Tuesday, November 14, 2017

Isle of Man - tax haven island

Offshore law firms regard the Isle of Man as one of its global headquarters and a place of choice for billionaires and businesses that want to avoid tax. It’s an island where hundreds of “straw” men and women will, for a small fee, stand in as the nominee directors and shareholders of shell companies – a legal, if increasingly dubious way, for the real owners of companies to obscure their real identities.  Manx companies have been used to transfer Kremlin-controlled state funds into Twitter and Facebook; they have obscured the financial connections between two Premier League football club owners; and they have been used to issue $1bn (£764m) of tax refunds to wealthy private jet owners, including sanctioned oligarchs from Vladimir Putin’s inner circle.  Alisdair Darling branded the island a “tax haven sitting in the Irish Sea”

 Manx banks hold €68bn of assets. Its anonymously owned, untaxed shell companies pump billions each quarter into financial markets. there are an estimated 25,000 active companies belonging to offshore owners in the Isle of Man.  Financial services represent more than 32% of the economy, insurance a further 14%. This has brought prosperity and a £1.8bn reserve. Yet poverty seems to be on the rise for locals without the proper connections.  Neal Mellon runs the Isle of Man’s first dedicated food bank. The number of parcels delivered has doubled every year, to 550 at the last count.
“More families are struggling,” he says. “There are people who just manage week to week, but you hit them with one crisis and they have nothing in reserve. The freezer dies, or the car needs fixing …”
Since the credit crunch, the number of banks with offices on the island has fallen from 34 to 20. Irish lenders in particular have withdrawn.
 Phil Craine, convener of Taxwatch explained “The City of London loves the crown dependencies because we are a cash cow for them,” says Craine. “We bring in investments from people all over the world which don’t sit here in the island, they go to London.”

“It looks as if the UK is still heavily subsidising the Isle of Man to be a tax haven,” said Richard Murphy, a tax campaigner and professor at City, University of London, after analysing the payments.

British money is being used not only to support low taxes. There are alarming signs of a rise in financial crime encouraged by lack of transparency and inadequate regulation. The island has been engulfed by a series of financial scandals. The island’s chief constable, Gary Roberts. In May, he sounded the alarm in his annual report. He described financial crime as a “genuinely strategic threat” to the future of the island.  He says the nature and scale of investigations engaging his force is “without precedent”.  “If you are going to play in the big world of offshore finance,” he told reporters, “you’ve got to have the infrastructure to support it.”

Leaked files showed that between 2010 and 2014 well-connected individuals in Moscow moved billions out of Russia into the western financial system. The cash flowed through UK shell companies registered on the Isle of Man. The National Crime Agency is investigating the scheme, during which Britain’s high street banks processed almost $740m. The largest payments, of $110.5m, went via a firm based in the Isle of Man.

0 comments: