Obama Victory could threaten financial industry in offshore jurisdictions including British Virgin Islands
On November 4, the elections are held in the United States. It is unknown yet who is to be elected as the next president, but it is clear that in any case he will have major impact on global issues. Some persons take a view that a Senator Barack Obama victory could be a particular threat to offshore centres, including the British Virgin Islands, because he made certain efforts to shut them down.
Almost a year ago, in February 2007, Obama co-sponsored the ‘Stop Tax Haven Abuse Act’, which was introduced by Senator Carl Levin. The provisions of this Bill outline a series of measures to crack down on offshore jurisdictions. The Bill is targeting “offshore secrecy jurisdictions”, defined as countries having ‘corporate, business, bank, or tax secrecy rules and practices which… unreasonably restrict the ability of the United States to obtain information relevant to enforcement’. The list of 34 countries is included which will be considered as such upon enactment of the act, including, among others, British Virgin Islands, Cayman Islands, Dominica, Grenada, Bahamas, St Kitts and Nevis, Turks and Caicos Islands.
In his speech in Wisconsin on September 22, Obama spoke on this Act saying: “We lose $100 billion every year because corporations get to set up mailboxes offshore so that they can avoid paying a dime of taxes in America. Imagine if you got to do that… I will shut down those offshore tax havens and corporate loopholes as President, because you shouldn’t have to pay higher taxes because some big corporation cut corners to avoid paying theirs.”
The Bill is thought to reduce the incidence of tax evasion in the US, but there is also an opinion that it will go too far and prevent legitimate individuals from using legitimate financial services, and that the purpose of the document is not to stop the abuse of offshore financial services but exercise control over large pools of development capital.