Question: I have seen that the G20 nations are looking to clamp down on offshore "tax havens". Will my savings plan be affected?
Answer: During the recent meeting in London of the G20 - the world's leading industrialised and emerging nations - it was agreed that countries that have not committed to the internationally recognised tax standard will be placed on a blacklist. The leaders at the G20 summit agreed to take action against these countries.
The number of countries that fall into this bracket however, is quite low, and you will not need to worry unless you have investments in Costa Rica, Philippines, Malaysia or Uruguay.
If you have an offshore account with a reputable, internationally recognised company, it is highly unlikely that any of your savings will be invested in these countries, and you can have peace of mind.
It may still be worth checking with your independent financial adviser on your current offshore investments, as many other countries have been put on what the G20 called a "grey list."
These are countries that have committed to the internationally agreed tax standards, but have not yet fully implemented substantial tax sharing arrangements.
Countries on the grey list include the more famous tax havens known to many of us: the Cayman Islands, Monaco, Liechtenstein and Switzerland.
If you are contributing to a financial plan in any of these countries, I would recommend you consult your independent adviser for reassurance that the current products in your portfolio remain sound investments.
Offshore jurisdictions that have effectively implemented the internationally agreed tax standard, and therefore the G20 nations are comfortable with as offshore havens, include the UAE, United Kingdom, Isle of Man, Guernsey, Ireland and Jersey, along with 34 other jurisdictions. Two relatively new offshore tax havens, Singapore and Hong Kong, have also now agreed to adopt the Organisation for Economic Cooperation and Development (OECD) standards in line with the request from the G20.
The internationally agreed tax standard requires the exchange of information on request in all tax matters for the administration and enforcement of domestic tax law. This standard applies without regard to a domestic tax interest requirement. The tax standard also provides for extensive safeguards to protect the confidentiality of the information exchanged.
For the most part, this is a very positive move by the G20 members to force countries to enforce tighter control over the tax haven structure, and bring more countries in line with OECD standards.
The OECD works to raise the standards of compliance and protection for savers and investors who make use of offshore tax havens around the world. It is good news for expat savers if more countries sign up to the standards laid down by the OECD, and agree to comply with their directives for the exchange of tax-relevant information.
Investing in offshore tax havens may sound like the pursuit of only the rich and famous; however, as more people work abroad, there are many products on the market which allow people in all salary brackets to be able to take advantage of these tax-saving benefits.
As the guidelines and regulations for investing can be complicated and often seem very strict, it is highly advisable to spend some time with an independent financial adviser who will be able to provide you with options best suited to your current financial requirements.
The writer is CII Chartered Financial Planner at Nexus Insurance Brokers. The opinions expressed are the writer's and do not necessarily reflect the views of Gulf News. If you have any questions please e-mail us at : advice@gulfnews.com
