Jersey Finance says ActionAid claims are irresponsible

A report by anti-poverty charity ActionAid revealed that a quarter of the UK's top 100 companies have offshore subsidiaries and has called for an end to tax haven secrecy.

The ActionAid report released last week states that "Ordinary people and small and medium-sized businesses in both developing and developed countries lose out when companies use tax havens to avoid their taxes. Given the ongoing economic crisis, government action is urgently needed to wean companies off their addiction to tax havens."

The report goes on to say that all tax havens should be forced to share information with tax authorities, not only in rich countries, but also in developing countries that want to receive it, by supporting multilateral tax information exchange initiatives.

However, Geoff Cook, Chief Executive of Jersey Finance refutes the claims made. He says: "It was irresponsible to claim that well regulated IFC’s such as Jersey undermine the stability of the wider international financial system, when it is clear that the recent global crisis had its roots firmly anchored in the debt taken on by major western deficit economies and inadequate regulation in London and New York."

He adds that in terms of the relationship between IFC’s and developing countries, a study by Professor Jason Sharman, one of a number of such authoritative reports, found that IFCs can enhance economic growth and alleviate poverty among developing countries by boosting domestic and foreign investment and that small IFCs are in fact crucial intermediaries for trade with and investment into developing countries.

"In this current period when the global financial architecture is under review there is a distinct danger that if IFCs are discriminated against or marginalised this could not only damage the flow of capital around the world, but significantly hamper the economic progress of developing nations,” says Cook.

He added: "Jersey is a cooperative, transparent and well-regulated international finance centre (IFC), a position that is supported by the results of numerous independent reviews by bodies including the IMF, FATF, OECD and HM Treasury.

"In relation to the UK, the island plays a valuable role in supporting the British economy, with international deposits taken by Jersey banks being upstreamed to their UK parents, providing many billions of pounds of liquidity to the market.

"Tax evasion is illegal in Jersey and has been a criminal offence since 1999. Companies do not use centres such as Jersey to avoid tax, they use them because Jersey provides a tax neutral location that offers stability, strong regulation and expertise."