Concern is mounting as the US plans to declare war on offshore jurisdictions as a 'lazy catch-all' report is seeking to justify a possible financial offensive.
On 16 January, the US Government Accountability Office (GAO) issued a report investigating issues which impact the US government's finances, including previously 'blacklisted' offshore jurisdictions.
The report was prepared at the request of senator Byron Dorgan and the chairman of the Senate's permanent subcommittee on investigation, senator Carl Levin.
Along with president Barack Obama, Levin is one of the co-sponsors of the Stop Tax Haven Abuse Act (STHAA) and "no friend of the offshore financial community," according to Ed Shorrock, director of forensic and regulatory services at BakerPlatt Group.
"The STHAA is founded on the assertion that the US government loses $100bn a year from 'abusive tax havens and offshore accounts," he says, while the report highlights 83 of the US' 100 largest corporations have subsidiaries in 'offshore tax havens' in 2007.
Shorrock believes the 'fundamentally flawed' GAO report was commissioned to prove the STHAA is needed and that offshore jurisdictions are to blame.
The report draws its definitive list of 'tax havens' by adding together three previously compiled lists from the CECD, National Bureau of Economic Research and the US District Court, as it says there is no agreed list of jurisdictions considered tax havens.
"The lazy catch-all approach completely fails to distinguish between jurisdictions on the list," says Shorrock. It also falls short of recognising positive steps taken by many jurisdictions to remove the stigma of 'offshore' and improve cooperation on tax matters.
The US Department of the Treasury itself casts doubt on the report's credibility based on the all-encompassing list of jurisdictions. "Oversimplification can lead to misunderstandings and mistakes," it says.
"Moreover, because any such list is likely to be regarded as a blacklist and may be used as the basis for the imposition of sanctions or other negative measures, such a list may inappropriately affect our economic and other relations with listed countries," it says.IFAonline
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From 6 April 2019