UK Targets Deposits in Tax Havens

After the US, the UK seems to be targeting the unaccounted money in offshore deposits. The UK government intends to impose taxes on new deposits offshore. The authorities are expecting to raise at least 10 billion pounds (approx. $16 billion) over next five years up to 2015.

UK Chancellor George OsborneDiscussions are on with Switzerland, famous for its bank secrecy laws, to impose tax on new deposits. BBC reported the UK government is in talks with three such tax havens which are not identified yet. Though Guernsey, Jersey and Isle of Man have denied that they are approached by the British treasury, the UK has already signed agreements in August 2009 with these countries including British Virgin Islands to exchange information of British citizens’ deposits in their banks.

Britain’s HM Revenue & Customs (HMRC) signed agreement with Liechtenstein in the same month, another most favorite country for tax evaders. It was expected that at least 5,000 British investors (not ordinary citizens) had deposits in Liechtenstein worth 3 billion pounds (approx. $4.84 billion)

According the agreement reached with Liechtenstein, the investors will be allowed a chance to reveal details of their deposits, which will be taxed at 10% over the past 10 years. If the investors do not come forward they will lose their deposits in their accounts. Those who reveal, it seems they do not have alternatives except shifting their accounts to other tax havens, will have to pay interest also on the evaded tax over the past 10 years.

The first conference of G20 after the financial crisis broke out in 2008, vowed to make accountable the tax havens in a bid to overcome the credit crunch at that time. So far, the US and the UK only made progress, how small it may be, in that direction.

The Emerging Market Economies like India have more such citizens, who habitually deposited their wealth in tax havens over decades. Indian government declined twice to reveal the names of bank debt-defaulters due to security reasons (!). Both the present government and the BJP (now in opposition) government did secure the names of debt-defaulters, whose debts were later converted into non-performing assets and finally abolished.

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