UK tax havens will likely come under increasing pressure in the coming months. Recent informations published by the British press have revealed that Prime Minister David Cameron has sent a letter to the Governors of the ten British Crown Dependencies, in which he called for a greater level of transparency. In the mentioned letter, the Prime Minister pointed out:
“I respect your right to be lower tax jurisdictions. I believe passionately in lower taxes as a vital driver of growth and prosperity for all. [...] But lower taxes are only sustainable if what is owed is actually paid - and if the rules to achieve this are set and enforced fairly to create a level playing field right across the world. There is no point in dealing with tax evasion in one country if the problem is simply displaced to another.”
Likewise, David Cameron encouraged the leaders of the British tax havens, including such significant offshore jurisdictions as the British Virgin Islands, Cayman Islands and Gibraltar, to move towards a greater level of transparency, allowing access to the names of the owners’ offshore companies.
For now, this letter is only a recommendation, but it is an indicator of the intentions of the British Government, which for the first time in history seems determined to promote transparency and exchange of information. However, for this initiative to succeed, it would be necessary to get similar commitments from all the other independent tax havens, since otherwise any legal change promoted by the UK alone would simply result in the flight of businesses and capital to other jurisdictions. And the possibility of tax havens committing to their self-destruction is a very unlikely scenario.
However, it cannot be denied that winds of change are blowing lately in many European governments, particularly interested in reducing their public debt by increasing their tax revenue. But will the large financial and business lobbies allow substantial changes in their play field? Or are possible changes once again to be limited to the “small fish” only? Possibly, some of these questions begin to be clarified during the next G-8 summit, where it is expected that new measures against tax havens and offshore secrecy may be proposed.