic exchange of information. "Further relaxation of the rules would damage not just the financial center, but the whole way we perceive the state," he said at a news conference.

In fact, one bright spot is the real possibility that the Swiss-U.S. tax information exchange treaty may be petitioned to national referendum, in which case it might well be defeated.

What then? Will the OECD legions follow Hitler's example and occupy Switzerland?

Man Oh Man

As an aside, a major policy action by the the Isle of Man may presage what's coming for many less courageous tax havens.

Manx Treasury Minister, Allan Bell, obsequiously addressing the annual OECD Forum in Paris June 28, announced the Isle of Man government will automatically exchange information on bank accounts with the tax authorities in the owners' country of residence under the EU tax directive, a change in the rules that has implications for thousands of offshore bank clients.

Attack of the Norsemen

To frost today's offshore cake, there's a new report out of Norway that calls upon itself (how does that work?) to lead the fight against tax havens. The document is worth a read, of only to learn how to cloak hysterical extremism in bureaucratic platitudes.

Back in July 2008, I commented on the obsession of oil rich Norway's left leaning government with destroying tax havens.

At the time I noted that Eva Joly, (right) described as a "special advisor on corruption for the Norwegian government" would lead a tax haven investigation. A the time she let go with a host of wild charges, among them that high oil prices are caused by speculators and hedge funds who hide in tax havens, that tax havens rob poor countries of needed food and wealth, that tax havens are used by rich people "to avoid paying taxes to their home countries, as well as for those that want to hide away money gained through corruption."

She also made the amazing claim that "for every dollar invested in development projects in poor countries, the countries lose ten dollars to the tax havens."

Why am I not surprised that, one year later, Ms. Jolie's pre-announced, radical anti-tax haven conclusions are all in the report issued yesterday. And these totalitarian plans go well beyond "gray lists" to call for international action that would override the sovereignty of any country who dares to differ with the world's leftist tax collectors.

The Passport Book - 7th Edition

So, if you you are looking for a new, freedom loving country in which to pitch your tent, deposit your cash or protect your assets, the seventh edition of my best-selling publication, The Passport Book, is available for pre-order. You can reserve your copy now Here's a sample of the contents. Those who place orders now will receive a FREE copy of the 74-page Forbidden Knowledge Report.

The Sovereign Society is a recognized voice in the complex offshore world.  Join the Sovereign Society and keep informed.

How to Gage the Coming Failure of the London G-20 Meeting

James Kirkup has a very astute observation inThree Line Whip blog published by The London Daily Telegraph about how to gauge the success of the G-20 summit that is to convene in London next week on April 2nd.

Kirkup writes: "The more you hear Mr Brown, Mr Obama and the rest talk about tax havens, the more they have failed to agree on more important things. No one likes tax havens. They're the low-hanging fruit of the G-20 process; saying rude things about the Swiss and the rest is pretty easy and uncontroversial. But it's also missing the point. This crisis didn't begin in Guernsey or the Caymans, it began in New York and London."

Orchestrated Anti-Tax Haven Blather

For weeks now the liberal world media dutifully has been repeating dire threats against so-called "tax havens" from the big spending, high taxing, anti-tax competition  likes of Germany's Merkel and France's Sarkosy. Even President Obama allowed his less than impressive Secretary of the Treasury to make some noise against tax havens.

The orchestrated battle of words hurled at offshore financial centers got so heated that British PM Gordon Brown felt obliged to drastic demand for "the end of tax havens." 

This belated anti-tax haven baloney comes from Her Majesty's first minister whose government is in charge (and has been for a decade) of the United Kingdom's many tax havens in its overseas territories (Bermuda, the Cayman Islands, British Virgin Islands, the Turks & Caicos) and its Crown Dependencies (the Channel Islands of Jersey and Guernsey and the Isle of Man), plus Gibraltar.

Does the Rt. Hon. Gordon believe that the City of London really can absorb all the dispossessed refugee bankers and trust officer that will flood in from these British world-class financial centers if he and the G-20 high tax goons shut them down? (Some unprincipled candidates, desperate for re-election, will do just about anything for votes!)

Spend vs. Regulate

The proponents claimed the G-20 meeting was not only going to solve the international economic crisis, (either by more Obama stimulus spending, or forced global regulation), but for desert, the G-20 would serve the collective severed heads of all tax havens displayed on a platter.

