The accusation that offshore centres have an unfair tax advantage is unfounded, according to speakers at an event organised by RBC Wealth Management.
The EU Code of Conduct Group will hold its meeting in Brussels today to discuss the zero-ten tax regime of Britain’s crown dependencies.
There have been three main criticisms aimed at offshore centres in recent years: they harbour criminal activity; they are used to escape paying tax; and they have an unfair competitive tax edge.
Paul Patterson, head of global trust, RBC Wealth Management, said: “In response to the attacks, international financial centres have ensured a high standard of regulation and become more transparent when needed, signing up to international standards and tax information exchange agreements. Sixty six countries have implemented Organisation for Economic Co-operation and Development recommendations and a further 20 countries have committed to do so. Tellingly, all IFCs have taken action. If any IFCs still aid criminal activity, they are not long for this world.”
Patterson said the accusation that offshore centres have an unfair tax advantage is also unfounded.
“The G20 countries compete with each other for wealth, people, talent, capital and they use tax incentives to do this. This is exactly what the resident non domicile regime in the UK does. Indeed, in the current financial situation, I expect we’ll see governments continuing to compete aggressively including in the tax arena. This will benefit individuals and businesses as proper tax planning and advice will be stepped up.
“IFCs allow businesses and wealthy families who are becoming increasingly global, working and living cross country borders, to plan their financial affairs effectively. The future of offshore centres is not about laundering and evasion, it’s about safety, stability and professional advice.”
Alan Binnington, a private client director at RBC Wealth Management, said evidence suggests that offshore centres have a key role in the financial system, increasing competition, increasing credit, and providing support and growth for nearby onshore centres, for example Mauritius and India, Hong Kong and China.
Offshore centres also make it easier for small to medium enterprises to access capital more easily.
“As well as an economic benefit, offshore centres are ideal for philanthropic structures, funding charity projects at home and in developing markets. It is not right to perceive offshore centres as having no social value,” he said.
“Far from being exclusive tax havens, offshore financial centres contribute massively to the social and economic well-being of onshore jurisdictions. Morality campaigns against offshore centres may ultimately be detrimental to the global economy.”
