Picardo, Azopardi Slate Government Secrecy over Tax Agreements

Over the past decade Gibraltar has survived the buffeting of several financial storms - some whipped up by the European Commission, others stirred by Britain's Treasury, and some of the Government's own making. There were the imagined threats of the Fourth and Seveneth EU Directives, whose implementation was delayed and delayed again as sundry lawyers and accountants forecast these Brussels regulations spelled doom for our then nascent finance centre; there was the threatened ‘blacklisting' of the Rock by the OECD as part of its putsch against money laundering and other white-collar crimes - a threat fanned by Madrid, but which evaporated as the IMF gave us a cleaner bill of health than our neighbours could hope for.

‘Tax Avoidance'

And, most recently, as Gordon Brown, Angela Merkel and other European leaders (as well as their finance ministers) merged the concepts of permissible ‘tax avoidance' with the illegal practice of "tax evasion" into an uncertain murk of crime and declared war on the so-called ‘tax havens'- of which we are one - came the call to share financial information with other governments and their official agencies. Without consultation with the jurisdictions which were to be most affected by the G7 ploy to scrabble back as much tax as possible from their nationals with investments elsewhere (the British Treasury estimates that it can lay its hands on some £2 billion this way)  the ‘Big Seven' demanded that agreements on exchange of information - with as many as 20 countries -  be put in place  by the end of this year.

The Caruana regime - like those of Jersey, Guernsey, the Isle of Man, Dublin and other strongly finance-oriented jurisdictions - had to comply and has slowly built up a respectable number of states with which it will exchange tax information.

But what is puzzling - and the point was raised this week by both the official Opposition and the PDP - is the secrecy with which Caruana in his guise as Finance Minister is going about theses TIEA.

While welcoming the signings - the most recent of which is with the United Kingdom - the GSLP/Liberal Opposition this week condemned the secrecy with which Caruana has ring-fenced the deals. And PDP leader Keith Azopardi warned that the Government  should not be signing these agreements "in some shroud of mystery because professionals in the finance industry need to advise clients on the implications of these."

Opposition Finance spokesman Fabian Picardo pointed out that the United Kingdom "is the most important legal and financial services market for Gibraltar as a finance centre." And it was "totally astounding" that the Gibraltar Government have entered into an agreement with the  Commissioner of HM Revenue and Customs without having announced that  agreement here.

"Already it is reliably reported that some finance centre practitioners have had the fact that Gibraltar has signed agreements brought to their attention by their clients," the Opposition said.  There was no good reason for the Government not to make announcements in respect of the execution of these agreements, "as it did, with great fan-fare, when we entered into the agreement with the USA."

"Given the publicity that was given to the conclusion of the TIEA with the USA, it  is continually surprising that the Government is now not even alerting people in Gibraltar, in particular professionals in the finance centre, to the fact that these agreements are being concluded," said Picardo. 

Internal Procedures

"I note that the agreements provide that they ‘shall enter into force when each Party has  notified the other in writing of the completion of its necessary internal procedures for entry into force,'  and that will not have happened yet. Despite that, it is necessary for the Government to be forthcoming about these developments in Gibraltar.  What is the Government playing at?"

Meanwhile, a statement from Azopardi pointed out that the TIEA with the UK had been reported in the international press but the Government had said nothing. It had signed similar agreements recently with Germany and Australia as well as other countries.

"It is clear that having lost significant ground to competitor jurisdictions the Government is now trying to move quickly to regain that ground so we are re-classified among the leading finance centers," said Azopardi. "Once again news of the signature of this agreement has reached Gibraltar via the international press without a murmur from the Government or the release of the agreement signed by it.

"The PDP call on Government to be much more frank about the agreements it is signing and to make these available to professionals. The PDP do not understand why the Government is behaving as if it can somehow pretend that these agreements are not being signed given that news emerges internationally.

Given that the United Kingdom is by far the largest source of finance centre work for Gibraltar the Government should particularly have been much more open about this with the industry."