Jersey and Guernsey have been forced to defend their reputations as legitimate and well-regulated of...
Jersey and Guernsey have been forced to defend their reputations as legitimate and well-regulated offshore finance centres after being included on a list of tax havens being examined by the US Senate.
Jersey chief minister Senator Frank Walker and Guernsey chief minister Mike Torode have both written to the US Senate Finance Committee arguing they should not be included on the list which includes other jurisdictions such as the British Virgin Islands, Bahrain and Panama.
The US government is looking at ways it can overcome the problem of US taxpayers evading local tax by placing their assets offshore.
In a statement to the US hearing, Senator Walker said: "Our good name and reputation is of huge importance to us. It is no part of Jersey's policy to assist directly or indirectly in the evasion of taxes properly payable in other jurisdictions. Such business is actively discouraged."
Both jurisdictions pointed out that a Tax Information Exchange Agreement (TIEA) has been in place since 2002. This agreement, which came into force in 2006, enables information to be exchanged with the US on all matters both criminal and civil. Peter Niven, chief executive for Guernsey Finance, said: "We have information which shows that we are very much adhering to international standards."
Graham Parrott, tax partner at Ernst & Young in Guernsey, said the potential ramifications of being kept on such a list were hard to judge. He said: "It depends on what the final form of the new legislation is but clearly it would bring us under the microscope and have an impact on our reputation as well."
Parrott added it was "ironic" that Jersey and Guernsey were now on a list of tax havens considering that it was pressure from US treasury secretary in 2000 that caused Jersey and Guernsey to be removed from an OECD blacklist. He added: "The reality is that a lot of the inappropriate money is being kept places a little closer to home."
Senator Walker said that he was confident that Jersey would now be removed from the list. He said: "Our record of regulation, transparency and cooperation is endorsed and supported by all the various agencies, including the UK government and the IMF."
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation