Offshore: Caribbean & Atlantic Making it pay while the sun shines
The Caribbean and Atlantic islands have made their reputations as sophisticated offshore tax havens, but a damning report from the OECD could change all that. Virginia Ginnane and Michael Gerrard examine how the four main jurisdictions have developed
The islands of the Caribbean and Atlantic are well known for being popular holiday destinations, but most of them also have highly sophisticated offshore financial centres.Almost every island in the area is jumping onto the offshore financial services bandwagon to give it an economic alternative to declining revenues from the region’s staple crop of bananas.But four countries in the region stand out: Bermuda; the Bahamas; the Cayman Islands; and the British Virgin Islands.Not only are they the longest established offshore financial centres, but they have each developed reputations as specialists in particular areas. All the islands’ offshore regimes, whether long established or not, are under scrutiny from the Organisation for Economic Co-operation and Development (OECD).At the end of this month, the OECD is due to publish a ‘blacklist’ of offshore centres as part of its offensive against “harmful tax competition”. It has 47 tax havens in its sights, which it defined in a 1988 report as “centres that combine no or low effective tax rate with other features such as an absence of legal and administrative transparency or arrangements that do not allow an effective exchange of information”.The aim is to shame jurisdictions seen to be at fault into greater transparency and openness so that they co-operate with tax evasion investigations. The more established jurisdictions believe they have introduced the necessary measures in tax and money laundering legislation. They also believe they have been spared the brunt of the OECD’s fire, although there will undoubtedly be some jitters as the deadline for the list’s publication draws nearer.
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