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Worst fears realised? Jersey shares ‘old’ records of trusts and foundations

Life’s full of surprises, some pleasant, some not so much. Imagine you had undeclared offshore assets when the global financial crisis struck, and you’ve nervously watched the world move towards TJN ‘s proposal for multilateral, automatic information exchange. Until now you’ve probably felt ok, and that you had a choice between two moves. Either you could say ‘Ok, the game’s up – I’ll use an amnesty or some kind of disclosure facility, and go straight’; or you could decide to keep hidden, using the new loopholes that are being actively promoted in Switzerland and elsewhere.

21870055935_0a6dfe5d22_bYou probably weren’t worrying too much about the past though. Information exchange will relate to existing holdings, so you just need to get things lined up before it kicks in (from September 2017 or after). But as India’s Economic Times reports,

“The worst fear of those with secret offshore bank accounts and private trusts is coming true — some tax havens are ready to part with ‘old’ records and even details of trusts and foundations that no longer exist.”

Jainism and Ethical Finance

May 16, 2017   AllAsia, Blog

“The financial crisis of 2008 has led to a re-evaluation of the role of financial institutions and their relationship with the wider economy and society. There is an increased questioning of both the conduct of business itself and the principles behind commercial and financial activities. Yet non-western voices have been notably absent from this debate, as have alternatives to the dominant western-derived economic ideologies.”

This is part of the description of a new book by Senior Lecturer in Accounting & Finance at the University of Suffolk, Atul K. Shah PhD (also author of ‘Celebrating Diversity’). His latest book is co-written with Dr Aidan Rankin and is called Jainism and Ethical Finance: A Timeless Business Model.


Vietnam legislates on country by country reporting

April 24, 2017   AllAsia, Blog

There’s a good development in Vietnam we’d like to share with you via Policy Advisor Economic Inequality and Tax Justice Francis Weyzig of Oxfam Novib. He says,

“Vietnam has introduced a legal requirement for domestic subsidiaries to provide a copy of the global Country By Country report directly to the Vietnamese tax authority. This way, Vietnam does not have to rely on tax treaties or information exchange agreements to the get information on foreign parent companies. It provides a great example for other countries to follow, so congratulations to my colleagues in Vietnam for this great milestone!”

The decision by Vietnam to require local filing by multinationals that wish to operate there is exactly what we have argued countries should do – instead of getting bogged down in the complexities of an OECD process that may never yield any data.Vietnam

Banking Secrecy in China, its related territories and Taiwan

Foreword. The Tax Justice Network is a non partisan network of experts working towards transparency, so we do not take any position about countries’ territorial and political claims.

However, we do expect countries with a de jure (legal) or de facto (in practice) influence over other territories, to take responsibility for their power. We point fingers at the UK for the secrecy of the overseas territories and Crown dependencies (Cayman Islands, BVI, etc.), against the U.S. about the U.S. Virgin Islands and Puerto Rico, and now it’s time for China, its related territories and Taiwan.

Hong Kong, Macao and Taiwan are becoming great risks for global transparency, especially when it comes to automatic exchange of bank account information. (It is not clear how much power China has to influence Taiwan’s laws or what role it has played in keeping Taiwan out of the relevant international agreements. Regardless of who is to blame, participation in global automatic exchange should be ensured for any country accepting deposits and investments from non-residents).

Hong Kong

This former British colony under the current control of China was ranked 2nd in TJN’s Financial Secrecy Index 2015. While it has committed to implement the OECD’s  Common Reporting Standard (CRS) for automatic exchange of banking information in 2018, it has also decided to make it harder for other countries to obtain information from Hong Kong banks. Instead of signing the Multilateral Competent Agreement (MCAA) – that would have facilitated the automatic exchange of information with over 85 signatory jurisdictions – Hong Kong has chosen the bilateral route. Any country willing to obtain information from Hong Kong will have to manage to sign a bilateral agreement with it.

So far only the UK and Japan have come to such agreements with Hong Kong. However, in view of the potential sanctions by a future blacklist of the European Union (EU) and the OECD, Hong Kong is now considering signing (bilateral) agreements with other countries, especially with EU countries. Apparently signing the MCAA is also under consideration. 

On top of the current bilateral approach to implement automatic exchange of information, Hong Kong is choosing “voluntary secrecy”. Others like Cayman Islands are also choosing “voluntary secrecy”, but at least they have signed the multilateral competent authority agreement (MCAA), so other countries should find it easier to obtain information from them.

