Archive for June, 2009
Ties to home may over ride UK 90 day rule
(TIMES): Wealthy people planning to move abroad for part of the year to beat the 50% top rate of tax have been dealt a blow by Revenue guidance on becoming non-resident. However, guidance from HM Revenue and Customs (HMRC) in April indicated that non-residents may have to pay full UK tax if their lifestyles suggest they still have strong associations with Britain — such as membership of a UK gentleman’s or sports club — even if they meet the 90-day test.
Cayman signs UK tax deal
(CNS): Leader of Government Business McKeeva Bush has signed a double taxation agreement (DTA) with the UK on behalf of the Cayman Islands Government. The deal reportedly protects against the risk of individuals or corporate entities being taxed twice on the same earnings. Stephen Timms, MP, who signed on behalf of the UK, said that the agreement includes unprecedented provisions for tax information exchange. It was not stated, however, if a bi-lateral agrement will follow this deal.
In a statement from the Ministry of Financial Services, Tourism & Development Public Relations Unit, it was announced that the LoGB had signed the deal today (15 June) in a ceremony at the UK Treasury. The DTA, which is another type of bi-lateral tax agreement, is the first double treaty to be signed by the Cayman Islands. “We are very pleased to sign this agreement with the United Kingdom today as part of the Cayman Islands’ continued commitment to high standards of international cooperation and transparency,” Bush said.
Speaking about the UK’s advantage, Timms said that information exchange is a vital tool in ensuring that governments receive the revenues they need to resource the essential public services on which we all depend. “I would like to congratulate the Cayman Islands Government for signing up to an arrangement which includes unprecedented provisions for tax information exchange that meet international standards of transparency,” he added.
The agreement (see details here) places Cayman another step closer to the OECD’s requirement for a minimum of twelve agreements, which the new government has said it is committed to achieving not least in an effort to remove Cayman from the post G20 ‘grey list’. Cayman now has nine agreements in place. UK Permanent Secretary for Tax, Dave Hartnett said the information exchange provisions in this arrangement meet OECD standards of tax transparency.
Negotiations with the UK had been ongoing for a bi-lateral agreemen for several years but these had stalled. The previous government had accused the UK of constantly moving the goal posts with regards to that agreement and said that they had been seeking some form of commercial advantage for Cayman’s offshore industry before signing.
Speaking at what was the regular weekly press briefing prior to the election, the former Minister Alden McLaughlin explained that, while the government had been criticised for not signing treaties, the PPM administration had in fact been engaged in negotiations since they took office, but that did not mean they were able to be successful, adding that the government had to be very careful not to put Cayman at a commercial disadvantage. “We don’t want to put Cayman in a position of competitive disadvantage. We want to be compliant with OECD tax exchange standards but we don’t want to give away things other countries haven’t and then lose business,” McLaughlin said in April.
That view, however, has been disputed by some in the offshore community who questioned the wisdom of holding out on exchange agreements. They say that there is probably very little commercial advantage that the government can negotiate as in most cases Cayman is already getting all the business it is likely to get from a given nation, but that not having tax agreements is currently more of a disadvantage than the risk of losing a competitive commercial edge.
Richard Murphy of Tax Research UK, a critic of TIEA as ineffective in terms of cracking down on tax haven abuse, has dubbed this DTA treaty as useless frm the UK’s point of view. He said it was not a full blown DTA or a a full blown TIEA. "In fact the extraordinary thing is that the information exchange clause is far less onerous than a TIEA. So, for example, there is no reference to the need for the parties to be able to prove beneficial ownership of trusts, companies and other arrangements in their territories, which a TIEA should require," he wrote.
The tax watchdog said that the UK would have as many problems complying as Cayman and Murphy said it would do little to assist Gordon Brown in his camapign against tax havens.
Appleby absorbs Isle of Man’s biggest law firm
(Legal Week): Offshore legal, fiduciary and administration service provider Appleby has merged with Dickinson Cruickshank, the largest law firm in the Isle of Man. The firm will continue to be known as Appleby and the merger is to be effective, once all conditions are met, on 1 October 2009. Appleby is the first global offshore law firm on the island and the move will see Appleby emerge as the offshore law firm with the widest jurisdictional reach, and become the largest offshore law firm by number of partners.
