The government has announced that Michael Foot, currently chairman of the UK office of Promontory Financial Group, will lead the independent review of British offshore financial centres which was announced at Pre-Budget Report 2008.
The brief is to review the “immediate and long-term challenges” facing British offshore tax havens. These include consideration of:
- Financial supervision and transparency;
- Taxation, in relation to financial stability, sustainability and future competitiveness;
- Financial crisis management and resolution arrangements;
- International cooperation.
Those who have been calling for reform in this area will be disappointed to learn that in light of the current economic climate, the government is not planning on pressing for any constitutional changes and our offshore financial centers will continue at the moment to retain their independence in fiscal matters and the setting of their own rates of taxation.
Michael Foot said: “After working as a financial regulator in the UK and overseas, I have direct experience of the achievements of the Crown Dependencies and Overseas Territories. I am looking forward to working with them to see how best the important contribution of their financial sectors can be underpinned and strengthened for the future in these challenging economic times.”
Only those Crown Dependencies and Overseas Territories with significant financial sectors are included in the scope of the review.
- In scope are: Jersey, Guernsey, Isle of Man, Bermuda, Cayman Islands, Gibraltar, Turks and Caicos Islands, British Virgin Islands, Anguilla.
- Out of scope are: Falkland Islands, Montserrat, South Georgia and the South Sandwich Islands, British Antarctic Territory, British Indian Ocean Territory, Sovereign Base Areas of Akrotiri and Dhekelia, Pitcairn Islands, Saint Helena.
The Review aims to produce interim conclusions for Budget 2009, with fuller conclusions later in the year.
The tax havens were positive following the initial Pre-Budget Report announcements:
Jersey’s senator, Frank Walker said “Most importantly it was confirmed that it will only look at fiscal arrangements to the extent they affect stability and sustainability. It will not look at taxation rates, nor will it consider any change to Jersey’s fiscal autonomy or the constitutional relationship with the UK.
Guernsey’s chief minister deputy Lyndon Trott said: ‘Guernsey, under my leadership, will play a full and constructive role in the review. ‘Financial services in Guernsey are well regulated and transparent, and have been recognised as such by the OECD, the Financial Action Task Force, and the Financial Stability Forum.”
Isle of Man minister Tony Brown MHK said,‘As far as the Isle of Man Government is concerned we welcome this exercise as another opportunity to show that the Island is well regulated, financially stable and internationally responsible.
‘The Isle of Man has a strong record of compliance with the highest global standards in the areas of financial regulation, taxation, transparency and international co-operation. This has been confirmed by bodies such as the IMF and the OECD.’