The offshore world is in a period of transition. There are several core issues that affect all offshore jurisdictions, including initiatives on money laundering, tax avoidance and evasion.
In the past couple of years, there have been reports by the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN) and the European Union (EU), which are designed to increase transparency and show that suspicious transactions are reported to the appropriate authorities.
The impact of e-commerce has yet to be fully realised. The winners and losers may depend upon the type of work, local legislation and the reaction of businesses in each jurisdiction to external pressures.
This article will look at the reports, as they have had an enormous impact on offshore centres, and will then look at different types of work to identify any emerging trends. Secrecy was important in these countries, so information available on who is doing what and where was necessarily sparse.
OECD harmful tax forum
OECD governments have a vested interest in minimising the activities of tax havens. As a result of the OECD report on harmful tax competition, the OECD Harmful Tax Forum is producing a list of tax havens and has been in discussions with 47 jurisdictions. A list of tax havens is likely to be submitted to the OECD Council later this month.
This will consider whether tax havens hinder the ability of home countries to enforce their own tax laws. The criteria to decide whether an offshore jurisdiction is harmful include lack of expertise and attracting businesses with no substantial activities.
Most practitioners who deal with international work believe that places such as the Cayman Islands, the Channel Islands and Bermuda are more ‘respectable’ than, for example, Vanuatu or the Cook Islands.
