EDITORIAL - Tax havens in retreat

A development that could affect the economics of some of Jamaica's more prosperous Caribbean neighbours and, perhaps, the pocketbooks of some of our better-heeled citizens, passed largely unnoticed here last week.

Ten of Britain's overseas territories and colonies, acquiescing to the prompting of the UK Prime Minister David Cameron, signed an agreement to share financial information with other jurisdictions.

Of the group, two, the Cayman Islands, and the Turks and Caicos Islands, are Jamaica's near neighbours in the northern Caribbean.

Three others, the British Virgin Islands, Anguilla and Montserrat, are in the eastern Caribbean. Another, Bermuda, is in the north Atlantic, but geographically has Caribbean pretensions. All, like the others in the group - Gibraltar, Jersey, Guernsey and the Isle of Man - are deemed to be tax havens.

Last week's action highlights the growing momentum of an ongoing global assault, led by the Organisation for Cooperation in Economic Development (OECD), on banking secrecy, as part of a fight against tax evasion, money laundering and corruption.

This development, of course, has implications for Jamaica and is especially relevant to those of us who may believe that Kingston can, for long, resist pressures to make it easy to share financial information with others.

Indeed, the agreement between Britain and its overseas territories could not have been easy, and would likely have been accomplished with substantial pressure for them to risk the potential of capital flight and the future of an industry on which they have built their economies.

But this flexing of muscles from London would merely have reinforced the stark reality - increasingly concretised by American power - that the heady days of shadowy offshore banking and murky financial dealings are on the wane.

Concomitant with the agreement by the UK's overseas territories, Mr Cameron announced that registered UK companies will be obligated to obtain and update information on their ultimate beneficial owners. In other words, the veil by shell companies is being stripped away, thus lessening the opportunity for shareholders to hide tax liabilities.

A few days later, at their summit in Northern Ireland, G-8 leaders pledged stronger efforts against money laundering and tax evasion and declared their determination to end the use of shell companies "to facilitate illicit financial flows stemming from corruption, tax evasion and money laundering". They urged countries to sign up to the convention on mutual assistance on tax matters.

Amendments

This brings us back to Jamaica and a debate that resumed in Parliament yesterday on amendments to the Revenue Administration Act.

The amendments will make it easier for the tax authorities to gather financial information on taxpayers - and share it with other jurisdictions - without having to inform the said taxpayers that they are under investigation.

The Opposition argues that the proposals are too intrusive. There is a view that, if the bill is passed, money will flee Jamaica. We believe that the issue is worthy of a fuller discussion than we have so far had.

But that must take place in a context, including that Jamaica is attempting to meet OECD benchmarks; that financial reporting is being demanded by America under FACTA; and last week's developments at G-8 and the undertakings of the British territories.

More important, Jamaica also has to ensure that there is genuine reciprocity of action from global partners.

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