As Jersey, Guernsey and the Isle of Man hurry to rearrange their corporate taxation it shows just ho...
As Jersey, Guernsey and the Isle of Man hurry to rearrange their corporate taxation it shows just how hard they are prepared to work to protect their finance industries.
The Isle of Man brought in its so called 0/10 taxation of corporates this year, with Guernsey following in 2008 and Jersey in 2009. In all three cases they are being driven by the need to fit in with the EU Code of Conduct on Business Taxation.
The offshore islands may be outside the EU but they have to conform with it to an extent to be able to feed off it. They know that aside from finance they have little else to sustain their current wealth and standards of living. Guernsey is not going to look as prosperous by going back to growing tomatoes, Jersey's beaches, however beautiful, cannot compete with the attractions of those in Southern Europe, Africa and the Pacific in the eyes of UK tourists, and the seafront at Douglas suggests its best days as a holiday resort lie in the past.
That has to be a comfort for anyone involved in the financial services industry because they know their interests are going to be looked after.
What is going to be of interest longer term is how far the offshore islands, all so keen on trawling the Middle East and Asia for future supplies of business, will go to make themselves look more attractive to these parts of the world.
On a 20-year view, will China or India's Code of Conduct on Business Taxation be more important than that of the EU?
While the islands should be congratulated on ensuring they remain profitably plugged into the global economy for now, the fact remains that today "globalisation" is still dominated by the Western world, with the promise of unimaginable amounts of Eastern wealth cascading into it in the future.
What no one is particularly keen to consider is how globalisation might look in the future should all this Eastern wealth decide it does not want to be run by Western bankers.
Are places such as the Middle East so friendly to Western business because they want it to run their finance industry, or because they want to learn and then do it themselves? Just as car production and telephone call centres have headed East, so too could intellectual capital and professional connections on a 20 year view.
While the Isle of Man, Jersey and Guernsey are moving swiftly to implement 0/10 taxation, it is worth remembering how fast other countries can move too. In Singapore the courts sit not only during the day but also at night to ensure high net worth disputes are resolved quickly, and hence make it a more attractive wealth centre.
To counter-act that sort of determination and central planning, the offshore islands dotted around the UK are going to have to work extraordinarily hard indeed. Not least they will need to create, or import, top-level specialists in all aspects of wealth management from the Middle East, India and Asia. If not, they could find they go through a golden period that rapidly comes to an end, with tourism and tomato growing unable to take up the slack.
Tanya Bird, editor
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