The UK's David Cameron announced that Britain's 10 crown dependencies and overseas territories--Cayman Islands, Bermuda, Jersey, Gilbraltar, Anguilla, Turks and Caicos Islands, Guernsey, Isle of Man, and the British Virgin Islands--would sign on to the OECD's multilateral convention on Mutual Administrative Assistance in Tax Matters. They also agreed to "produce action plans about providing information on who owns which companies and who benefits, the so-called beneficial ownership." Wall St.J., June 17, 2013, at C3.
While many vacationers may know most of these spots because of their location in tropical paradises, most tax practitioners recognize them as key linchpins in tax avoidance plans of many wealthy individuals, banks and corporations. As many as 18,000 corporate offices are located in mailboxes in a three-story building in the Caymans, all with a few Cayman laywers as their principal directors. And of course one of the reasons these tax-haven countries are in demand is that they have both very low taxes and a good deal of secrecy about just who owns what.
Signing the OECD tax convention won't solve all the many problems that revolve around tax haven and banking secrecy jurisdictions. The exchange of information provisions, while an advance over no agreement to exchange information, are still far too difficult to bring into play without having some information about owners and account holders.
But getting these tax haven jurisdictions on board the convention is a first step in the right direction, just as the signing of the convention by other tax haven and banking secrecy jurisdictions like Singapore earlier this year was. One can't help hoping that it is a signal that these tax haven countries realize that tax secrecy ultimately will not be a great way to maintain a stable economy and they will eventually need to produce something useful besides tax avoidance regimes.