27 Jan 2011

Hey Davos! What about the tax havens?

In the relatively recent world of online newspaper access, my day begins just before 6am with a rapid fire review of what’s around. The corner stone of this trawl, I don’t mind admitting, is the FT – the only organ for which I have succumbed to paying an annual online sub.

Scanning ‘Fleet Street’ in this way is a fast and rewarding experience. I still haven’t decided what I miss from not getting my fingers covered in ink. I do miss the tactile aspect of newsprint. Of course it also means that one can pick up stuff from such foreign organs as the New York Times, the Washington Post , Haaretz, and the Tehran Times.

The problem for a TV hack centres on how much of the stuff I pick up can quickly be advanced and built upon in a televisual medium.

So it is, in part thanks to a Swedish online fanatic and contact I tumbled upon the IKEA story in the FT this morning.

It’s a fine investigation led by three Swedish journalists and revealed on Swedish television yesterday. The shock of the tale is not the complex structure of the company and the clever mechanism by which it enables IKEA’s founding family to retain ultimate ownership of the world-wide flat pack emporium. No, the shock is that it confirms that in the very heart of the Europe in which we live, there is in the diminutive Principality of Liechtenstein, STILL a thriving offshore tax haven where tax avoidance remains a full time industry.

We have been repeatedly told by Brussels that Liechtenstein and its tax activities have been dealt with. Allegations of tax laundering by high street traders in Britain, let alone foreign owned companies, have been rife for many years. In recent years, successive UK Governments have claimed that these tax loopholes will be closed.

Then, thanks again to the FT, today the spotlight falls on the ultimate hedge fundista’s tax haven of the UK administered Cayman Islands. The British appointed Governor of the Islands has rejected claims by a former Scotland Yard lead investigator that the Caymans’ judiciary was involved in ‘wrongdoing’ in an abortive police corruption probe.

Yet today there remain tens of thousands of companies registered in this tiny British dependency which amount to no more than a nameplate. Those nameplates are for ‘tax purposes’ and locate some of the largest Hedge Funds and Private Equity outfits in the world.

There is no one who intersects with the UK’s current deficit related woes who does not know that if war were declared on these tax havens our financial position could be fast transformed. So why is nothing done? Why is it still permissible for British Citizens to avoid taxes by living, or locating funds in the Caymans, Liechtenstein, or indeed much closer to home in Channel Islands for ‘tax purposes’?

As the World Economic Forum opens in Davos, might it be a relevant question for the great brains assembled there? Don’t hold your breath!



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