The Channel Islands are a Archipelago in the English Channel, off the French coast of Normandy, which is made up of two separate and independent governmental jurisdictions; that of Guernsey and Jersey. They are officially known as British Crown dependencies as opposed to overseas territories or colonies.
Neither are actually physically part of the either the United Kingdom nor the European Union, but are members of the British-Irish Council and are possessions of the British Crown, however they are not sovereign nations in their own right.
The Land of Milk and Money
Jersey is famous for both financial services and a high quality of dairy products, however it is the financial services market and specifically the islands reputation as a tax haven that has garnered its inhabitants an economy substantially ahead of all the world's large developed economies, with an estimated per person GDP of US$57,000, according to the CIA World Fact Book.
In addition, Jersey holds an estimated $400 billion in assets from various private business and due mainly to its thriving financial industry. Only two places in the world have an estimated higher per person GDP, and those countries are Bermuda and Luxembourg.
The Importance of the G-20 Summit
The recent G-20 summit was vitally important to world banking centers like Jersey because of the proposed crackdown on so-called tax safe-havens. Most experts view tax havens as place where certain taxes are levied at extremely low rates or not at all.
According to former Jersey Economic Adviser Geoffrey Colin Powell, writing in the magazine The Economist, Powell wrote,"What...identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of, and exploit, a world demand for opportunities to engage in tax avoidance."
U.S. President Barack Obama was adamant about cracking down on areas of the world that would not share banking information with members of the G-20 so that a new more transparent banking system can emerge from the old. He singled out tax havens as contributors to the global economic melt-down and hinted that their lack of transparency and lack of cooperation would no longer be tolerated.
World's Tax Havens Work to Maintain Advantages
Despite the warnings from U.S. President Obama and other G-20 heads of state like British Prime Minister Gordon Brown, the world's tax havens are trying to maintain their specific advantages. Financial centers like Monaco in France, Geneva in Switzerland, and Jersey, The Channel Islands are trying to avoid being placed on the G-20's black list of tax haven nations.
But despite each having signed agreements to share greater information, in Monaco, they are sticking by their guns and maintaining most of their Secrecy. And if you happened to be what Monaco terms a URI, an Ultra-Rich-Individual worth at least US$30 Billion, then the advantage of secrecy and paying no taxes could be for you.
America also has a Tax Haven
Not to be out done, the U.S. has a bit of tax haven all its own, but it is hardly off-shore. It is the ability that any business inside or out of the United States has to create shell company in the state of Delaware.
The way it can work is that Delaware state law allows for companies to transfer ownership of all of their non-tangible assets to a Delaware shell company, then the parent company pays royalties or licensing fees to the parent company for use of those assets or obtains dividends, basically paying money to itself.
In addition to obtaining tax breaks in the jurisdiction the parent company is located, an added bonus is that that any loans paid back or money made by the shell or holding company is tax-free according to Delaware law.
Works Cited
1. A Profile of Jersey, The official website of the British Monarchy
2. CIA World Fact Book
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