News from Anguilla.
2 April 2000. Issue #12
This issue contains articles found in other magazines/sources. Please
contact the source with a view to taking out a subscription (some of them
are free) if you want to obtain more of the same. Also check out the other
lists at topica.com; some are announcement lists and others are discussion
lists � there will be at least one of them that will be to your liking!
Please feel free to contribute to, reply to, comment on or (Heaven forbid)
correct any item in these newsletters. Send an e-mail to: [EMAIL PROTECTED]
Your input will be discreetly disseminated.
Thank you to those who pointed out that there was no issue last week. Yes,
we had noticed and it was intentional. In fact I think we�ll assume this
will be a fortnightly publication from now � you�ve suffered long enough!
LATEST NEWS FROM ANGUILLA....
The new NBA building was formally opened, with a large number of people
in
attendance. The commemorative plaque was unveiled by former Chief Minister,
and Anguilla�s sole knight, Sir Emile Gumbs.
Our Chief Minister, Osbourne Fleming, and Minister of Finance, Victor Banks,
are both in London, to undertake several commitments, specifically...
Anguilla did not get too much assistance from the U.K. after the passage
of
Hurricane "Lenny". It is said that this was as a result of political
posturing on the part of our (then) Chief Minister. Essentially, it is
understood that he wanted $x million dollars (to be spent as his Government
saw fit). Whitehall told him, "Thanks for asking, but we don�t do things
that way". That was as far as it went. (Yes, Anguilla did get assistance,
as
much as could be reasonably expected under the circumstances, but nowhere
near as much as the neighbouring islands got from their corresponding
European countries). So, the local Exchequer has not been able to afford
the
kind of repairs that would otherwise be considered necessary � such as
several washed out roads, and damage to the still inoperative buildings
of
the Public Works, Agriculture and Community & Welfare Departments and some
of the schools. These repairs are now overdue. So the two Ministers have
made up a shopping-list and taken it off to the U.K., in an effort to get
funding from the mother country. They will certainly be looking for more
than the $400,000 pledged so far � neighbouring islands have (rightly) asked
for, and got, figures well into the tens of millions. The Chief Minister
is
of the view that the case for funding would have been strengthened by the
recent Royal visit because, in his words, "I spoke to [Prince Andrew] at
length; and I know he is very concerned � He recognises that hardly anything
was done for Anguilla". Now, I�m not too sure that Prince Andrew is exactly
on first name terms with the people in Whitehall who pull the levers and
sign the cheques, and in such a short visit, he would not have seen the
worst of things, but it cannot be denied that the visit would hardly have
harmed Anguilla�s case.
The Chief Minister will also be attending a conference "Overseas Territories
into the new Millennium" which will review the U.K. Government White Paper
"Partnership for Progress and Prosperity: Britain and its Overseas
Territories", published just one year ago. It is this Government�s policy
to
develop a partnership with the U.K. (and, incidentally, to improve
relationships with neighbouring islands). He added that it was important
to
see the White Paper in its full context. There has been little discussion
(apart from some predictable knee-jerk reactions) on this important document
over the last year in Anguilla, and the Chief is hopeful that, even at this
late date, there may be room for some discussion.
Both the Chief and Finance Ministers will be meeting the large Anguillian
community in Slough, through the Anguilla Improvement Association.
The Minister of Finance will be attending the important Shorex ("Offshore"
marketplace) in London. Also present will be our Registrar of Companies,
demonstrating ACORN, as well as other members of the Financial Service
Department and members of the Anguilla Financial Services Association
(AFSA). All there to drum up business and to explain that Anguilla, with
its
pro-active regulation, is one of the few untarnished jurisdictions in the
world, and therefore a good place to do business.
SEGUE-ING MORE INTO THE "OFFSHORE" AREA�.
Other travellers are Marcel Fahie (Permanent Secretary, Economic Development
and Planning) and John Lawrence (Director of Financial Services) who flew
to
Cayman to attend the launch of a U.N. sponsored forum on Offshore Finance,
organised by the U.N.�s Office for Drug Control and Crime Prevention (ODCCP)
Global Programme Against Money Laundering (based in Vienna). This will be
called the "UN Offshore Forum." This is a 3-year initiative intended to
deny
criminal access to international financial markets through the various
financial centres, with minimum performance standards. These standards
include the 40 recommendations of the Financial Action Task Force (FATF)
to
combat money laundering, the Basle Committee on Banking Supervision Core
Principles and the International Association of Insurance Supervisors (IAIS)
insurance principles. To assist those jurisdictions willing to make a strong
political commitment to regulate their financial services sector at an
acceptable level, a comprehensive technical assistance programme will be
made available. This seeks to ensure that sound money-laundering and
confiscation laws will be put in place, financial investigation and
intelligence units are established, as well as a mentoring programme. Unlike
the various other initiatives (OECD, EU, G7, APCO, etc.) this one is more
of
a carrot than a stick.
