The governments of Jersey and Guernsey have defended the Islands against accusations by the USA that they are "offshore secrecy jurisdictions".
Two Bills brought before the Senate Finance Committee Hearing: “Offshore Tax Evasion: Stashing Cash Overseas”, put both offshore centres on an initial list of jurisdictions described as “tax haven countries”.
The hearing is considering the best way to overcome the problem of US taxpayers evading local tax by placing their assets ‘offshore’ . Part of the evidence submitted by the senators who brought the Bill, is an initial list of “offshore secrecy jurisdictions” based on a 2000 register drawn up by the Organisation for Economic Co-operation and Development (OECD).
As a result, Deputy Mike Torode, Chief Minister of the States of Guernsey, and Senator Frank Walker, Chief Minister of the States of Jersey, both submitted written evidence to the inquiry outlining the jurisdictions’ high regulatory standards and its co-operation in fighting fraud and tax evasion both with the USA and internationally.
Torode says given the main purpose of the hearing was to consider how the problem of US taxpayers evading local tax by placing assets overseas might be overcome this was an important opportunity for Guernsey to set the record straight.
He says: “I made it very clear that we are in no way a so called ‘tax haven’ but a responsible international finance centre maintaining the highest regulatory standards and that a Tax Information Exchange Agreement has been in place with the United States since 2002.”
“This is particularly relevant, given that the hearing highlighted information exchange as being a key solution in dealing with the problem.”
In his submission, Walker says Jersey is “extremely concerned at its inclusion in the initial list of offshore secrecy jurisdictions”, which the Bill justifies on the basis that Jersey had been "previously and publicly identified by the Internal Revenue Service (“IRS”) as a secrecy jurisdiction in Federal court proceedings".
However Walker points out: “Jersey has provided the IRS with assistance over the years and has a formal Tax Information Exchange Agreement (“TIEA”) with the United States which recognises that 'Jersey has long been active in international efforts in the fight against financial and other crimes, including recent efforts against terrorist financing'.”
As a result he adds: “Jersey is a long standing international finance centre providing a wide range of financial and professional services and in compliance with international standards. It is not part of Jersey’s policy to assist directly or indirectly the evasion of taxes properly payable in other jurisdictions. Such business is actively discouraged.”
In addition, Torode says his testimony allowed him to refute additional suggestions that Guernsey is a so called ‘tax haven’, which he says is a label taken from an OECD list published in 2000 which Torode warns is now “out of date” as Guernsey was declared a co-operative jurisdiction by the OECD in 2002.
He adds: “I have suggested in the strongest possible terms that Guernsey’s name should not appear on any list of non cooperative jurisdictions which might in the future be formulated by the US Treasury Department which is a potential outcome if these Bills are successful in the Senate.”
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