Britain’s Overseas Tax Havens Facing Overhaul
UK government pushes for transparent system of company ownership in BOTs
British Overseas Territories will be forced to make public the beneficial owners of companies registered in their jurisdictions.
On May 1 the UK Parliament approved a legislative amendment making it obligatory for Britain’s overseas territories, including the tax havens of Cayman Islands, British Virgin Islands, and Bermuda, to introduce publicly accessible registers of the beneficial ownership of companies located in their jurisdictions.
The new law will apply to the following overseas territories: Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Gibraltar; Montserrat; Pitcairn Islands; Saint Helena, Ascension, and Tristan da Cunha; South Georgia and the South Sandwich Islands; the Sovereign Base areas of Akrotiri and Dhekelia; and the Turks and Caicos Islands.
They will be required to develop publicly accessible registers by the end of 2020.
However, the Crown Dependencies of Jersey, Guernsey, and the Isle of Man were left out of the bill.
Supporters of the amendment say public registers will help prevent international money laundering, terrorist financing and tax evasion.
Financial services stakeholders, however, argue that such a requirement would violate their clients’ rights to privacy, which in turn could cripple the offshore financial industry. They also point out that other jurisdictions around the world — including areas within the United States — are not held to the same standards.
Those on the receiving side of the action were understandably infuriated by the amendment.
The Cayman Islands Premier Alden McLaughlin said his government was “deeply aggrieved” by the legislation.
“Imposition of legislation, through powers that date back to the colonial era, over and above the wishes of the democratically elected legislative bodies of the Overseas Territories represents a gross affront to the constitutional relationship we currently have with the United Kingdom. Further, imposing such an obligation on the Overseas Territories while exempting the Crown Dependencies discriminates unfairly against the Overseas Territories. This amendment is based solely on prejudice and a wilful misunderstanding of our current regulatory framework.”
Alden McLaughlin, Cayman Islands Premier
Both the Cayman Islands and Bermuda mentioned the possibility of legal action in the attempt to block the introduction of public registers of the beneficial owners.
Premier of the British Virgin Islands, Dr. Daniel Orlando Smith, said it was wrong for the will of the BVI’s’ democratically elected government to superseded by the UK parliament. In the absence of global standards, any imposition by the UK is unfair and discriminatory and will result in a material loss of jobs and revenue in the territory.
In evidence submitted to the UK Parliament, the VI government claimed the imposition of registers could cause a funding gap of $1 billion over the next decade.
In response to critical comments, a UK government spokesperson said: “We have a close and long-standing relationships with our OTs and following this amendment our intention is to work together with them to ensure the best possible outcome.”