Wednesday, March 17, 1999 Published at 07:21 GMT
Business: The Economy
Testing times for tax havens
Bermuda will have to tightly regulate its financial sector
Life may not be so sweet from now on for business owners and investors who enjoy the benefits of UK tax havens.
The UK is under pressure from the European Union and the Organisation for Economic Cooperation and Development (OECD) to get tougher with those offshore financial centres that have attracted wealthy investors with the lure of little or no direct taxation.
£400bn in assets
It is estimated that Britain's 13 remaining Overseas Territories could be a tax haven for assets worth as much as £400bn. They include the Cayman Islands, Virgin Islands, Bermuda and Gibraltar. Grand Cayman is the world's fifth largest financial centre.
The moves to clamp down on tax havens are part of wider EU moves to create a more a level playing field for businesses across the region - which has also seen the push to eliminate duty-free retailing and calls for harmonisation of tax rates among member nations.
It is anticipated Foreign Secretary Robin Cook could offer full citizenship and British passports to haven residents in exchange for their agreeing to tighter financial regulation.
Tom Russell, UK representative for the government of the Cayman Islands, and a past Governor of the territory, maintains the majority of businesses located in the Caymans are legitimate and that a regulatory crackdown would not cause them too many problems. He sees the possible extra administrative burden as the main concern.
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