This entire hypocritical anti-tax haven campaign, as I have oft noted, is but an extension of the phony blacklists that have streamed for years from the tax-exempt minions at the Paris headquarters of the Organization for Economic Cooperation and Development (OECD), a taxpayer financed, pro-tax mouthpiece for the G-20 major nations who pay their salaries.

The OECD invented the blacklist and has used it skillfully as a public relations ploy to smear tax havens.

But in a classic case of removing the wind from the sails, the OECD blacklist ploy deflated when Switzerland, Austria, Luxembourg, Belgium, Hong Kong, Singapore, Liechtenstein, Andorra and Monaco, among others, all announced their agreement to broader but limited tax information exchange.

Even German foreign minister Steinbrueck, one of the most caustic anti-tax haven critic, has said he does not think G-20 leaders now would come up with a blacklist of tax havens. "As far as I see, there will be no such list at the London meeting," he said.

Despicable Communiqué

When I asked one the leading American tax experts, Dan Mitchell (left) of the Cato Institute, what he thought the G-20 outcome might be he said: "To be honest, I'm not sure what to expect from the G-20 meeting, other than a despicable communiqué attacking tax competition. My guess is that the real enemy is still the OECD, and the G-20 is just engaging in public relations warfare."

As The Telegraph's James Kirkup writes: "The transatlantic disagreement over stimulus vs. regulation isn't a full-blown row yet, but it's not far off, and the still-skeletal Obama administration has enough worries at home without looking for more abroad. Better for the president to play safe and sign something anodyne in London."

List Grows Long

The Swiss daily Tages Anzeiger reported that in a letter dated March 5 to British Chancellor Alistair Darling, OECD chief Angel Gurria provided an anti-tax haven blacklist including Switzerland and Singapore, as well as territories such as the Cayman Islands, Andorra and Montserrat.

The OECD branded 46 countries and territories for "insufficient progress" in meeting standards on tax cooperation and banking secrecy. (To the OECD that means an end to all financial privacy and automatic exchange of tax information among nations, as well as uniform higher taxes in all jurisdictions).

The OECD list also included Costa Rica, Chile, Grenada, Guatemala, Hong Kong, Liberia, Panama, the Philippines, San Marino and Uruguay, as well as Gibraltar, Guernsey and Jersey and a host of Pacific and Caribbean islands.

How Many Legions?

But as the brutal Soviet dictator, Josef Stalin was reportedly to have said about the influence of his enemy, His Holiness, the Pope: "How many legions does the Pope have?"

The Pope was said to have responded through Stalin's Foreign Minister, Molotov: "Tell your master he will meet my legions in Eternity."

Well, the OECD is loud and demanding, but it has neither any enforcement legions and certainly not any heavenly allies.

The Tax Haven Test

So remember that on April 2nd, if tax havens and offshore finance are anything more than a minor part of the "global new deal" struck in London, then the G-20 global economic meeting will have failed.

And no matter what the G-20 does, tax havens will still be with us, fortunately.

* To learn more about the economic benefits of tax havens, click here:
* To learn more about the moral case for tax havens, click here:
* To see why anti-tax haven demagoguery is misguided, click here:

Blacklist Fades to Gray, Then Disappears

 

Like that illusive Cheshire Cat in Lewis Carroll's Alice in Wonderland that appears and disappears at will, the threatened G-20 "blacklist" of  allegedly disreputable tax havens seems suddenly to have evaporated into the murky international fog.

You will recall that at a scheduled April 2nd "G-20" London meeting of major nations, dominated by high tax welfare states, it was expected the group would issue a new anti-tax haven blacklist, with Germany and France in the lead pushing for condemnation of even Switzerland, the cleanest and most respected of all offshore financial centers.

What Tax Bullies Really Want

In truth, financial cleanliness has never been the true objective of the high tax nations that make a habit of bullying low tax jurisdictions.

As Veronique de Rugy notes in the current issue of Reason magazine: In the part of high tax nations, "bank secrecy laws have long been seen as an obstacle to tax enforcement." As she says, supposedly by setting up "safe havens" for dollars, pounds, and euros, bank secrecy laws get in the way of these governments "forcing their high income tax rates down its taxpayers' throats."