The airport traffic is two-way though. In a week�s time, we get an important
visit ourselves. As called for in the White Paper, Anguilla�s financial
services legislative and regulatory structure will be examined by a four
man
KPMG team from Leeds, UK from 10th to the 12th April 2000. The team will
examine Anguilla�s legislative and regulatory framework to ascertain the
extent to which it adheres to internationally accepted standards including
the FATF�s 40 and CFATF 19 Recommendations, Basel Committee on Banking
Supervision Core Principles, IAIS standards of insurance regulation and
where trusts and company formation are concerned, international good
practice. The Terms of Reference of the exercise provide for an in-depth
independent review by experts to assess progress made in the regulation
of
the financial services sector, and to make further recommendations on areas
to be brought up to standard. At the end of the exercise, the review will
have stated where the Overseas Territories (OTs) are in terms of their
compliance with international standards and if they aren�t fully compliant,
the areas that need to be addressed and recommendations on how to achieve
such compliance. Specifically, the exercise will cover 5 areas: Regulation
of Banking and Insurance; Regulation of Companies, Partnerships and Trusts;
Independent Regulatory Authorities; International Cooperation; and Measures
to combat money laundering. In each area, Anguilla�s compliance will be
assessed against the relevant standard. Thus far, all necessary steps to
cooperate fully with the exercise have been taken. The report and
recommendations are due to be made available by the end of June. A
favourable, though objective, review may go some way to assure the promoters
of the initiatives of the supra-nationals, such as the OECD, of the bona
fides of the territories. They will be meeting with various Government
officials, from The Governor on down, as well as selected members of AFSA,
including yours truly.
Looking further down the line, in July we will be examined in and by the
Caribbean Financial Action Task Force (CFATF)�s Mutual Evaluation of
Anguilla. The CFATF, established as a result of meetings in Aruba (May 1990)
and Jamaica (November 1992), is based in Trinidad and is presently an
organisation of 25 states of the Caribbean basin, from The Bahamas in the
north, Belize, Nicaragua, Costa Rica and Panama in the west, to Venezuela
and Suriname in the south. The states agreed common countermeasures to
address the problem of criminal money laundering. Part of the mandate is
the
ongoing programme of mutual evaluation by members � and in July it will
be
Anguilla�s turn to be subjected to the peer review. The examiners will be
financial, law enforcement and legal experts from designated countries who
will be checking up on Anguilla�s compliance with the 40 FATF
recommendations as well as the CFATF�s own 19 recommendations. (Anguilla
has
provided technical assistance and manpower to perform reviews of other
territories in the past; what goes around �)
Part of Anguilla�s present problem is that, as a result of the political
impasse over the last few months, it is one of the very few territories
which has not yet passed a modern Proceeds of Criminal Conduct Ordinance.
However, this is rapidly expected to change, once the House of Assembly
resumes later this month. Already, the joint Government-AFSA legislative
committee has prepared a draft bill which has received the nod by those
affected.
Meanwhile, for those who missed it in an earlier issue, here is the gist
of
the OECD�s (controversial) Harmful Tax initiative � an important one as
it
could effectively sound the death-knell for many of the overseas "offshore"
jurisdictions (this has been cribbed from an author who can put it far
better than I)�.:
The OECD�s initiative seeks to eliminate practices in jurisdictions that
it
considers harmful to its member countries. It is a contentious approach
and
one that has caused much controversy. The original May 1998 report which
started the process defines a tax haven that conducts harmful tax
competition as one which: (1) Imposes nominal or no tax income; (2) Offers
preferential treatment to certain types of income at no or low tax rates;
(3) Offers or is perceived to offer non-residents the ability to escape
taxes in their country of residence.
It identifies other practices that it finds unacceptable; these include:
(a)
Those that prevent the effective exchange of relevant information with other
governments on taxpayers evading or in some cases avoiding tax; (b) General
lack of transparency; and (c) The absence of a requirement that the activity
be of a substantial nature (investment that is purely tax driven).
