Asia-Pacific, Boston Consulting Group, HNWI, Hong Kong, OECD, offshore, offshore banks, offshore wealth, Organisation for Economic Co-operation and Development, private banking, secrecy, Singapore, Tax Information Exchange Agreement, Tax treaty, UHNWI
Offshore wealth is now at 8.5 trillion dollars – a rise of 6.1 percent – and is expected to reach 11.2 trillion dollars by 2017.
According to the Boston Consulting Group the top three destinations for this money are Switzerland, Singapore and Hong Kong; who together have only managed to muster a total of one Tax Information Exchange Agreement (TIEA) out of the 800 currently in force.
Read the full report here:
Is there a correlation between this fact and the increasing popularity of these countries among High Net Worth and Ultra High Net Worth Individuals?
Besides the fact that they, along with their competitors in the rest of the offshore world offer discretion; and a broad, specialised and diversified suite of private banking services and expertise; these countries have a large and growing network of double taxation agreements.
They know that tax treaties are integral to providing asset solutions to the rich and mobile. TIEAs, on the other hand, add nothing to the profile of these destination countries for offshore wealth. Instead they know that in the marketplace TIEAs serve only to dilute their business brand.
This is especially so since the global standard on tax information exchange, contained in TIEAs, is reflected in their tax treaties, most of which, over the past five years, have been systematically updated in line with the OECD standard.
Why else would they have secured a passing grade in their OECD Phase 1 Assessments which determines whether a country has the requisite number and type of agreements demonstrating their commitment to the international standard.
Search OECD Reports here: http://eoi-tax.org/jurisdictions/CH#agreements
The moral of this story is:
OFCS need to stop diverting their national wealth, which is after all the collective wealth of their people on TIEAs that were never expected to provide the definitive solution to lack of access to confidential taxpayer information.
OFCs need to stop blindly fuelling the work programme of the OECD especially when these plans seem only to gain momentum, even among its own membership, under threat of sanction by the G-20.
By now, OFCs ought to have recognised that, in the past five years since the TIEA programme was re-launched, precious little has changed; and what was before has only been reinforced. Indeed the OECD itself has said it is still too early to gauge the success or otherwise of these agreements and now has its eyes firmly fixed on populating its own multilateral convention on information exchange and the global FATCA+ agenda.
Most importantly, however, OFCs need to note that with the rise in HNW and UHN individuals projected to come from the Asia-Pacific region and not the West, it is unlikely that they will gain any part of this new market if they continue to focus their attention and resources on trying to measure up to shifting OECD standards and not minding their own business.