Joe Donohoe, a private client director at RBC Wealth Management, moderated the discussion, which was entitled "Mind, Management… and Morality?" He noted that: "In the famous Duke of Westminster case in 1935, the House of Lords declared that a man could order his affairs so as to reduce the amount of tax he was liable to pay so long as he did so by legal means. But is that still the case? In recent years it has appeared that a man can only legally reduce his tax bill so long as the amount he pays satisfies a test of fairness determined by public opinion.”
High standard of regulation
Paul Patterson, head of global trust,said: “There have been three main criticism’s aimed at offshore centres in recent years: that they harbour criminal activity; that they are used to escape paying tax; and that they have an unfair competitive tax edge.
“In response to the attacks, international financial centres have ensured a high standard of regulation and become more transparent when needed, signing up to international standards and tax information exchange agreements. 66 countries have implemented Organisation for Economic Co-operation and Development (OECD) recommendations and a further 20 countries have committed to do so. Tellingly, all IFCs have taken action. If any IFCs still aid criminal activity, they are not long for this world.
“The accusation that offshore centres have an unfair tax advantage is also unfounded. The G20 countries compete with each other for wealth, people, talent, capital and they use tax incentives to do this. This is exactly what the resident non domicile regime in the UK does. Indeed, in the current financial situation, I expect we’ll see governments continuing to compete aggressively including in the tax arena. This will benefit individuals and businesses as proper tax planning and advice will be stepped up.
“IFCs allow businesses and wealthy families who are becoming increasingly global, working and living cross country borders, to plan their financial affairs effectively. The future of offshore centres is not about laundering and evasion, it’s about safety, stability and professional advice.”
Key role in financial system
Meanwhile, commenting on the economic value of offshore financial centres, Alan Binnington said: “Evidence suggests that offshore centres have a key role in the financial system, increasing competition, increasing credit, and providing support and growth for nearby onshore centres, for example Mauritius and India, Hong Kong and China. Offshore centres also make it easier for small to medium enterprises, the generators of income and drivers of our economy, to access capital more easily.
“As well as an economic benefit, offshore centres are ideal for philanthropic structures, funding charity projects at home and in developing markets. It is not right to perceive offshore centres as having no social value.
“Far from being exclusive tax havens, offshore financial centres contribute massively to the social and economic well-being of onshore jurisdictions. Morality campaigns against offshore centres may ultimately be detrimental to the global economy.”