Anguilla, represented by Messrs. Marcel Fahie, John Lawrence and (Attorney
General) Ronald Scipio, made a presentation to the OECD, in Paris, in August
1999. The OECD has recently sent letters to the Government of Anguilla
detailing the two options that Anguilla has in terms of its commitment to
bring its offshore finance regime in line with its views of what constitutes
harmful tax. The OECD�s approach is both prescriptive and prohibitive; in
order to avoid inclusion on the (black) list of tax havens to be published
at the end of June, jurisdictions have to: (I) Undertake to implement such
measures (including legislative changes) as are necessary to eliminate any
harmful aspects of its regime that relate to financial and other services
and (II) Commit to a programme of effective exchange of information in tax
matters, transparency reporting, and the elimination of any aspects of the
regimes for financial and other services that attract business with no
substantial domestic activities. Further, jurisdictions are to refrain from
(III) Introducing any new regime that would constitute a harmful tax
practice under the OECD Report; (IV) Modify any regime that currently fails
to qualify as a harmful tax measure in such a way that after modification,
it becomes such a measure and (V) Strengthen or extend the scope of any
existing measure that currently constitutes a harmful tax practice.
Now, we can all write till the cows come home as to what is a harmful tax
practice. More on that later. Needless to say, the OECD Initiative is a
serious one, and yet not everyone at the OECD HQ is in favour of it.
Finally in this section: The UK Inland Revenue, as a result of the very
recent Budget, is being empowered by the House of Commons to seek agreement
with foreign countries, including the OTs, to enter into exchange of
information agreements on tax matters. The move is not surprising and should
be considered in light of the OECD�s initiative. Under such an agreement,
banks in Anguilla would be required through a taxation agreement to report
interest income on their accounts with UK addresses to the Inland Revenue
as
well as the Government of Anguilla assisting the Inland Revenue in specific
tax investigation matters. This is all part of the G7 Initiative launched
in
1998 by UK Chancellor, Gordon Brown, to prevent tax evasion, which he feels
is drain on the public revenue of the UK Government.
Now, let�s see what some of the clippings say about this lot�.
CLIPPINGS FROM MAGAZINES AND NEWSPAPERS
As is always the case, the following contains material which is courtesy
of
various publications (who also hold the Copyright) � please contact them
for
subscriptions:
This from "THE GUARDIAN WEEKLY" � 30 March 2000
Trusts and tax dodgers face crackdown. By Dan Atkinson
Sweeping new measures against tax dodging are likely to sound the
death-knell for offshore trusts and arm the Inland Revenue with powers to
collect information on all savings accounts and investment income. Action
against the trusts alone is expected to net the Treasury �500m.
The Chancellor sweetened the pill of his anti-dodging crackdown by defying
Brussels to abolish the 20% withholding tax paid by British residents on
eurobond interest. This comes at a time when the UK is fighting European
Union attempts to end the existing tax-free status of eurobond interest
paid
in London to non-residents.
But the decision came alongside moves that will effectively end the use
of
trusts, both on and offshore, for tax purposes. Gordon Brown also announced
a legislative package that will allow the Inland Revenue "to collect routine
information about the savings income of all individuals".
The information will be shared with the tax authorities only of countries
that establish reciprocal arrangements with the UK, but the law will be
changed to make it easier to set up such arrangements. Further changes will
allow the Revenue to gather information solely for the use of tax
authorities outside the EU.
On trusts, Mr Brown said he was moving to end "avoidance of capital gains
tax by individuals exploiting the tax rules for trusts". He said he will
save �200m from the ending of existing arrangements and protect a further
�300m from arrangements that will not now take place.
Comment: There are more U.K. political voters in London�s lucrative Eurobond
market than in the Overseas Territories.
Next, an "Opinion" from the same source:
Devil take the hindmost. By George Monbiot
Last week's Budget gave global corporations a huge boost - and if they want
to move on, they can�.
Britons are no longer taxed on their income, but on their immobility. Only
those who cannot move are obliged to pay. This, though almost everyone seems
to have missed it, was the real message of last week's Budget. Income tax
remains unchanged, but the tariffs on business are collapsing. Capital gains
tax has been slashed. The "withholding tax" imposed on financial
corporations will be abolished. The biggest lorries will be exempt from
much
of the duty they now pay.
