The future of offshore

The future of “offshore”

Each of the governments of developed (and many of the developing) countries propagandises on the subject of tax havens and decries their existence – nasty, seedy places, they say, where shady money is stashed away out of their reach.

But is this really so? Might part of the problem be the overarching greed of tax authorities throughout the world?

Some of the earliest tax advice is to be found in the Bible. The gospel of Saint Matthew extols us to render unto Caesar that which is Caesar’s, and what was being rendered to Caesar at that time was taxes charged by the invading Roman Empire.

As they grow in power and reach, states have a habit of taking on the worst characteristics of empires. The United States is the most obvious example today. Its citizens are taxed on their worldwide income; it imposes rather than agrees tax treaties with other nations (while the rest of the world uses the OECD model for their treaties, the United States uses its own model which it “offers” on a “take it or leave it” basis).

The United Kingdom is not much better in this respect. It routinely enacts legislation which is in contravention to its agreed double tax treaty obligations and the laws of the EU.

But offshore financial centres are not merely tax havens. They remain some of the safest and most secure places for banking in a global economy fractured and poisoned by dodgy lending and financial mismanagement in those markets which are at the heart of these greedy countries and whose citizens are now being asked to pay heavily for the mistakes and wrongdoings of others. They provide flexible and transparent trading and asset ownership structures. They enable cross-jurisdictional co-operation in trading and investment which would not be possible in those many countries which take a heavy-handed and inflexible approach to these matters, adding attritional transaction and withholding taxes, bureaucracy and red tape to the cost of doing business and holding assets.

For all of these reasons, we can probably conclude that the future of offshore is certainly secure for now.