The government is telling us to tighten our belts, but is it doing the same? Or do the Tories have vested interests in offshore tax havens?by Philip Clothier / October 20, 2010 / Leave a comment
Published in November 2010 issue of Prospect Magazine
The Cayman Islands: a tax-free paradise for Conservative donors, among others
In the Cayman Islands they are celebrating the end of one of the more scary windy seasons. The gigantic Hurricane Earl had promised to cause havoc, just as Hurricane Ivan had in 2004. But this time the islands were saved, as Earl swung away to terrorise the eastern seaboard of the US instead.
Meanwhile, a more serious threat has been hovering over the Caymans: the threat to its famous tax haven status. The issue is whether to let the Caymans continue as an offshore haven through which billions of pounds are funnelled, untaxed, around the world. The power to make any changes lies with Westminster, the ultimate political controller of this British overseas territory—and thanks to the financial crisis London has suddenly found itself with unusual leverage over the Cayman authorities.
The key to tax havens like Cayman is that they charge no income tax, no corporation tax and no stamp duty. Even better, they exempt some companies from tax for long periods in the future. They are also places with an extraordinary degree of anonymity, where companies don’t even have to file accounts on the public record.