Police urge teen to call
(CNS): Updated Monday 4:30pm — Detectives are now urging Yanique Conolly to contact them personlly following indicaitons by her relatives that they have been in contact with her and there have been some sightings of the teenager. Yanique was reported after last being seen outside the courthouse on Friday morning. Police said they would now like her to come forward and speak to them in person.Yanique is urged to contact officers at Bodden Town police station on 947-2220.
The seventeen year old girl who had reproedly not been in touch with her family since Friday (12 June) and who lives at Clearview Drive, Bodden Town, was said to have last been seen in the vicinity of the court building in George Town at around 10.30am when she indicated to her mother she would get the bus home. Yanique is described as 5ft 9ins tall, short black semi-curly hair, around 170lbs, brown complexion and has her nose pierced. She was last seen wearing white jeans pants, a pink blouse and black slippers.
Yanique or anyone aware of her whereabouts is asked to contact the police or her family to let them know she is ok.
Anyone with information about crime taking place in the Cayman Islands should contact their local police station or Crime Stoppers on 800-8477 (TIPS). All persons calling Crime Stoppers remain anonymous, and are eligible for a reward of up to $1000, should their information lead to an arrest or recovery of property/drugs.
UK’s economy is ‘best in Europe’
(BBC): The UK is in the best shape out of all the economies in Europe, according to a leading economist. Paul Krugman, who won the 2008 Nobel prize for economics, said that the UK’s economic policies had been "pretty good" and called them "intelligent". The government also deserved more credit for its policies, he said in an interview with The Observer newspaper. His comments come at the end of a week when the pound has risen to its highest level this year.But Professor Krugman believes the earlier fall in the value of sterling may have helped the UK.
Secret papers show Shell targeted Nigerian protesters
(The Independent): Serious questions over Shell Oil’s alleged involvement in human rights abuses in Nigeria emerged last night after confidential internal documents and court statements revealed how the energy giant enlisted the help of the country’s brutal former military government to deal with protesters. The documents, seen by the IoS, support allegations that Shell helped to provide Nigerian police and military with logistical support, and aided security sweeps of the oil-rich Niger Delta. Earlier this month Shell agreed to pay $15.5m (£9.6m) in a "humanitarian settlement" on the eve of a highly embarrassing US lawsuit.
Myners fights EU fund rules
(Times): CITY Minister Paul Myners has vowed to fight “tooth and nail” to revise a directive from Brussels that would give the European Union the power to set limits on how much hedge funds are allowed to borrow. The draft legislation has triggered panic in the industry and prompted several senior figures to threaten to leave London unless the legislation is radically altered. The European Commission unveiled the draft plans in April, saying that funds with “systematically high” leverage would be required to make additional disclosures on their use and source of borrowing and give Brussels and national authorities power to set leverage levels.
Shoe drops in Italy’s boot
The communiqué from the G8 finance ministers (one of the groupings of major rich countries that control the world’s capital and want to keep it that way) after their meetings in southern Italy this weekend contains some nuggets of information that Cayman should consider carefully.
The G8 finance ministers in particular called on others to:
-join their efforts to ensure global financial stability and an international level playing field (the G8 do not actually believe in a level playing field unless it is tilted in their favour, they make the rules and also own the ball);
-welcomed progress in the negotiation of tax information agreements; urged the development of an effective peer review mechanism to assess compliance with the OECD standards on tax information exchange;
-welcomed the Financial Action Task Force (asubgroup of the OECD) engagement with the G20 to fight against money laundering and the financing of terrorism;
-agreed to work with the FATF to improve international standards and their implementation; requested the FATF to report back in September 2009 on its progress in identifying uncooperative jurisdictions in the implementation of FATF standards;
-noted that reform of the global financial markets will require promoting transparency and strengthening regulatory and supervisory systems and noted the need for common principles and standards for propriety, integrity and transparency in the conduct of international business and finance.
Apparently, the G8 finance ministers do not consider the existing efforts of others (G20, the IMF, the World Bank, OECD, FSB, FAFT, IOSCO and other international organizations) sufficiently robust or fast enough.
And not enough countries are coming into line. So they agreed the “Lecce Framework”. This is to create a coherent and comprehensive framework, building on existing initiatives, “to identify and fill regulatory gaps and foster the broad international consensus for rapid implementation”.
