UK Calls On Its Overseas Territories To Press Ahead With Sharing Tax Information

Tom Burroughes

20 May 2013

The UK has urged its overseas territories such as the Cayman Islands and British Virgin Islands to “get their house in order” over the sharing of tax information ahead of a meeting with Group of Eight leading economies, Reuters reported.

The country is using its presidency of the G8 to reform the way in which companies and individuals can use complex structures to conceal some of their financial affairs via such international financial centres. The G8 holds its annual summit on 17 and 18 June.

David Cameron, prime minister, has written to UK offshore territories and other self-governing regions, calling on them to sign up to international protocols on information exchange, and improve their transparency. The territories receiving the letter were Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man, the report said.

"With one month to go, this is the critical moment to get our own houses in order," Cameron said. "I respect your right to be lower tax jurisdictions... But lower taxes are only sustainable if what is owed is actually paid."

Defenders of such jurisdictions say they help to avoid the problem of double taxation and also put economies under competitive pressure to keep tax rates lower than would otherwise be the case; critics have attacked such IFCs for encouraging tax evasion and concealment of illicit money.

At a recent conference in London hosted by Jersey Finance, the promotional body that acts for Jersey’s financial services sector, speakers voiced fears that pressure to disclose who are “beneficial owners” of offshore structures will put those owners or their families, in some cases, in personal danger. In the past, organisations such as the Society of Trust and Estate Practitioners (STEP) have warned that exchange of information agreements must take account of whether data passed to governments is properly used.

Some of the 10 countries that received Cameron’s letter were identified by British tax authorities this month as home to complex tax arrangements. Cameron asked all the letter's recipients to sign up to the Multilateral Convention on Mutual Assistance - a protocol developed by the Council of Europe and the Organisation for Economic Cooperation and Development that facilitates cooperation between states on tax matters. In addition, Cameron said the territories needed to produce an action plan on how to improve their transparency with respect to ownership of assets and companies.

"Put simply, that means we need to know who really owns and controls each and every company," he said.

In early May, Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands joined the Caymans and Gibraltar in agreeing to provide Britain, France, Germany, Italy and Spain with details of bank accounts held by their citizens in the territories.