A Bill supported by Senator Barack Obama (pictured), designed to prevent tax evasion and target offs...
A Bill supported by Senator Barack Obama (pictured), designed to prevent tax evasion and target offshore secrecy jurisdictions, has been slammed as 'anti-competitive' and 'draconian'.
Senator Carl Levin introduced the 'Stop Tax Haven Abuse Act' Bill, supported by Obama, on 17 February 2007. In August the Obama camp released a campaign video accusing Republican presidential contender John McCain of promising to defend tax breaks for insurance companies which locate to Bermuda.
McCain told Bermuda paper, the Royal Gazette: "The industry, the reinsurance that's had such phenomenal success has been good for both nations. I would oppose any measures that would upset that."
However, if Obama wins the Presidential race on 4 November, the Bill could gather unstoppable momentum, according to accountancy and business advisory firm Baker Tilly.
As well as preventing tax evasion, the Bill's prime focus is 'offshore secrecy jurisdictions'. These are judged by the US Treasury to have "corporate, business, bank or tax secrecy rules and practices which ... unreasonably restrict the ability of the US to obtain information relevant to enforcement."
The Bill reportedly includes a list of 34 countries that could be automatically considered secretive if it is enacted, including Jersey, Guernsey and the Isle of Man.
Baker Tilly said the main problem with the Bill is it "combines the creation of an incredibly draconian regime whilst blacklisting countries to which that regime applies on little more than a whim".
"The automatic listing of 34 countries, made with no clear justification or reasoning, only serves to highlight the potential arbitrariness," it added.
Furthermore, the Coalition for Tax Competition said, if enacted, the Bill would harm the US as it would place its citizens at a competitive disadvantage with foreign nationals. The Bill is anti-competitive and in breach of the US's trade obligations, it added.
From a UK perspective, Baker Tilly warned the Bill should ring alarm bells for those who have dealings with the US. "There is no doubt that the personal and corporate civil and criminal risk exposure will rise if the Bill is pressed into law," said the firm, which warns the consequences of failing to adhere to US legislation can be 'extremely costly'.
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