In November of this year those involved in the offshore and cross-border industry initially reacted with resigned acceptance to the latest leak of stolen data from an offshore law firm. The 13.4 million documents, dubbed the “Paradise Papers”, held information on various structures used by some of the world’s wealthiest individuals and organisations to keep their finances private. As usual there was a deluge of articles and reports in the media pouring scorn and criticism on those whose names were deemed high profile enough to attract attention. There was enormous condemnation of these people who were not doing “the right thing”. However, at the same time the media was repeatedly stating that these people had not acted unlawfully.
There was no doubt that the reporting of the paradise papers lacked any big sound bites. There was an attempt to draw the Queen into the firing line because she had invested a modest amount (for her) in an offshore fund that happened to be invested in a British protectorate of which she is the head of state. It is hard to criticise anyone who pays tax voluntarily. Attacks on Bono and Lewis Hamilton lacked any substance and were rebuffed with assurances that the correct amount of tax was being paid, and if they weren’t, it would be investigated.
The media reports coming out about the Paradise Papers created the impression that all business done in offshore centres has the aim of evading tax in another jurisdiction, and that the Crown dependencies are somehow the worst offenders in the world. The cry to close-down these financial centres is driven by the politics of envy and enmity. All the jurisdictions featured in the Paradise Papers already share information with tax authorities around the world. The demands for public disclosure of ultimate beneficial ownership has nothing to do with tax transparency and everything to do with the desire to delve into private lives of others. There will always be those who decide to follow a devious route to wealth, but these individuals are not confined to the offshore world. However, if any illegal activity or tax evasion is discovered then this will need to be addressed in the appropriate way.
There has been very little reporting of the fact that since the financial crisis in 2008 there has been a sustained drive for more transparency and cooperation between countries. The Isle of Man has been at the forefront of signing up to international information sharing agreements, such as the Common Reporting Standards (“CRS”) and FATCA. This has further enhanced its reputation as a jurisdiction leading the fight against tax evasion and the laundering of criminal proceeds.
The Isle of Man has retained its top ‘Compliant’ rating by the global body reviewing tax transparency around the world. The OECD (Organisation for Economic Co-operation and Development) Global Forum on Transparency and Exchange of Information for Tax Purposes recognised the Isle of Man as one of only six countries to be awarded the top compliant rating during the second round of reviews and is currently one of only three to have been rated compliant in the first and second rounds of reviews. The rating is based on a peer review assessment carried out by a team of experts on behalf of the OECD’s Global Forum, which involves 147 jurisdictions.
The feeble revelations made public in the Paradise Papers has raised the spotlight on the offshore financial centers such as the Isle of Man. However most reasonable observers will see through the one-sided anti-offshore reporting and they will make an informed decision based on all the facts.
Peregrine Corporate Services Limited is licensed by the Isle of Man Financial Services Authority.