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Jurisdiction review | 29
The Stop Tax
Haven Abuse Bill
A leading Jersey lawyer assesses the possible
impact of changes mooted by the President-elect
by Stephen Platt,
Chairman of the BakerPlatt Group
O
n 17 February 2007, American jurisdictions which, in the judgment of the challenge, or at least without taking significant
Senator Carl Levin introduced Treasury Secretary, have ‘corporate, business, personal risk.
a Bill entitled the ‘Stop Tax bank, or tax secrecy rules and practices which… The Government can also take into account
Haven Abuse Act’. It contains unreasonably restrict the ability of the United whether or not the country has been identified as
provisions aimed at combating States to obtain information relevant to enforce- uncooperative by an inter-governmental group,
what Levin described as the ment’. As well as providing a statutory framework or organisation of which the US is a member.
$100 billion per year drain on to determine what an ‘offshore secrecy jurisdic- Whilst some may argue that this is a sound basis
the US Treasury from offshore tax abuse. When tion’ is, the Bill includes a list of 34 countries for making such a determination, the fact
Levin introduced the Bill he did so with the stat- which will, upon enactment, be automatically remains that some of the countries on the list,
ed support of two other senators: an individual considered as such. The list includes Jersey, such as Jersey, have not been identified as unco-
called Coleman and one Barack Obama, the Guernsey and Isle of Man. operative by any respected international organi-
President-elect of the United States. The ‘rules and practices’ referred to within the sation (quite the contrary).
On 22 September, in a speech in Wisconsin, definition are those that inhibit access of law
Obama said, “We lose $100 billion every year enforcement and tax administration authorities Content of the Bill
because corporations get to set up mailboxes off- to information on beneficial ownership or ‘other Whilst it is not possible to detail every provision
shore so that they can avoid paying a dime of financial information’. The latter appears to be a contained in the Bill, it is important to outline
taxes in America. Imagine if you got to do strikingly broad description. some of the key measures contained within it.
that……I will shut down those offshore tax The existence of a treaty on tax information The Bill is split into four sections. The first, and
havens and corporate loopholes as President, exchange or another agreement will be consid- main, section is titled ‘deterring the use of tax
because you shouldn’t have to pay higher taxes ered a sufficiently ‘effective information exchange havens for tax evasion’. It creates a rebuttable pre-
because some big corporation cut corners to practice’ where it provides for ‘prompt, obligato- sumption, for internal revenue code and securi-
avoid paying theirs.” Since Obama has subse- ry and automatic exchange of information fore- ties law purposes, that a US person who either
quently made it to the White House many com- seeably relevant to the treaty, and such formed, transferred assets to, was beneficiary of
mentators consider the Bill may gather an information is adequate to prevent tax evasion in or received money or property from an entity in
unstoppable momentum. the United States’. an offshore secrecy jurisdiction exercised control
The Bill is not only bullish in its aim, which is Another quite broad definition. It is clear that over that entity, irrespective of the corporate veil.
to prevent tax evasion. Its prime target is ‘off- the dice are being loaded in favour of the US Consequently, any amount or thing of value
shore secrecy jurisdictions’. This is defined as authorities with limited rights of appeal or received from an offshore secrecy jurisdiction
www.investmentinternational.com January 2009 Investment International
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