For big business, Britain is already one of the world's most luxurious tax
resorts. In 1979 corporation tax stood at 52%. After successive Conservative
and Labour cuts, it has been reduced to 30%. This, Gordon Brown boasted
last
year, is "now the lowest rate in the history of British corporation tax,
the
lowest rate of any major country in Europe and the lowest rate of any major
industrialised country anywhere, including Japan and the United States".
The
UK chancellor claims that he wants to wage war on tax havens. But, under
his
guidance, Britain is becoming one of the worst.
It is not hard to see why this is happening. More mobile than ever before,
big businesses can bully governments into relieving them of their
responsibilities. If a state won't cut the taxes it levies, they threaten
to
disinvest, and move to somewhere that will. By these means they have been
able to shift the burden of taxation, worldwide, from the rich to the poor
and middle-incomed. Fifty years ago US corporation taxes rendered more than
30% of federal revenues, which was more than the union received from
personal taxation. Now they account for just 12%, a quarter of the amount
delivered by personal tax. While the Confederation of British Industry
clamours for cuts in corporate taxes, it has lobbied against cuts in
consumer taxes. It wants the money spent on public infrastructure, providing
lucrative contracts for business.
Personal taxation has not grown evenly. The highly paid, like the
corporations that employ them, are mobile, and can play one state off
against another. The poor are forbidden to move, so their taxes remain as
high as their weakened democracies allow. They pay their immobility tax,
and
reap the insecurity caused by this global race to the bottom.
The great corporate tax rebate mirrors the great corporate handout. Before
it came to power Labour hinted that it would stop doling out money to
business. But it reckoned without the protection racket run by big
companies, which threaten to clear out and take the economy with them if
they don't get what they want. This month it gave $840m to BAe Systems to
persuade it to build its new super-jumbo jet in Britain. Some economists
suggest that the state subsidies corporations receive outweigh the tax they
pay.
Big business has further reduced its contributions by ingenious tax
avoidance strategies. Rupert Murdoch's British holding company, Newscorp
Investments, has paid no net British corporation tax on the �1.4bn in
profits it has made since 1988. As companies move their transactions on
to
the internet, their business will become more opaque and mobile. They will
install their servers where taxes are lowest, disguise their trade in goods
as a trade in services, and even launch their own virtual currencies. The
British inventor of one internet currency - beenz - appears to understand
the implications. "I wouldn't want to be working for the Inland Revenue
when
it happens," he says.
The tax burden, in other words, is shifting to those who are unable to move
their assets either offshore or out of the old economy and into cyberspace.
While the beggar-thy-neighbour economics that Brown practises hurt rich
countries, the poor are wounded still more gravely. With little else to
offer, poor countries end up giving everything away in a desperate attempt
to attract "investment". If taxation is not to become wholly regressive
all
over the world, we will have to revolutionise the means by which the rich
are charged.
Some innovative schemes have been proposed. The "Tobin tax", for example,
would penalise short-term financial speculation. If collected
internationally, it could fund the United Nations or pay for development
and
emergency programmes. War on Want calculates that a 0.25% tax would raise
an
annual $400bn. The "total consumption tax" proposed by Professor Robert
Frank would exploit the gap between richer people's incomes and savings,
levying steep tariffs on the purchase of luxury goods. Land taxation would
make use of one of the few assets big business can't move. Some people have
proposed a "bit tax", imposed on all electronic communications. This,
though, is surely just as likely to punish the impoverished internet anorak
as the tax-exempt corporate predator.
It seems to me that we need to be still bolder. Perhaps it is time to give
serious consideration to the idea of a global corporation tax.
The corporations have globalised everything except their obligations. Their
rights have been harmonised, their responsibilities have been shed. They
have ensured that international bodies establish only maximum standards
for
corporate behaviour. We need to turn this formula around, obliging
corporations to respond to human needs. Among the measures we should force
on them is a fixed rate of business tax.
This would not be easy to implement or enforce. It would hand an advantage
to countries playing outside the rules, as corporations would flock to them
just as they flock to tax havens today. But it is possible to conceive of
a
system of sanctions, rather like the sanctions imposed today on countries
seeking to protect their markets.
None of this could work without the democratisation of global treaty-making:
prior parliamentary approval of national negotiating positions, for example,
and referenda on important decisions. But this needs to happen anyway:
corporations have been able to extract such advantages from globalisation
only because they have been able to keep the public out of international
decision-making. Governments will reassert their control over corporations
when people reassert their control over governments.
