Crystal clear – is transparency the solution to the 'dirty tactics' of tax avoidance?
It is perhaps unsurprising that mass media outlets in the UK have increased their focus on tax avoidance by large corporations as well as by private individuals, not least as we begin to feel the pinch from the government's austerity package and as politicians start to limber up for the next general election. Hearts and minds are to be won, and the legality and morality of tax mitigation are hot topics with a plentiful diet of opinion. The voice of the international financial centres (IFCs), which are criticised for their use of attractive rates of taxation to entice business, is often quieter than the voice of their critics. This is particularly the case for the smaller IFCs among the UK's crown dependencies (CDs) and overseas territories (OTs), but what they have to say is of merit and should be listened to. Indeed, in many areas of tax transparency as well as compliance and anti-money laundering, standards are higher in the more sophisticated and well-regulated offshore centres than in their counterparts onshore. Furthermore, with IFCs contributing to the efficient flow of capital between developed and less-developed economies through direct and indirect investment, their role in promoting trade is well-established.
Transparency has been lauded as a solution to the ’dirty tactics’ of tax avoidance some critics say is rife in international financial centres. Robert Duggan wonders whether they’re on to something…
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