The only way to fix this problem, the high tax welfare states argue, is for all nations to implement an automatic and unlimited exchange of information about nonresident investment. So-called tax havens, goes this line of thinking, should collect private financial data on foreigners and turn that information over to the appropriate governments.

Decade of Offshore Improvements

Most offshore financial centers, (as they now prefer to be called), have been shaken by the sudden intensification of pressure, especially after they have worked hard adapting to international demands for more transparency during the past decade.

The latest crackdown has been fueled by alleged tax evasion scandals in Liechtenstein and Switzerland in last year, the election of an avowed enemy of tax havens as U.S. president and the near collapse of the global banking system -- which the more radical anti-tax haven critics brazenly blamed on tax havens.
Jean-Claude Juncker (left), Luxembourg's Finance Minister responded on that point by saying: "Imagine for a moment that Switzerland, Austria and Luxembourg did not have banking secrecy six months or a year ago. Do you really think that the financial crisis would be any less serious? There is no link between banking secrecy and the global economic crisis."

American Hypocrisy

The U.K. Channel Islands (Jersey, Guernsey) ten years ago adopted legislation making foreign tax evasion a crime; other U.K. offshore centers (Cayman Islands, Bermuda, British Virgin Islands) followed suit shortly thereafter.

 

  
Large countries like the United States have yet to take similar steps, no doubt because the substantial tax free deposits from foreigners in U.S. banks provide essential funding for America's trillion dollar budget deficits.

Expert observers, including the International Monetary Fund, have regularly acknowledged U.K. offshore territories' transparency and supervision as amongst the toughest in the global finance industry.

The reputation of the offshore centers like Switzerland and the U.K. Crown Dependencies (Isle of Man, Channel Islands) and U.K. overseas territories, such as Bermuda and Cayman for probity, professional skills and financial sophistication enables them to attract capital from around the world. Such offshore capital is injected into U.K., Europe and the U.S. banking and securities markets, creating crucial connections with such centers.

Ten Years of Phony Blacklists

For more than a decade high tax nations have condemned as aiding and abetting massive tax evasion, any offshore jurisdiction that has low taxes, respects financial privacy and guarantees bank secrecy.

These anti-tax haven, anti-financial privacy campaigns have been spearheaded by the Organization for Economic Cooperation and Development (OECD), a paid, pro-tax mouthpiece for the major nations. The OECD invented the blacklist and has  used it skillfully as a public relations ploy to smear tax havens.

Capitulation

Indeed, the OECD had at the ready its latest blacklist for the G-20 London meeting when an unexpected thing happened. Many of the countries that were destined to be smeared in the list agreed in the future to apply OECD standards allowing exchange of tax information among all nations.

Now the pursuit of specific tax evaders by foreign countries supposedly will be made easier by greater co-operation from Switzerland, Austria, Luxembourg, Belgium, Hong Kong, Singapore, Liechtenstein, Andorra and Monaco, among others. All announced last week their agreement to broader but limited tax information exchange.

Never Enough
But don't count on the tax collectors to stop now. German Finance Minister Peer Steinbrueck (left) has told Der Spiegel that he wants countries like Switzerland to reveal  the names of all their account holders "even when there's no concrete suspicion of tax evasion."

 

Nevertheless, Steinbrueck, one of the most caustic anti-tax haven critic, said on Friday he did not think G-20 leaders meeting in London next month now would come up with a blacklist of tax havens. "As far as I see, there will be no such list at the London meeting."

German Chancellor Angela Merkel said she could not imagine any country that accepted OECD standards for exchanging tax information would be on a blacklist, but she gloated that the mere talk of this "virtual list" had already had "positive" effects.

International Blackmail

So "positive" that the much herald G-20 "blacklist" suddenly has faded into momentary obscurity, no doubt to be kept in reserve for a re-appearance in the next high tax onslaught against low tax jurisdictions which, in my opinion, is just a matter of time.

But I suggest that we call all these phony campaigns what they really are -- not a blacklist, but blackmail.

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Second Dissolution of the British Empire (What's Left)

"I have not become the King’s First Minister in order to preside over the liquidation of the British Empire."