And all designed to “strengthen the global market system”.
corporate governance
market integrity
financial regulation and supervision
tax cooperation
transparency of macroeconomic policy and data
executive compensation
regulation of systemically important institutions
credit rating agencies
accounting standards
cross-border exchange of information
bribery
tax havens
non-cooperative jurisdictions
money laundering and the financing of terrorism
the quality and dissemination of economic and financial data
The OECD will be introducing a programme assessing effective implementation of tax information exchange agreements and other arrangements. Whether or not Cayman is promoted to the white list, no longer will mere numbers be sufficient; rather, the test is how much information is flowing and are the recipients (requestors) of the information satisfied. Cayman needs to secure meaningful TIEA’s with key jurisdictions and to ensure that proper requests for information are executed promptly in accordance with the terms of the agreements.
The FATF will be conducting more assessments, and effective implementation will be front and centre stage, i.e. the number of prosecutions and convictions for money laundering offences and the size of assets frozen/seized. Cayman needs to enhance the effectiveness and speed of its enforcement.
Official corruption (bribery of public servants) and the laundering of the proceeds through offshore financial centres is being brought into the mix. The Cayman Anti-Corruption Law and the Commission go live 1 1 2010. The steps necessary to make this happen effectively on day one need to be taken without delay.
Cayman should focus immediately on expanding domestic transparency (e.g. publicly available information about regulated and unregulated entities) and revamping the Confidential Relationships (Preservation) Law into a holistic data and financial privacy law.
EUSD II is coming, and Cayman needs to start thinking seriously about its potential implications and planning accordingly.
There are many pressing matters on the new Government’s plate. But these particular issues are critical to the long term future and success of the financial services industry, a key revenue earner for the Government and the Islands generally.
So they should be at the forefront of the Government team’s thinking as it heads to Europe this coming week.
‘Ultracool subdwarf’ stars speeding through space
(The Telegraph): A recently discovered family of peculiar wandering stars may include a visitor from another galaxy, scientists believe. The stars, described as "ultracool subdwarfs" follow very unusual paths around our galaxy, the Milky Way. They have low temperatures and are small enough to be close to planet-like objects. Only a few dozen ultracool subdwarfs, which are up to 10,000 times fainter than the Sun, have been identified. One of the oddest aspects of the stars is the rapid speed at which they travel. They have been clocked at more than a million miles per hour. Professor Adam Burgasser said: "If there are interstellar cops out there, these stars would surely lose their driver’s licences."
Captain Underpants gets OTs
(CNS): In a recent shuffling of responsibilities at the Foreign and Commonwealth Office (FCO), Chris Bryant, the openly gay Welsh MP and former Anglican vicar, has replaced Gillian Merron as Parliamentary Under-Secretary of State with responsibility for Overseas Territories. Bryant was dubbed "the Captain Underpants MP” in the British press in 2003 after it emerged he had sent a photograph of himself wearing only underpants along with sexually explicit messages to a stranger through a gay dating website.
The image of Bryant showed him apparently taking a picture of himself in a bathroom mirror, wearing only a pair of Y-fronts. He later issued a public apology.
Bryant was also caught up in the ongoing scandal of MPs’ expenses, in which he apparently "flipped" (re-designated) his second home twice in two years, allowing him to claim almost £20,000 for renovations and fees.
The Telegraph reported that he has claimed more than £92,000 in second home expenses in the past five years. In 2004, he attempted to claim £58,000 – almost three times the annual maximum – to overhaul his second home in Porth, Wales, but the claim was disallowed.
In order to tackle the very high teenage pregnancy rate in the UK, Bryant has made the controversial suggestion that schools or education authorities should give out detailed information about sex and relationships to all parents of children from the age of nine or 10 upwards to encourage them to broach the subject with their sons and daughters.
In the House of Commons recently, Bryant argued that the well-known symbol of the Red Cross is an insulting reminder of the Crusades that could undermine the work of the international charity and should be replaced with a crystal.
According to the FCO website, Bryant was born in Cardiff in 1962 and brought up in Cardiff, Spain and Cheltenham. He read English at Mansfield College Oxford and Theology at Ripon College, Cuddesdon, before ordination in the Church of England in December 1986.
From May 2005 to June 2006 Bryant was the Parliamentary Private Secretary to the Lord Chancellor, Lord Falconer of Thoroton, then to Harriet Harman as Leader of the House of Commons from July 2007 to October 2008. He was appointed Deputy Leader of the House of Commons in October 2008.
He is an Associate of the National Youth Theatre of Great Britain and a member of the Co-op Party, Amnesty International, Amicus and the Fabians. He speaks fluent Spanish and good French. He lives in Porth in the Rhondda Fach.
The reshuffle took place on Friday (10 June) and Gillian Merron has now been made Minister for Public Health.