Nov 07 2011

Offshore jurisdictions fight back, with City’s help

Posted by: Nick Shaxson in: Thoughts

The Lawyer is running quite a long article about tax havens, citing arguments that they have recently been gettting a bum rap. It also looks in some detail at a thing called the Global Financial Centres Index, a fairly widely quoted index in this field. The message from offshore lawyers is upbeat, from their point of view: the offshore system is alive and well.

“generally they believe that the use of offshore structures has held up well in the past few years. “I don’t think there’s been a slowdown in the use of offshore jurisdictions,” says ­Conyers Dill & Pearman director John ­Collis. “We’re now seeing all the numbers beginning to climb.””

One lobbying organisation that has popped up recently is called the International Financial Centres’ Forum, which publishes what I consider a lot of one-sided arguments singing the praises of tax havens. (Doubtless they would be similarly critical of me. But if you’re in any doubt take a look at their arguments, then take a look at mine which probably provide the counter-argument you’re looking for – and make up your own mind.) The Lawyer speaks approvingly of the IFC Forum:

The offshore world is aware that it cannot rest on its laurels when it comes to representing its role in the functioning of the world economy. Lawyers have a key role to play here, being behind a number of profile-boosting initiatives such as the International Financial Centres (IFC) Forum, which seeks to “provide authoritative and balanced information about the role of IFCs in the global economy”.

The IFC Forum freely admits that they aren’t trying to win the argument through public debate – they prefer to wield their influence behind the scenes:

“Our strategy isn’t to go head-to-head in the popular press, but to reach out to ­policymakers,” adds [Stein, the Chairman of veteran Cayman-based law firm Walkers]. “We’ve had meetings with various sherpas for the G20 governments and also with a number of European and UK politicians to put the other side of the argument across.”

Back now to the Global Financial Centres Index, whose 2011 ranking puts the City of London in top spot, followed by New York, Hong Kong, Singapore and Shanghai.

This index is overtly a lobbying tool for this thing they like to call ‘competitiveness:’

Michael Snyder, Chairman of Policy and Resources at the City of London Corporation which represents UK financial services, said: “To maintain competitiveness, the UK must take action to address concerns over its corporate tax environment. The GFCI shows a change in emphasis of the areas of competitiveness. Currently, the regulatory and tax environments are judged to be the biggest contributors to overall competitiveness.”

(translation: a ‘competitive’ corporate tax environment means a low-tax environment.)

And who publishes this index?

The GFCI, conducted by Z/Yen for the City of London Corporation and with additional data from PricewaterhouseCoopers, is the first of what will be a biannual index of competitiveness for 46 world financial centres, charting how they rate relative to each other on an on-going basis.

Another anecdotal, yet still significant, indication of the strange role of the City of London Corporation plays in financial globalisation. More, of course, in Treasure Islands, and here.

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[…] weasel word ‘competitiveness’ again (read deregulated, light-touch, and low-tax.)  Next, who exactly is TheCityUK? “Our […]

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