Winston Churchill’s famous statement in November 1942, just as the tide of the Second World War was beginning to turn towards victory, pugnaciously affirmed that great British leader's loyalty to the global colonial institution he had served for most of his life.

Britain fought and sacrificed on a world scale to defeat Hitler and his allies -- and won. Yet less than five years after Churchill’s defiant speech, the British Empire effectively ended with India's independence in 1947 and the end of the British Mandate in Palestine in 1948.

Color Him Brown

And now the Rt. Hon. Gordon Brown, the current and dour British prime minister, seems bent on causing another major setting of the sun on what little remains of Britain’s truncated empire.

Brown is in major political trouble. Under pressure from unions and a nose diving economy, suddenly he is all too willing to throw to the leftists wolves Her Majesty's overseas territories. Most of these are leading tax havens nurtured as such by London for the last half century, (and by Brown himself, in a decade as Chancellor of the Exchequer).

Months ago Brown was promoted by admirers as the man to save the world from economic catastrophe. Now he has his hands full just trying to save his own job. The Conservative Party and its well spoken young leader, David Cameron, have a 20-point lead over Labour in polls in the run up to the general election in 2009.

Bank Bailouts Unlimited

But if you think Bush and Obama have been criticized for trillions of dollars in U.S. bank bailouts, Gordon Brown is being blasted by both right and left for even larger U.K. bank bailouts.

An estimated £1.2 trillion (US$1.7 trillion) has already been spent (with no end in sight) on the Royal Bank of Scotland, HBOS, Lloyds, and Northern Rock, all of which the U.K. government now controls (along with billions in toxic assets).

One British newspaper headlined: "Brown does a U-turn on tax havens with blacklist." And Brown chose to make a big pitch for his apostasy in his address to the U.S. Congress last week, no doubt trying to grab on to President Obama's flapping anti-tax haven coat tails.

Brown Blacklist

U-Turn Brown is preparing to unveil a blacklist of what he now suddenly considers to be "harmful tax havens" to be published before the London G-20 meeting next month, which he chairs.

This phony list is expected to include offshore centers, long overseas territories of Britain, including the Cayman Islands and Bermuda. Other U.K. OTs include the British Virgin Islands and the Turks and Caicos Islands. Add to the list the Crown Dependencies of Jersey, Guernsey and the Isle of Man, all major offshore financial hubs tied to the City of London.

So unique are these financial centers that hundreds of thousands of investors and business persons worldwide use the services of their investment houses, banks, accountants, lawyers, insurance brokers, and trust and corporation services located there.

Hypocrisy Squared

Brown's move is a radical departure from the prime minister's historic position of protecting the pre-eminence of Britain's financial services industry, both in London and in the overseas territories.

His move is a crude political attempt to counter growing criticism at home for his bank bailouts, and pressure from high tax France and Germany that make the specious charge that the U.K., like Switzerland, is an obstacle to imposing a global "transparent financial system" -- meaning they demand an end to financial privacy everywhere.

Face it, dear readers, this isn't about transparency. This is about destroying tax competition and the forced exaction of confiscatory taxes internationally without regard for individual rights.

Offshore Centers Have Reformed

Brown, is certainly no Churchill, not even a pale imitation of his predecessor, the affable Tony Blair. But there is a special irony in Her Majesty's government suddenly attacking the British offshore tax havens that it created with great care since the end of World War II.

Over the last 15 years the Blair/Brown Labour governments in London demanded and got substantial reforms in all U.K. offshore financial centers, including statutory transparency, an important fact Brown never even mentioned in recent days when he suddenly turned on the offshore territories with his bogus attacks.

These offshore reforms are now written into local laws in these semi-independent islands. They include: 1) much tighter financial regulatory reforms; 2) "all crimes" money laundering and foreign tax evasion statutes; 3) extensive banking client surveillance; 4) increased cooperation with foreign official authorities seeking tax and other information about persons and legal entities based on the islands; 5) a major weakening of previously strict financial privacy laws and, 6) imposition of the EU savings tax directive which all of these offshore centers now enforce and collect.

Brown’s Betrayal for Political Gain

In fact Bermuda, the Cayman Islands, the British Virgin Islands, the Isle of Man, Jersey, and Guernsey each already have signed Tax Information Exchange Agreements (TIEAs) with the United States and many other countries. What more transparency does galloping Gordon expect?

