Tax Havens - a good thing ?

kennyboy66_2

Generali wrote: »

They are. However, the companies that operate there are just following local laws. It's no more reasonable for the UK to dictate banking laws in Cayman than it is for China to dictate banking laws to the UK.

The Cayman islands is a poor example as it is a British Overseas Territory and the Governor (appointed by Britain) could if he wished exercise complete control.

There is symbiotic relationship between London as the major international financial centre and the number of British "affilated" tax haven such as Cayman, Jersey, IOM etc etc.

I guess in the long term it could be a bit of a double edged sword cracking down on them if the tax havens that gained where places like the Bahamas or Liechtenstein.

itsnever2lateisit?

ninky wrote: »

Is that a rolling year or could you for example stay three months at the end of one year and three months at the start of the next - in effect, six months?

Not sure, its all in this gobbledegook http://www.hmrc.gov.uk/pdfs/ir20.pdf

bubblesmoney

sovereign jurisdiction matters! the usa or uk cant do anything by trying to enforce their tax laws on another sovereign entity be it the bahamas or switzerland, leichtenstein or any other place. every country has a sovereign right to set their tax rates or even have zero taxes like many middle eastern countries.

what needs to be tackled is tax evasion, that would be legal. tax avoidance would be legal game playing of the tax rules. no uk or usa court would be able to enforce uk or usa tax laws in another country. just like another country's courts wouldnt be able to enforce their countrys tax laws in the uk or usa.

tackling tax evasion would be relatively easier. the govt just has to enforce its rules under its sovereign territories. this especially needs to tackle the pipelines to the tax havens, namely organisations like SWIFT, Euroclear, Clearsteam etc that are pipelines for international banking transactions. money moves electronically, so tracking them shouldnt be that much of a problem.

ofcourse money / gold could move physically as well but i suspect that will just be a small portion of the traffic now a days, even that physical traffic can be tackled by customs authorities and by analysing entry and exit data of the govt for people moving in and out of the uk.

or something like a transaction tax could be used for all funds going in / out of the uk but that wont solve the tax evasion problem as that transaction tax would still be too small in comparison to the income tax gains.

just make it a rule that any and every investment / transaction in the uk / governed territories will be subject to uk tax laws whether the person / company is resident in the uk or not. obviously the bilateral / multilateral tax agreements would have to be suitably modified and other nations would retaliate in kind as well and that might affect uk trade.

the govt cant expect to collect taxes on uk transactions and also on foreign transactions, no country in the world will allow that to happen unless the days of the empire start again, which i think is unlikely.

but tightening screws on official banking pipelines will just increase the traffic through non-official banking pipelines like hawala transactions and increase the hold of criminals on banking transactions, not that there is a lack of them (criminals) already in the system!

In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city. The hawala broker calls another hawala broker in the recipient's city, gives disposition instructions of the funds (usually minus a small commission), and promises to settle the debt at a later date.
The unique feature of the system is that no promissory instruments are exchanged between the hawala brokers; the transaction takes place entirely on the honor system. As the system does not depend on the legal enforceability of claims, it can operate even in the absence of a legal and juridical environment. No records are produced of individual transactions; only a running tally of the amount owed by one broker to another is kept. Settlements of debts between hawala brokers can take a variety of forms, and need not take the form of direct cash transactions.
In addition to commissions, hawala brokers often earn their profits through bypassing official exchange rates. Generally the funds enter the system in the source country's currency and leave the system in the recipient country's currency. As settlements often take place without any foreign exchange transactions, they can be made at other than official exchange rates.
Hawala is attractive to customers because it provides a fast and convenient transfer of funds, usually with a far lower commission than that charged by banks. Its advantages are most pronounced when the receiving country applies distortive exchange rate regulations (as has been the case for many typical receiving countries such as Pakistan or Egypt) or when the banking system in the receiving country is less complex (e.g. due to differences in legal environment in places such as Afghanistan, Yemen, Somalia).
Furthermore, the transfers are informal and not effectively regulated by governments, which is a major advantage to customers with tax, currency control, immigration, or other legal concerns. For the same reasons, governments do not favor the system, and accusations have been made in recent years that terrorist funding often changes hands through hawala networks.

if currency restrictions come into play due to the economic crisis then that would be boomtime again for the hawala transactions. even banks would be shamed by the scale these hawala transactions were capable of in their glory days. any restrictive atmosphere will just breed ways to bypass the system. it will be inevitable and would just defeat the purpose the restriction was started in the first place plus will also decrease tax receipts and ability to monitor the transactions and also breed corruption in enforcement agencies who WILL turn a blind eye because of the kickbacks from the hawala operators. history tells that unfair restrictions just breed ways to bypass the system illegally. best to have fair tax policies in the 1st place and such methods will die naturally. now dont ask me whats fair though :rotfl:

bubblesmoney

http://news.bbc.co.uk/1/hi/business/7941717.stm

The Swiss government confirmed that in line with OECD rules, it would now respond to overseas requests for information in cases of suspected tax evasion, and not just tax fraud.

John_Pierpoint

Am I the only person who thinks tax rates in the UK are ridiculously high?

After all the peasants on their way to the tithe barn were only being taxed for 1/10th of their produce.

http://www.adamsmith.org/tax-freedom-day/

ninky_2

John_Pierpoint wrote: »

Am I the only person who thinks tax rates in the UK are ridiculously high?

After all the peasants on their way to the tithe barn were only being taxed for 1/10th of their produce.

http://www.adamsmith.org/tax-freedom-day/

I think the problem is not so much that the taxes are high but the return we get for them is so low. I wouldn't mind spending much of my income on tax if I could see it was making the world I lived in a much better place. Its when you see it going on illegal wars and bailing out private financial institutions you start to get angry.

bubblesmoney

Brown is clearly vulnerable because of the central role that Britain plays in facilitating corporate tax dodging. While the IMF has already named London as an onshore tax haven, crown dependencies such as Jersey, Guernsey, the Isle of Man and overseas British territories such as the Cayman Islands, Bermuda and British Virgin Islands are all listed as "offshore secrecy jurisdictions" in the new US legislation against tax havens which is soon to be put before Congress. The draft law, which is backed by President Obama, identifies these jurisdictions from previous court cases as "probable locations for US tax evasion".

http://www.guardian.co.uk/commentisfree/2009/mar/12/tax-evasion-avoidance-jersey

Generali

As an aside, lots of hedge funds operate out of the building that Obama highlighted in Grand Cayman (Ugland House).

I can't think what that could have to do with tax evasion.

FWIW, the hedge fund I worked for provided K1 tax forms as required by the IRS for all taxpayers liable for US tax whether resident or not in the US. Probably many hedge funds don't do that as they are costly to produce and presumably not all US investors want them produced.

koolcat99

When you order a dvd or cd from asda or tesco. its shipped from the channel islands, do you think that this is by acident,?
blatent tax avoidance!

Castleman

koolcat99 wrote: »

When you order a dvd or cd from asda or tesco. its shipped from the channel islands, do you think that this is by acident,?
blatent tax avoidance!

BUT...

If they were based in the UK, they would pass that tax cost onto the customer by increasing their prices. We can't have it both ways!