The report recognises the niche positions of a number of the jurisdictions in their respective financial markets, including Bermuda’s position as the third largest reinsurance centre in the world and Gibraltar’s offering as a gateway to the European single market. It also identifies a number of areas of significance that these jurisdictions have to the UK, including positive benefits in terms of increased cashflow and reputational risks including if a jurisdiction fails to meet international standards on taxation, financial regulation or fighting financial crime.
The report highlights some key areas where further progress is required from the jurisdictions in dealing with both internal and international risk, for example the need for some jurisdictions to take urgent measures to ensure that robust economic planning and fiscal control measures are in place.
The review also commissioned an evaluation from Deloitte of the importance of these jurisdictions in tax avoidance by UK corporates. Deloitte’s report tentatively concluded that many of the jurisdictions differentiate themselves from the international consensus on tax arrangements and concluded that there was a case for removing those differentials. Deloitte recommended that each jurisdiction that does not currently operate a goods and services tax regime should introduce one, and that the jurisdictions should also introduce (to the extent they do not already have one) a properly constructed corporation tax system.
The report highlights the need for these jurisdictions to meet international standards in tax transparency and prevention of financial crime and notes that although the majority of the jurisdictions currently have good standing in this regard, minimum standards continue to rise and they need to maintain that position.