It is obvious that Brown, just another desperate socialist politician, is willing to disrupt, if not destroy, the economies of these loyal British offshore centers, jeopardizing tens of thousands of jobs in the midst of a worldwide recession.

All this would be amusing if it were not so tragic.

** To better understand the situation with the U.K. Overseas Territories and the Crown Dependencies, my book, Tax Havens of the World, gives you a complete description of their origins as tax havens, their uses and survival chances. Click here

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British Left Attacks U.K. Tax Havens

LONDON: This week the British government holds meetings with its Overseas Territory (OT) leaders. After a series of radically left attacks in Britain in recent days aimed at these long-established U.K. tax havens, this meeting should see some hot debates, notwithstanding traditional British civility.

Some Labour Party leaders and their socialist and trade union allies are using the British government's multi-billion dollars bailout of selected banks as an excuse to demand that aided banks be ordered to end all of their offshore activity in tax havens. These radicals insist that now that the British Labour government owns a stake in the banks, the government should force policy decisions on the banks' managements.

In Britain, the government holds as much as 6% of Royal Bank of Scotland and up to 43.5% of a combined HBOS and Lloyds TSB. U.K. banks that benefit from the publicly-funded bailout have hundreds of subsidiary firms in tax havens such as the Cayman Islands, Jersey and The Bahamas, and radical leftist are demanding that all such offshore entities be abolished.

Leftist Radicals in Full Cry

The U.K. Treasury should tell banks receiving investment from the government to close their operations in offshore tax havens, said Vince Cable, a Liberal Democrat lawmaker. "It seems totally inappropriate for banks funded by the taxpayer to be systematically avoiding British tax or helping customers to do so,'' Cable said in an interview. "The anomaly of the nationalized banks will bring this issue to a head.''

The research director of the radical socialist Tax Justice Network, said: "I think these banks should close down their offshore subsidiaries. This is because the government cannot have a stake in companies that undermine the government. Closing them down could be done as it is a commercial choice to operate in tax havens."

At stake could be the very survival of existing U.K. tax havens and billions in assets in places such as Bermuda, the British Virgin Islands, the Cayman Islands, the Turks & Caicos Islands, as well as the Crown Dependencies of the Channel Islands (Guernsey, Jersey and Sark) and the Isle of Man.

Labourite Anti-Havens Record

Ever since the Labour government came to power in 1997 under Prime Minister Tony Blair, the U.K. offshore tax havens have been forced to tow the leftist line laid down by the Foreign Office in London. Following U.K. orders, they lifted strict bank and financial privacy laws, enacted laws making tax evasion by foreigners a crime, strengthened anti-money laundering laws and mandated exchange of individual's tax information with other governments -- the free booting offshore "good old days" came to an end.

Underlying these forced "reforms" has been Left Labour suspicions that Her Majesty's offshore havens are really exotic fronts for massive tax evasion. That sour view has been balanced by the very substantial income, taxes and the havens' valuable accommodation of the flow of British worldwide finance.

Unintended Consequences

One unintended result has been a substantial movement of assets and cash away from the U.K. OTs to non-U.K. jurisdictions such as Switzerland, Singapore, Hong Kong and Panama, much as high British taxes have driven U.K. corporations to move to low tax countries.

Another perhaps unexpected result has been a major clean up of offshore jurisdictions, now with stricter rules in many areas than even those honored in the breach in the City of London or New York, the world's two major money laundering venues. But this reform is ignored by the anti-tax haven haters of the Left.

American Cousins

But here in the United States similar anti-capitalist noises are being heard from the American Left and the likes of AFL-CIO head Tom Sweeny, based on the U.S. bank bailout.

More importantly, as I have noted before, this sort of fascist/socialist state control of banks and banking policies is the heart of proposed anti-tax haven legislation sponsored by Senator Barack Obama.

It looks as if the massive Bush/Paulsen bank bailouts may give a leftist new U.S. government, should there be one, and opening to do all it could to destroy offshore tax havens -- and the rights of millions of until now free Americans to invest and bank offshore.

** There are many legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here. And if you're interested in Switzerland, Click here for Swiss Money Secrets.