Many professionals working in the offshore financial services industry are asking the question; when will the tax inquisition end? Most of them understand that as long as there’s more than one currency in the world, and while over two thirds of the collective surplus cash supply is parked in so called tax havens, there will always remain a need for professionals to handle and manage the wealth of the world.
To think that new rules and regulations, put in place by the global power elite, for the purpose of appeasing a disgruntled public, by politicians who campaign to end tax havens, is unrealistic.
The people who are most acutely aware of the importance of protecting assets in a safe place, that has both a stable government and a solvent economy, are the people at the top of the political pyramid. The very people who stand on a podium and preach the end of tax inequity, are the same people with fortunes stashed, in banks outside of the countries they pretend to be leading out of the morass and into the promised land of balanced budgets.
Sure the offshore tax haven witch hunt exposed a few warlocks, and fed some cake to the angry citizens at the gate but the truth is that the Kabuki Theater did nothing to actually change the fact that the majority of money still remains offshore, and that no amount of new tax revenue will solve the debt problems on-shore. Soon the audience will grow bored with the lousy acting and they’ll realize they’ve been played. However, by that time, the bad actors will be replaced by new characters and more witch hunting, this time for corporations. It’s just then next scene in the same play.
London bankers, for example use the Isle of Man kind of like the United Kingdom’s version of the Cayman Islands to the USA. Technically the Isle of Man is a crown dependency, and the British government is responsible for its defense and foreign relations. But it’s also completely self-governing with one of the oldest Parliaments in the world, an absolute perfect arrangement for the bankers of London.
The “island administration,” which sits in the middle of the Irish sea, is a popular tax haven for British bankers. It’s no coincidence that the island’s financial sector accounts for more than a third of the gross domestic product. And it’s little wonder that it’s become the poster child for the new breed of transparent tax-compliant legal jurisdictions. So why did the ratings agency Standard and Poors recently downgraded The Isle of Man’s credit rating from a AA+ to a AA?
As a major tax haven, Isle of Man has no wealth, capital gains, corporate, or inheritance taxes – and as a result it has benefited handsomely from a thriving offshore banking industry. However, Standard and Poors thinks that’s about to change, as governments reform and gear up the Tax Haven Witch Hunt and try to clamp down on companies and individuals that stash money overseas illegally.
While economists and analysts differ in their understandings of what exactly constitutes a tax-haven, the countries that are most consistently labeled as such are Bermuda, the Netherlands, the Cayman Islands, and Ireland. As a result of their low taxes, many of these countries house headquarters for companies that do most of their business elsewhere. This storyline makes for great theater and allows Politicians and Law Makers to divert the attention of their constituents to mythical places that require more Knights.
If Standard and Poor’s is correct, and these Tax Havens of the world are facing stricter regulation in the future, then many of the Global companies which save money by opening subsidiaries oversea could see their costs increase. Thousands of corporations from Google to General Motors participate in corporate inversion to reduce taxes and remain competitive.
At the end of the day, the bottom line is that while there will be more scrutiny on tax havens, tighter rules and tougher regulations, still most of the global surplus money supply will remain in legal jurisdictions where it can more easily be put to work, for enriching those who know; that money will always go, to where it’s most welcome.