“Voluntary secrecy” consists of countries choosing to send banking information to other countries, but refusing to receive it. This voluntary secrecy makes obviously very little sense in a new transparency initiative like automatic exchange of information because these countries could simply receive the information and then do nothing with it or simply throw it away. Instead, they want to legally ensure secrecy, either to promote their “fake” residency certificates in exchange for money (to allow foreigners to acquire their residency certificates and then lie to their banks about where the actually live) or to prove that they are not interested in either tax collection or the combat against money laundering and corruption. The OECD contemplates this “voluntary secrecy” by allowing countries that signed the MCAA to choose to be listed under Annex A. However, they are likely so ashamed of it – or they want to protect tax havens that chose this – that the OECD does not simply list the countries that chose voluntary secrecy. Instead, anyone interested in finding out who chose not to receive information has to look into the specific list of “activated exchange of information relationships” of each of the +100 countries that committed to the CRS. On each country’s list, one would have to compare (i) the countries from which each jurisdiction is receiving information, to (ii) the countries that each jurisdiction is sending information to. In the case of Hong Kong, its list of activated Exchange of information relationships shows that Hong Kong will send information to the UK and Japan, but will receive information from no country (not even from the UK and Japan). This proves it chose “voluntary secrecy”.


Macao was ranked 11th in the FSI 2015 edition. It has also committed to implement the OECD’s CRS for automatic exchange of information in 2018, but so far it hasn’t either signed the multilateral competent authority agreement (MCAA) to implement the CRS nor started to sign bilateral agreements (like Hong Kong did). It is still uncertain what route Macao will take (including “voluntary secrecy”), so we will give it the benefit of the doubt. 

Mainland China

China was ranked 20th in the FSI 2015 edition. While its secrecy score is not as bad (as opaque) as that of Hong Kong and Macao, it still has room for improvement. China is now a party to the OECD Multilateral Tax Convention on Administrative Assistance in Tax Matters which serves as the legal basis to implement the OECD’s CRS for automatic exchange of information. China also signed the Multilateral Competent Authority Agreement (MCAA) to implement the CRS. However, it has not extended the coverage of either treaty to Hong Kong or Macao. This means that without pressure, Macao may follow Hong Kong and sign bilateral treaties to exchange information automatically. 


After news about Taiwan becoming a tax haven, TJN started assessing its legal framework in the 2015 edition of the FSI. Given the lack of external assessments of Taiwan’s legal framework, Taiwan could not be ranked in the FSI, although its range of potential “secrecy score” (how secretive its legal framework is) is among the worst secrecy jurisdictions (or “tax havens”).

Taiwan has not even committed to implement the OECD’s CRS for automatic exchange of banking information let alone signed the multilateral competent authority agreement to implement it. On top of everything, Taiwan is exploiting this voluntary self-exclusion to promote itself as a tax haven. An email sent to the Tax Justice Network by a Taiwan Company told us the following

“almost all the countries will participate in this international reporting system in 2017 or 2018 but Taiwan will not, so we can provide the client a clever way to perfectly hide their asset in Taiwan. We search online recently the websites about offshore tax haven and read about your article about un-noticed tax haven—Taiwan (…)

The world famous tax havens such as Cayman and the Virgin Islands are the first countries to sign CRS, January 1, 2017 from the implementation, and promised to complete the first exchange in 2017; even the tax evasion protagonist Panama, for fear of G20 countries on its economic sanctions, and therefore on April 17 to join, with China, Hong Kong, Singapore, have become the second batch of signatories, starting next year. In the future there will be a third wave, the fourth wave of countries have joined, but Taiwan has not heard any relevant discussion, customers in Mainland China, Japan, Hong Kong, Singapore have noticed that Taiwan has not yet joined.”

 The OECD should address this urgently.


Automatic exchange of information is a clear improvement towards transparency, in spite of all of its loopholes (especially lack of access by developing countries). However, if major financial centres like the U.S. and now also China, its related territories and Taiwan are off the hook, it is uncertain whether it will have any impact at all. Sanctions seem to be the only way to encourage global participation.

Now, do you understand why TJN (sadly) laughed at OECD’s comments about the “end of banking secrecy”?

Photo credit: Barbara Willi on Flickr under a creative commons license. 

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