Internet speckles with titles like “Financial globalisation ends offshore financial centres” and “No onshore or offshore, just good and bad”. What’s in this for our clients? This post is following some recent publications in anyway referring to further existence of the “offshore jurisdictions”.
“On 30 May 2008 the Executive Board of the International Monetary Fund (IMF) agreed to integrate the offshore financial center (OFC) assessment program with the Financial Sector Assessment Program (FSAP)”, with one of the purposes among all “to eliminate the need to maintain a potentially discriminatory list of OFC jurisdictions”, “which has become increasingly difficult to justify in the face of financial globalization”. (IMF Executive Board Integrates the Offshore Financial Center Assessment Program with the FSAP)
The Isle of Man doesn’t want the world to call them “offshore centre”. Chief Minister Tony Brown says: “Expressions like “offshore” and “tax haven” have no agreed standard definition. We tend to use the term “international finance centre”, “the Isle of Man, like the UK, has normal commercial confidentiality but no banking secrecy laws”. (Chief minister wants Isle of Man to lose ‘offshore’ tag)
“GUERNSEY will no longer be referred to as an ‘offshore’ financial centre by the International Monetary Fund. The ‘onshore’ distinction has also been dropped.” (No onshore or offshore, just good and bad)
It’s quite obvious that definition of zero or low tax jurisdictions as “offshore” or “tax haven” has colored in the negative and will disappear in the nearest future due to globalization of the world economy and increase in transparency of international business activities, being replaced by “international finance centre” or alike, not offending those jurisdictions in question.
But what is the practical implication of these changes for our customers – businessmen and individuals working offshore? Or better to ask if there is something new about this trend?
No. Absolutely nothing new. It’s a very expected result of international efforts against money laundering, tax evasion and terrorist funding by means of facilities offered by offshore financial centers. But if the expression “tax haven” escapes from our day-to-day vocabulary does it mean the same destiny for zero or low tax regions or regimes? No. They proved to be too good incentives for foreign investments. If we stop saying “offshore” when speaking about our foreign bank accounts does it mean we lost our rights for privacy and business freedom? No. We do our business off our home country shores and will continue doing that.
In the ever opposition of Legality vs Secrecy, particularly tense during the last decades, the first one is always the winner. We keep saying our clients: “Stick to legal structuring of your business, don’t rely upon secrecy, which can be eliminated any moment by a local or international legislative act, and you will keep safe and afloat under any force-major.”