Some of the world’s most secret offshore tax havens are facing tough times as organisations and high-tax nations join forces to ‘encourage’ them to open up their strict secrecy rules and comply with international standards of reporting, for example.
The likes of Lichtenstein have already agreed to ease up and allow greater transparency in the way they conduct their offshore business, and it seems highly likely that offshore tax havens such as Monaco and Switzerland will be forced to follow suit.
It’s a case of taxing times for many offshore havens at the moment, as those that previously enjoyed high wealth throughput because of their strict secrecy laws are being forced to open up about who is holding money in the national coffers…
Just over a month ago leaders of European nations joined forces at a meeting in Germany to ‘encourage’ greater regulation of financial markets, products and participants to try and bring stability throughout the global financial marketplace. As part of the EU leaders’ recommendations for greater regulation and transparency, a direct message was passed to offshore tax havens that refuse to comply with direct requests for improved regulation and reporting. Sanctions were suggested for example.
The idea of using sanctions against non-compliant offshore jurisdictions has been effective already – particularly when coupled with pressure from the likes of the G20 leaders who met recently, and when added to mounting pressure from the Organisation for Economic Cooperation and Development. So much so that Lichtenstein has already agreed to be more open about how it does business for example, and it has finally agreed to comply with international tax and data sharing standards as drawn up by the OECD.
Andorra has followed suit in a bid to be removed from the OECD blacklist of non-cooperative nations, and Monaco – which is also on the list – is under increasing pressure to be more open and transparent too. It’s a slightly different story in Switzerland however, the nation is not on the list but it is being very closely monitored. Germany wants Switzerland to be added to the list and is actively pushing for this to happen. In the meantime, Singapore which has been hot on Switzerland’s heels in terms of stealing away significant amounts of its offshore business, has recently signed up to the OECD’s recommendations and received praise as a result. So unless Switzerland wants to continue to see much of its business being pulled from under it, and unless it wants to end up on a tax haven blacklist, it seems highly likely this secretive nation will also have to make changes to the way it conducts business.