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mARCH 2012 40 Legal Expert Board
Offshore Companies
Offshore companies have long been a popular option for businesses to make the most of attractive tax and financial frameworks around the world. However, there have been several legislative attempts recently at limiting the benefits that are available to companies looking to take advantage of such opportunities.
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uthorities around the world are pressuring jurisdictions to
remove secrecy laws which protect the confidentiality of clients using offshore services. Several countries have also signed tax agreements with some offshore jurisdictions in an effort to return unpaid taxes from private bank accounts. One such agreement was the deal signed by Switzerland and the UK in the latter part of last year. The deal is expected to secure £5bn of unpaid tax for the UK exchequer by 2015. The deal will mean that UK taxpayers with funds in Swiss bank accounts will have to pay tax rates of 48 per cent on income from investments, 40 per cent on dividends and 27 per cent on gains. The move is a bid by the UK government to stop people from hiding
the proceeds of tax evasion and is expected to come in to force in 2013, subject to Parliamentary scrutiny. People who have already paid their
taxes will not be affected, and under the agreement terms, existing UK taxpayer funds in Switzerland will have to pay a one-off deduction of between 19 per cent and 34 per cent to clear previous tax liabilities. According to the BBC, Dave Hartnett
of HMRC commented: "The world has changed for tax evaders. A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion” He continued:"We will secure significant sums of tax that some had thought we would never see." Other recent offshore news includes
recent research that has shown Jersey to be the favoured low-tax jurisdiction for the subsidiaries of FTSE 100 companies. Research by charity, ActionAid, and reported by the Telegraph in October, showed that out of the 100 companies listed on the London Stock Exchange, 98 of them use tax haven-based subsidiaries in throughout the world, with Jersey hosting the majority. The report also showed that the Cayman Islands rank second and Luxembourg third. Over the next few pages, as part of
Lawyer Monthly’s Legal Expert Board feature on Offshore Companies, we speak to several legal professionals experienced in this sector. Here they discuss the general issues surrounding this practice area.