13 September 2013

British Crown Dependencies and Tax Havens

In his recent response to questioning in the House of Commons and comments made at the G20 summit, Britain’s Prime Minister, David Cameron, has made it clear that because of the positive steps taken by Crown Dependencies in relation to international transparency and cooperation, that these Crown Dependencies should not be referred to as tax havens.

He said "I do not think it is fair any longer to refer to any of the Overseas Territories or Crown Dependencies as tax havens. They have taken action to make sure that they have fair and open tax systems. It is very important that our focus should now shift to those territories and countries that really are tax havens."

This comes just after his comments earlier this year where Mr. Cameron wrote an open letter to Overseas Territories and Crown Dependencies noting that he respected the rights to have lower tax jurisdictions that do not condone tax evasion where he said that “we would like to think that his latest comments will put the notion that Guernsey is a tax haven to bed and instead paint it as the cooperative and transparent international finance centre that we are.”

The OECD identifies four key factors in considering whether a jurisdiction is a tax haven:-

  1. Nil or only nominal taxes are imposed to attract non-residents who wish to escape high taxes in their country of residence;​
  2. There are no substantial activities of the tax payer in that jurisdiction;​
  3. There is protection of personal financial information against scrutiny by foreign tax authorities; and​
  4. There is a lack of transparency in the operation of the legislative, legal or administrative provisions.

A jurisdiction is said to be a tax haven if some, but not necessarily all, of the above features are present. However, there is no specific or confirmed definition of a tax haven.

There are currently 14 British overseas territories and they are Akrotiri and Dhekelia, Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn Islands, Saint Helena, Ascension and Tristan da Cunha, South Georgia and the South Sandwich Islands and Turks and Caicos Islands.



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