The Tax Justice Network compiled a 2015 index of the world’s offshore havens showing 2 Asian countries, Hong Kong and Singapore, rising from their previous ranking for financial secrecy. The Chinese territory is currently in the number 2 spot, trailing behind Switzerland.
According to the Tax Justice Network that is based in London, both of these financial hubs in Asia have made insufficient reforms to their corporate secrecy regimes. If you must know, the TJN campaigns for transparency in terms of finance. In the previous index made in 2003, Singapore’s ranking has moved from the 5th place to the 4th place; meanwhile, Hong Kong was in the number 3 spot.
The TJN said, “Singapore, in fourth place, poses many of the same threats that Hong Kong does: a lack of serious reforms to its corporate secrecy regime; a lack of interest in creating country- by-country reporting or in creating public registries of beneficial ownership.”
The Global Market
The TJN says that the two countries account for about 4% of the global market in terms of financial services offshore. These two hubs are highly exposed to offshore processes mainly because they have increasing assets that are under management and they are regional financial hubs as well.
The Spokesperson of the Financial Services and Treasury Bureau of Hong Kong sent a response through an e-mail regarding the survey to the TJN saying, “We do not have laws protecting bank secrecy and so we have never attracted foreign capital by such means. Hong Kong has all along been highly supportive of international efforts to enhance tax transparency and combat tax evasion.”
The US Ranked 3rd
The U.S., on the other hand, was on the 3rd spot for secrecy according to the TJN; primarily because they refused to take part in the global system of exchanging bank data devised by the Organization for Economic Cooperation and Development.
According to the report by Forbes, the TJN accused the IRS of being stingy in terms of sharing its data.
The Cayman Islands
Despite being criticized by many U.S. politicians and media that they are a so-called “tax haven”, Cayman Islands is ranked below the U.S. in the latest edition of the financial secrecy index according to the TJN.
The Huffington Post writes that the Financial Secrecy Index report shows that there is an approximately $21 to $32 trillion worth of privately-owned financial wealth that are lightly taxed, if not untaxed at all, in secrecy jurisdictions around the world. The city, on the other hand, doesn’t maintain company ownership details among their official records.
Aside from that, the index also noted that the region doesn’t avoid the promotion of tax evasion through a tax credit system. It also doesn’t require residents to pay certain agents to inform the domestic tax officials regarding payments to non-residents.
Even the United Kingdom hasn’t escaped the spotlight. According to the TJN, they could have easily surpassed Switzerland.
Macau, which only makes below 0.2% of the global market in terms of offshore financial services, is considered a small player compared to other jurisdictions, says the TJN.
India, on the other hand, has made a notable improvement in the last 2 years in terms of financial transparency.
The Tax Justice Network evaluates a country’s financial secrecy by combining global data of offshore financial territories, along with the qualitative rating of 15 secrecy indicators such as existence and availability of registers for trusts and foundations; bank secrecy; companies; beneficial owners; accounts and financial reports; efficiency of tax implementation and administration, as well as tax-evasion and anti-money laundering laws; automatic exchange of information; bilateral treaties and worldwide contracts and commitments; and worldwide judicial cooperation.