tax justice network again names switzerland

However, in a statement accompanying the release of its latest league table of "secrecy" jurisdictions, the TJN cited the United Kingdom as "the most important global player in the financial secrecy world" even though it is ranked only 21st.

That’s because the UK "supports and partly controls a web of secrecy jurisdictions around the world, from Cayman and Bermuda to Jersey and Gibraltar", the TJN statement explains.

"Had we aggregated the entire British network, it would easily top the index, far above Switzerland."

"Claims" in September by British Prime Minister David Cameron that the UK’s "tax havens" are no longer are a concern "are baseless", the TJN went on.

"Our research demonstrates that while the British Virgin Islands, Cayman Islands and some other British jurisdictions have recently curbed some secrecy offerings, others have expanded theirs."

The 2013 Financial Secrecy Index is the third to be compiled by the TJN since 2009. The index combines a so-called "secrecy score" with a weighting system based on each jurisdiction’s share of the global market for offshore financial services.

Switzerland topped the index in 2011 as well. In 2009, the TJN awarded top honours to the US state of Delaware, citing its "commitment to corporate secrecy, and resolute lack of cooperation and complilance with international norms". This year the US was in sixth place, down from fifth place last year (see table, below).

Luxembourg, Hong Kong and the Cayman Islands occupy second, third and fourth positions this year, as the Caymans dropped from second place to fourth. 

No. 1 out of 82

In this year’s index, Switzerland topped the secrecy index because it scored the most number of "secrecy points" of the 82 jurisdictions surveyed, with a score of 78 out of a potential 100. Switzerland is said to account for slightly less than 5% of the global market for offshore financial services.

Areas in which Switzerland was considered to have fallen short included what the TJN said was its "failure" to implement measures aimed at curtailing bank secrecy; failure to disclose or prevent trusts and private foundations; failure to avoid promoting tax evasion; and for having having fewerthan 46 tax information exchange agreements that comply with the Organisation for Economic Cooperation & Development’s minimum standard.

“Switzerland’s 78% secrecy score shows that it must still make major progress in offering satisfactory financial transparency," the TJN explains on its website.

"If it wishes to play a full part in the modern financial community and to impede and deter illicit financial flows, including flows originating from tax evasion, aggressive tax avoidance practices, corrupt practices and criminal activities, it should take action on the points noted where it falls short of acceptable international standards.”

‘Some positive trends’

The TJN admitted that there were some "positive trends" in evidence since it last took the measure of the world’s financial services jurisdictions. Public tolerance for offshore financial secrecy has fallen sharply in many countries, and more countries are signing up to the OECD/Council of Europe’s Multilateral Tax Convention, the European Union’s Saving Tax Directive, and the United States’ Foreign Account Tax Compliance Act, it concedes.

Still, "the [Financial Secrecy Index] reveals that overall, financial secrecy remains alive and well…while some welcome promises have been made and modest improvements seen, we remain light years away from eeing the transformative changes the world so urgently needs." 

Other key points:

• The UK’s recent crackdown on tax evasion and avoidance enabled it to drop to 21st place this year, from 13th in 2011 and fifth in  2009; it nevertheless remains in the TJN’s line of fire for its role in, the TJN claims, enabling secrecy to survive in such UK Crown Dependencies and Overseas Territories as Jersey, the Cayman Islands and Gibraltar
• Lebanon, Bahrain and Dubai are among the Middle East countries which appear on this year’s Secrecy Index, in seventh, 13th and 16th places respectively.
• Lower down the TJN’s scale of "low to mid-range secrecy" are such major global financial players as India (32nd) and Ireland (47th).

The TJN estimates that $21trn to $32 trn of private financial wealth is located "untaxed or lightly taxed" in secrecy jurisdictions around the world. Illicit cross-border financial flows, it says, add up to an estimated $1trn to $1.6trn each year.

To view the TJN ranking on the Tax Justice Network’s website, click here.

TJN’s Financial Secrecy Index

                           Source: Tax Justice Network