27 Jul, 2016
PM May must be careful not to tarnish offshore financial services reputation
British Prime Minster Theresa May should not “tarnish the offshore financial services industry’s reputation because of the BHS claims”, warns deVere Group's founder and CEO, Nigel Green.
Mr Green is speaking out after Mrs May, in an interview with The Times, has ordered a crackdown on individuals’ and companies’ use of offshore tax havens as part of her campaign to ‘reform capitalism’ following the recent BHS scandal.
Mr Green comments: “Clearly, there are very necessary and important questions surrounding the BHS situation. The whole affair also brings the spotlight back on to the real and serious global problem of tax evasion.
“However, I would urge the new British Prime Minister to be very careful to not tarnish the wider offshore financial services industry’s reputation because of the BHS claims. To do so would be unfair, damaging and hypocritical.”
He continues: “It would be unfair because whilst there might be a small rogue element in the offshore industry – as there is in all industries - the overwhelming majority of the sector only offers products and services that are entirely compliant and legal.
“Similarly, the overwhelming majority of those who use these products and services have no criminal intention and are quite simply and reasonably seeking greater investment returns, options and flexibility.”
Mr Green goes on to say: “Any suggestion the offshore world is inherently corrupt is also potentially very damaging as international financial centres are a vital cog in the global economy in many key ways.
“For example, they allow companies to avoid double taxation on the same income, they help facilitate optimum allocation of capital, they encourage an investment and savings culture, and due to their competitive tax regimes, it can be reasonably argued that they help promote lower tax policies in other parts of the world.
“In addition, they offer bona fide financial refuge for those who live in countries where there is economic instability, leading to, for example, major currency volatility and out of control inflation; and/or where there is political unrest and persecution from the ruling elite.”
He adds: “Furthermore, any suggestion that the wider offshore industry is inherently questionable would also be hypocritical. It must be remembered that tax havens aren’t just the traditional ‘treasure islands’. The UK, for example, is a major tax haven for Chinese and Russian nationals living in Britain. The UK is a tax haven for non-Brits to attract foreign investment.”
Mr Green concludes: “Of course we need a focused, joined-up, global approach to combat corruption wherever it is flourishing. But we must be careful not to assume that all offshore financial centres are by their very existence corrupt. Indeed, most international financial hubs are now largely well-regulated, cooperative and transparent.”
See also - ‘Significant volatility’ is the new normal