Paying taxes is a 'legal' obligation, not a 'moral' one, says offshore regulator
SOURCE: OffshoreAlert
MIAMI, FL February 20, 2008
Attacks on offshore financial centers for helping individuals and businesses in the world's major countries to legally reduce their tax liabilities are unwarranted, according to a senior offshore regulator.
"Many have forgotten that paying tax is not a moral obligation and never has been," Tim Ridley, chairman of the Cayman Islands Monetary Authority, told OffshoreAlert. "Legal tax avoidance (as opposed to illegal tax evasion) is quite proper and keeps wasteful governments in check.
"Civilised societies allow their citizens and corporations to minimise their taxes. So the outcry at those citizens and corporations using offshore financial centres legally to do so is unjustified."
OFCs have a positive influence on the global economy, not a negative one, said Ridley who, prior to becoming a regulator in one of the world's leading offshore jurisdictions, was a senior partner with Maples and Calder, which is Cayman's biggest and most-prestigious law firm.
"There is a misconception that Offshore Financial Centers deprive onshore jurisdictions of investment capital," he added. "Nothing could be further from the truth. The monies that are invested in offshore funds are for the most part invested onshore in jurisdictions that provide the best return to the investors."
While he recognized that OFCs, such as Cayman, Bermuda, the British Virgin Islands, and the Bahamas, face a challenge to win over their critics, he said it should not stop them from trying to educate the international community about their significant benefits.
"OFCs need to work more closely together to carry their message effectively to the onshore politicians, regulators and media and to the international standard setters," he said.
"OFCs need to recognise they will never be loved given the serious competition they present to onshore jurisdictions. The best they can aim for is an acceptance and recognition of the vital contribution they play to legally facilitating international transactions and investments."
Ridley will expound on his views about the role of OFCs at the 6th OffshoreAlert Financial Due Diligence Conference on April 13-15, 2008, when he will talk about 'How to Utilize Offshore Financial Centers WITHOUT Breaking The Law'.
One of his fellow panelists is Ken Morgan, who is Executive Director of the British Virgin Islands-based arm of Rawlinson and Hunter, an international firm of chartered accountants.
Morgan echoed Ridley's comments about the positive economic effects of legal offshore products. "As long as there is political uncertainty and economic instability in parts of the world, then there will be a place for financial centres offering certainty and stability," Morgan told OffshoreAlert.
"It cannot be in the long term interests of the offshore centres to facilitate questionable business practices and tax evasion. Those that raise the quality of their business, understand the legitimate needs of their clients, and develop the products and services which attract the best clients, will be the centres which emerge as credible participants in a global economy.
"Seeking information and understanding the objectives of your clients will help you offer them the best advice. Asking no questions reflects badly upon you and may lead them into actions they will later regret."
Joining Ridley and Morgan for their OffshoreAlert conference panel on using offshore financial legally will be Bob Stewart, a Bermuda-based businessman who is Vice Chairman of one of the offshore world's biggest financial institutions, Butterfield Bank, as well as being a non-executive director of Fidelity International Limited, which is part of the Boston-based Fidelity mutual fund group.
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