News from Anguilla
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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 Anguillas 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 dont 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, Im 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 Anguillas 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 Governments 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 weeks time, we get an important visit ourselves. As called for in the White Paper, Anguillas 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 Anguillas legislative and regulatory framework to ascertain the extent to which it adheres to internationally accepted standards including the FATFs 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 arent 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, Anguillas 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 Anguillas 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 Anguillas compliance with the 40 FATF recommendations as well as the CFATFs own 19 recommendations. (Anguilla has provided technical assistance and manpower to perform reviews of other territories in the past; what goes around )
Part of Anguillas 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 OECDs (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 OECDs 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 OECDs 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 OECDs 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, lets 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 Londons lucrative Eurobond market than in the Overseas Territories.
Next, an "Opinion" from the same source: Devil
take the hindmost.
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
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?
Apologies for those looking for scam news - no time, no space - still plenty
out there though!