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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Thursday, September 16, 2004 - Vol. 6 No. 177
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In This Issue:
* COMMENT: Cayman Islands Disaster.
* OFFSHORE: Gibraltar; Exempt Companies Safe? Hong Kong, China Relieved. Liechtenstein's Future. British Virgin Islands Eyes Independence.
* WEALTH: EU East Outbids EU West on Low Taxes. ATM Bites Millions.
* PRIVACY & RIGHTS: Auto Spy. PAT Act No. Invasive Invasion. Accounts.
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COMMENT: Cayman Islands Disaster.
Dear A-Letter Reader:
At this writing the fate of the 43,000 souls who live in the Cayman Islands is unclear. Hurricane Ivan has swept the three small islands, destroying, by one early estimate, at least one half of all buildings. How many may have died is as yet unknown. The Caymans, a group of three islands south of Cuba, have not experienced a storm of this ferocity since 1932.
This is made more remarkable for the fact that the Caymans are (or were) one of the leading tax havens of the world. A 2001 estimate claimed over US$800 billion in cash and assets were located there, making this the fifth largest financial center in the world, (after New York, London, Tokyo and Hong Kong).
But an equal (or in the long haul, greater) disaster for the Caymans has been its status as a British colony under Tony Blair's Labour Party. Since Labour's world socialists took over the UK Foreign Office, the Cayman Islands has been spied on by London, forced to dilute its legendary financial secrecy and may be made to impose taxes on foreign investors -- at which point the Caymans will no longer be a tax haven. And, as you might guess, those billions have been flowing elsewhere.
Part of London's excuse for abandoning its Caribbean colony (as well as its other overseas territories) is that the UK must, as an EU member state, enforce the EU tax directive on all Her Majesty's possessions. That means exchange of tax information and so-called 'tax harmonization' - meaning no special tax breaks for offshore investors and an end to most financial privacy.
At least one study showed that the Cayman Islands will lose hundreds of millions of dollars under the EU tax directive. It also predicted the EU directive will have a dramatic, damaging impact on all UK offshore centers (Bermuda, the Isle of Man, Jersey, Guernsey et al).
According to a 2003 report by market analysts, Datamonitor, up to 1/3 of money held by British investors in tax havens world-wide, particularly in the Channel Islands and the Caribbean, will be re- directed to the UK, where they will taxed in full. By 2013, the amount of offshore funds held by UK citizens will decline by 36% from £269 bn (US$477bn). Overall offshore assets held by other EU citizens by 2013 will drop by 26% from a 2001 figure of £747bn (US$889bn). Add to that cash flight by other non-UK EU investors.
It also foresees rapid contraction in funds and deposit assets causing job loses and economic suffering. But the report says offshore centers that don't abolish financial privacy and refuse to go along with EU- OECD tax information exchange, such as Panama, will flourish.
So at this point Panama is looking even better. And Panama never has had to suffer a hurricane because it is well outside the Atlantic hurricane belt. More importantly, Panama no longer suffers as any other nation's colony -- and that includes the USA.
That's the way that it looks from here.
BOB BAUMAN, Editor
PS: Join me at the Sovereign Society Panama conference, Oct. 20-24; For more information, click here: LINK:
http://www.internationalliving.com/promos/panama/ss_areaders.htm
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PSS: Want to know the latest about the Cayman Islands & other world tax havens? To order my new offshore tax haven book, click here:
LINK: http://www.agora-inc.com/reports/190STHOW/W190E804/
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COMMENT LINKS:
* Will Caribbean tax havens survive? LINK:
http://www.nationnews.com/StoryView.cfm?Record=53396&Section=Business&Current=2004-09-13 00:00:00
* No permanent damage to Cayman financial industry. LINK:
http://www.menafn.com/qn_news_story.asp?StoryId=CquzSWeicq0fztufosvnmqu5euW
* The Cayman Islands, CIA Fact Book.
LINK: http://www.odci.gov/cia/publications/factbook/geos/cj.html
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* OFFSHORE *
SOLVING THE GIBRALTAR - SPANISH ISSUE.
Gibraltar's PM wants to lead historic solution. LINK:
http://www.panorama.gi/updates.htm#Caruanas secret
* The Rock celebrates self-determination and democracy.
LINK: http://www.falkland-malvinas.com/Detalle.asp?NUM=4234
* Caruana says Gibraltar exempt company status is safe.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17240
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CHINA CELEBRATES HONG KONG ELECTION
Limited success of Democrats causes relief in Beijing.
LINKS: http://news.bbc.co.uk/2/hi/asia-pacific/3652124.stm
http://www.nytimes.com/2004/09/13/international/asia/13hong.html
* Hong Kong's Election - A Comment.
LINK: http://www.nytimes.com/2004/09/15/opinion/15wed2.html
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LIECHTENSTEIN FACES CHALLENGE
VADUZ: A need for a new vision for the principality.
LINK: http://www.news.li/news/meld3.htm
INDEPENDENCE FOR BRITISH VIRGIN ISLANDS?
Road Town: Islanders understand implications of UK independence.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17269
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* WEALTH *
EU NATIONS MOVE TOWARD LOWER TAXES
Jobs flow eastward to new EU states putting old Europe on notice.
LINK: http://www.iht.com/articles/530131.html
* Flat tax works in Russia, Europe; why not the USA? LINK:
http://www.freedomandprosperity.org/blog/2004-09/2004-09.shtml#143
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U.S. FEELS ALTERNATIVE MINIMUM TAX BITE
An average of $6,000 more in taxes for millions of Americans.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17266
* The very real need for US corporate tax reforms.
LINK: http://www.cato.org/dailys/09-14-04.html
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* PRIVACY & RIGHTS *
U.S. PRIVACY EXPERTS NIX BLACK BOXES
TSB wants black box spies in all new cars.
LINK: http://www.foxnews.com/story/0,2933,132056,00.html
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NEBRASKA COUNCIL OPPOSES PATRIOT ACT
Council members voted 4-3 against. LINK:
http://www.journalstar.com/articles/2004/09/14/local/10055016.txt
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SURVEILLANCE vs. PRIVACY
Ever more invasive intrusions into everyday life. LINK:
http://www.itbusiness.ca/index.asp?theaction=61&lid=1&sid=56632&adBanner=Security
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U.K. ACCOUNTANTS WANT LAWYER PRIVILEGES
Plans to extend confidentiality to tax professionals.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17259
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
* Bob Bauman, Editor * Daniel Aponte, Jr. Editorial Asst.
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