While offshore banks in popular offshore jurisdictions like Belize is gasping for air, strangled by regulation after regulation – including the severing of relationship with Bank of America, there is a jurisdiction that seemingly can do whatever they want to do, the way they want it. Which offshore jurisdiction is it?
Introducing, the world's next top tax haven – the United States of America.
You may laugh at the silly statement, but we're also surprised knowing that the U.S. - with its controversial FATCA, a piece of law that requires Americans abroad to self-submit required reports on their U.S.-taxable activities – is NOT transparent with their data about foreigners who do business and make a living in the U.S
Found in the Tax Justice Network press release, it's said that the U.S. is among the Top 10 “bad boys” when it comes to tax transparency.
The press release is to inform the general public about Tax Justice Network's newly-released Finacial Secrecy Index 2015 – the list of jurisdictions sorted by the secrecy scores. High ranks in the Index means that the countries have high secrecy score.
If you guessed Switzerland, you're right: Unlike what the media reported to the public, bank secrecy in Switzerland is far from dead. There are visible changes – e.g. Signed the OECD's automatic information exchange agreement – but it's still the best offshore jurisdiction when it comes to tax secrecy.
That said, Switzerland sits on the top of the list, having the highest secrecy law.
After Switzerland, there is another popular offshore jurisdiction on the second spot, Hong Kong. Unlike Switzerland, Hong Kong hasn't signed the automatic information exchange agreement. Thanks to China control over the country, secrecy in the offshore jurisdiction remains intact.
Spot number three is controversial – and surprising. The offshore jurisdiction is namely the USA.
With strong policies adopted by the IRS, including punishing Americans abroad for 'hiding' their money, it's mind-boggling knowing the fact that they don't walk the talk. The Tax Justice Network mentioned that “though the U.S. has been a pioneer in defending itself from foreign secrecy jurisdictions... it provide little information in return to other countries, making it a formidable, harmful and irresponsible secrecy jurisdiction at both the Federal and state level.”
With the U.S. at number three, it's concluded that when it comes to secrecy, U.S ranks higher than the popularly and traditionally known as offshore jurisdictions, such as Cayman Islands (rank #5), Luxembourg (rank #6), Bahrain (rank #9) and Dubai/UAE (rank #10).
This fact begs a question: Why is USA pushing FATCA globally when it won't share its own data in return by signing OECD's automatic information exchange?
As expected, the answer is pretty undiscernable by the general public, so let us put it this way; based on what we read: The U.S. is already a tax haven for foreigners. Actually, the U.S. was going to sign up for the reciprocal tax cooperation – but seemingly backed off.. for now. Read the full analysis here.
U.S.' stubbornness is said by the Tax Justice Network as threatening the progress toward transparency. It's quite understandable, as – just like anything else in life – you need to lead by example. The U.S. is actively pushing its FATCA. But with no reciprocity, the leadership seems to be meaningless.
The Tax Justice Network puts it in the best possible way: “...Will the United States itself realise that if it doesn't play ball, others won't want to play either?”
Indeed, an issue worth thinking about.