Moneywise: A bolt from the bleu: France’s bewildering decision to put Bermuda on tax haven list – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

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Moneywise: A bolt from the bleu: France’s bewildering decision to put Bermuda on tax haven list

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It was more than a little disconcerting to see the announcement that Bermuda was placed on France's tax haven list. One would think that there had to be a substantive reason for this pre-emptive label-tarnishing directly before the G20 meeting that just took place in St Petersburg, September 05, and 06, 2013, but none seems to be forthcoming.

Intrigued and concerned, I undertook just a little research on the web regarding large OECD nations (including France) in transparency and financial compliance actions to curtail corruption that turned up a number of interesting facts — making the French statement about Bermuda even more opaque and confusing.

Transparency International (TI) is the non-profit organisational movement (and watchdog) that relentlessly stirs the world's collective conscience by taking a stand against corruption and working with partners in government, business and civil society to put effective measures in place to stop corruption. At the onset of the G20 conference, TI called on the group to take Action on Corruption.

Each year, TI reviews research data on more than 100 countries and publishes the Global Corruption Index by country**. The research is focused on topical areas where corruption can be rampant: access to information, intergovernmental bodies, climate changes, health, poverty and development, politics and government, private sector, education, international conventions, whistle-blowing, and others. The data indexing score is such that the higher the score percentage on the scale to 100 your country receives, the higher the country compliance controls with resultant lower corruption reported.

Bermuda, discussed recently in this respect in the media and also in an article in Moneywise earlier this year, is at the upper end, earning an 88 percent score in the year 2012 TI report. Much more astonishing is that the transparency of our large immediate neighbours compared to Bermuda is separated by only one (one!) percentage point in grade between France (89 percent), the United Kingdom (90 percent) and the United States lagging with 86 percent. Yet, the Philippines, a country that scored only 22 percent, on August 31, 2013 was taken off the French government's blacklist of non-co-operative countries with respect to tax evasion and money laundering, according to Michelle V Remo, the Philippine Daily Inquirer.

In detail, then TI also narrates the corruptions challenges that each country still needs to resolve. According to the TI website (quoted) by country, France's list of challenges is as follows:

• Conflicts of interest between public office and the private sector are a serious concern. As of 2012, France has no law that obliges elected public officials to disclose potential conflicts of interest arising from business relationships or positions.

• Lobbying Rules. Established to regulate political lobbying and implement codes of ethics are unsatisfactory. No guidelines have been adopted to direct Members of Parliament's (MPs) dealings with lobbyists. There is also a serious lack of transparency between the work of MPs and lobbyists.

• Judiciary. France's judiciary lacks investigative authority, independence and resources. Judges face difficulties accessing classified documents to investigate cases. Judicial independence is also undermined by the executive's political interference.

Space does not permit me to list the corruptions challenges of both the United States and the United Kingdom, both of whom have also launched their share of critical zingers at Bermuda.

France has had some further challenges in the last couple of years in the tax avoidance, tax evasion and fraud by politically exposed persons area as well. The individuals in question have generated plenty of salacious headlines already, so no need to provide great enumeration except to point out that several individuals were connected to the leaders of current French ruling party. With so much written in French and global media about cracking down on tax evasion and financial corruption, these sideshows were a bit of a distraction.

So yes, that statement shot across the global bow from our European neighbour — the place where thousands of Bermuda residents (over the years) have gone to vacation, buy property homes, rave about the food, and the French cities and countryside experience in places like Provence, was a bewildering turn of events.

Can we conjecture that it was because of the G20 meeting? Is this just more political posturing? Who knows?

It has also been reported that well-known wealthy individuals in the arts and fashion have moved (or are contemplating moving) their residency from France to a more kindler, gentler tax environment — all legitimate tax planning, of course. The appropriate condemnations were made, very familiar and resembling political statements made in the US when another now famous wealth tech mogul chose to expatriate.

All of this activity and noise may be worth a few thoughts when all countries implement stringent fiscal transparency while stamping out corruption. But until then, is it just more posturing??

But, I am cynical and it is not going to happen. Bermuda is not a tax haven — that constant mantra is out-of-date and repetitious, revealing just exactly how far out of touch some individuals are. No, the tax haven moniker is moving on from the reach of the OECD, and tax compliance experts. ICIJ (the International Consortium of Investigative Journalism) revealed last week that the very wealthy and others still wanting more confidentiality, less restrictions and focused on keeping their financial affairs out of public scrutiny, are now relocating to places such as The Gambia, Latvia, Shannon Prefecture, Tibet, Nairobi, Kenya, and the Northern Territory, Australia. (From West Africa to Tibet, New Locales Enter the Offshore Secrecy Market by Sasha Chavkin.

Need I say more?

** Transparency International: Corruption by Country/Territory Profiles

Martha Harris Myron JP CPA PFS CFP is a Bermudian journalist and a cross border financial planning specialist. Offshore financial perspectives for international citizens living, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle: United States, Canada, United Kingdom, Europe, and the island of Bermuda, the premier international finance centre.

President of Pondstraddler? Life™ Consultancy.

Publications, Presentations and Seminars.

One would think there had to be a substantive reason for Bermuda to be placed on France's tax haven list before the G20 meeting took place this week in St Petersburg, Russia.
One would think there had to be a substantive reason for Bermuda to be placed on France's tax haven list before the G20 meeting took place this week in St Petersburg, Russia.

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Published September 07, 2013 at 9:00 am (Updated September 06, 2013 at 6:04 pm)

Moneywise: A bolt from the bleu: France’s bewildering decision to put Bermuda on tax haven list

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