Global taxation will be troublesome and politically hazardous. Whether we
intervene or not, corporate taxes will converge worldwide, but downwards,
rather than upwards. If business is not forced to redistribute its wealth,
the rich will roam the world, free of obligations, while the rest of us
will
be left to support society, the state and the corporations through an ever
more onerous immobility tax.
Not just Britain, of course�. This from The Financial Times,
EU tackles Germany on state aid. By Deborah Hargreaves in Brussels and Tony
Major in Frankfurt - 31 Mar 2000 23:47GMT
Mario Monti, the EU's competition commissioner, is to take Germany to the
European court in an increasingly bitter dispute over illegal state aid
payments.
The move - further evidence of Mr Monti's aim to crack down on government
subsidies to companies - is the latest step in the case of Westdeutsche
Landesbank, which received E807m ($783m) in funding. The European Commission
decided last July the aid was illegal, and called on WestLB to repay its
owner, the regional government of North Rhine Westphalia.
Mr Monti announced on Friday that he intended to take the federal government
to court because it had not forced WestLB, a publicly-owned regional bank,
to repay the money. The row has brought Brussels into conflict with
Germany's powerful regional governments, which have accused Mr Monti of
attacking the country's entire public sector and have threatened to block
key EU reforms.
Mr Monti's spokesman said: "This is a very important case" . The German
government is setting a very bad example. We cannot allow member states
to
defy the EU's rules in such a flagrant manner."
Mr Monti wrote to the German government on Thursday saying he would ask
a
meeting of the full Commission to sanction an immediate application to the
court. The bank, the regional government and the German federal government
have all appealed against the decision.
However, the Commission says an appeal does not suspend the need for
repaying the aid.
The German government submitted a second proposal for repaying the aid a
month ago. But Mr Monti judged this unsatisfactory as it suggested that,
at
the same time as repaying the aid, the NRW government would inject the same
amount of cash back into the bank together with accumulated interest.
The government makes the reimbursement conditional on Brussels approving
the
cash injection. The Commission says it cannot accept such conditions. WestLB
said it had yet to received official notification of the EU's decision but
remained convinced that the latest repayment proposal met all the EU
commission's criteria.
The funding of Germany's state-owned public banks is extremely sensitive.
The unlimited financial guarantees the public banks enjoy give them high
credit ratings and allow them to borrow at lower rates than commercial
banks. Together with publicly owned local savings banks they are the
dominant banking group in Germany and widely regarded as a key pillar of
the
country's social market economy.
The Commission is currently investigating possible aid payments to six other
German public banks.
Finally, in this section and from the same source, a warning to those making
phone calls TO AND IN the U.K�
New UK phone codes may unleash costly Egypt bug. By Ashling O'Connor - 29
Mar 2000 23:51GMT
When businesses get their first telephone bill after the area code changes
[this month], they could be surprised to find lists of expensive
international calls to Egypt.
A new problem, dubbed the "Egypt bug", has surfaced to add to the headache
for businesses in London and other big cities preparing for the change to
new area codes on April 22.
Number Master, a Winchester-based company, has discovered that 020, the
new
code for London, will be interpreted by many popular software organisers,
such as Microsoft's Outlook, as +20, the international country code for
Egypt.
"The software tends to reformat the phone numbers into a standard it
recognises," said managing director Jonathan Symons. "It is trying to be
helpful but there are so many area codes worldwide, it is getting confused."
The problem is likely to hit companies that use a computer modem to dial
phone numbers - call centres for example.
A one-minute [U.K.] national peak-time call costs 8p. The same call to Egypt
would cost �1.27.
Oftel, the telephone industry regulator, appears to have been wrong-footed
by the Egypt bug. "Businesses must check with their software suppliers,"
it
advised.
Comment/Question: Would it work the other way around, too? If you dial a
number in Egypt, will your call get as far as London?
FINALLY�
Apologies for those looking for scam news - no time, no space - still plenty
out there though!
As mentioned before, the web page of C.E.G. has been redesigned and rebuilt.
Check it out at http://www.ceg.ai
Best wishes,
Graham
P.O. Box 294, Heywood House, Anguilla, B.W.I.
Tel: (+1 264) 497 6468, (+1264) 497 6263 or + (5995) 70390
Fax: (+1 264) 497 6080 or (+1 264) 497 1357
________________________________________________________________________Start
an Email List For Free at Topica. http://www.topica.com/register
IMPORTANT NOTICE: If you are not using HushMail, this message could have been read
easily by the many people who have access to your open personal email messages.
Get your FREE, totally secure email address at http://www.hushmail.com.
