Why would you ever want to be a shareholder-investor in a company in a tax haven like BVI (British Virgin Islands), Cayman Islands, Bermuda, Gibraltar – other than to dodge tax?
The myths about tax havens are, first, that owning a company in them always equals tax dodging. Not true. Tax dodgers don’t pay tax wherever their companies are.
The second myth is owning a company in them is always not ethical because the UK Government misses tax revenue. Not true, because you are still paying tax in the UK, and even better not paying any foreign country tax (which is why you do it). Only if you go to great Google or Amazon type lengths is this myth true; in which case you should be imprisoned – but Governments don’t have the guts to go after Google or Amazon CEOs.
The third myth is that owning a company in them must always be a secret. Not true, 3,000 investment funds in BVI all need to be public because they are looking for public investors. There are thousands in the public domain marketed daily from London alone.
It’s so good for Britain to have tax-haven companies that all these reputed investment fund companies are formed in tax havens and run by British companies, Gartmore funds (Domiciled in Cayman Islands); Barclays Global Investors funds (domiciled in Ireland); F&C funds(domiciled in Cayman Islands); Henderson funds (domiciled in Cayman Islands); Jupiter funds (domiciled in Cayman Islands); New Star funds (domiciled in Bermuda); Old Mutual funds (domiciled in Cayman) – the list of British established investment fund companies in tax havens goes on and on. A new scandal?
Your pension will be a shareholder (ie investor) in them or others just like them.
That means you are almost certainly a shareholder in a tax haven investment company, through your British pension, and that includes journalists at the Sunday Times and Daily Mail – and even Parliamentary pension funds. So are you an unethical investor, perpetuating tax-dodging? Or could you actually be bringing more tax to the British exchequer?
BVI, Bermuda, Cayman are common jurisdictions for global investment companies because they’re geared for attracting global investors (cheap and simple and familiar globally) and it’s easier to market such ‘plain vanilla’ funds – ie the familiar to a global audience. Thereafter as a British taxpayer, profits are repatriated and paid in the UK, not in BVI (because it is a zero-tax jurisdiction).
So does Britain benefit? Yes. It means British shareholders, pensioners, get to keep more of the profits earned, with nothing deducted at source…more money for you in your pocket. More tax for you to pay too to the British exchequer.
No wonder for investment companies BVI is a perfectly legitimate British Overseas Territory and has 3,000 listed mutual funds.
And here is the kicker – don’t feel bad - the BVI, Cayman Islands - the Head of State is HM Queen.
Alpesh Patel
