Expatriate savers welcome announcements from the expat tax havens of Singapore and Hong Kong with recent compliance agreements making the Asian cities even more attractive to offshore tax havens.
A key issue that has emerged out of the recent worldwide financial crisis is the need for a firm crackdown on non-compliant offshore jurisdictions. Tax havens were prominent on the agenda of this year’s G20 meeting in London and the official communiqué of the meeting proclaimed, “The era of banking secrecy is over!”
What are expatriate tax havens? Simply put, tax havens are offshore entities that, through organized service providers such as insurance companies and legal firms, allow individuals and corporations to escape the regulation and tax requirements of their own countries. At present there are more than 70 recognized tax havens throughout the world.
How expatriates can reduce the risk associated with offshore savings. The Organization for Economic Cooperation and Development (OECD) have been tasked with establishing an effective system of reporting that can raise the standards associated with offshore savers. They have three main objectives:
0. Prevent tax avoidance
0. Prevent criminals from using jurisdictions to launder money
0. To protect legitimate individuals who utilize the benefits off offshoring their wealth legally and ethically.
During the April 2009 G20 summit, the OECD were tasked with publishing a list of tax havens that were believed to be incompliant with their standards. Three different groups of jurisdictions emerged; those that were not in compliance, those that were said to be committed to the regulations but had yet to meet the requirements, and those that were compliant. Both Singapore and Hong Kong were identified in this list as lacking transparency with their tax information and, as a direct consequence of this, became a risky proposition for overseas investors and savers.
However, shortly after the publication, both Hong Kong and Singapore agreed to comply with the OECD standards and thus openly exchange and share relevant tax information. This is positive news for any expat savers who fall into category three of the OECD’s objectives and are thus legitimate savers. Through complying with the directives, Hong Kong and Singapore are now much safer destinations for off shore savings and offer much less risk than those countries who fail to comply.
A full list of uncooperative tax havens can be found at the Centre for Tax Policy and Administration on the OECD website.
Read the full article: http://www.oecd.org/
