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Editorial Comment
Being seen to do right
Mossack Fonseca, the south American law firm at the centre of worldwide attention following publication of millions of documents that lift the veil on previously secret overseas investments - the so-called Panama Papers - has operated a small branch office in Gibraltar for more than a decade.
It has been advocating greater use of foundations as a substitute for trusts, the tax efficient vehicles at the cornerstone of Gibraltar’s financial services heritage. Displaying a degree of transparency, the number of foundations is publicly available in Panama, unlike for trusts administered in Gibraltar, or elsewhere in the world, points out Nick Poole, the Jersey- based managing director of the local business.
Worldwide concern has focused on numerous jurisdictions offering facilities to form and, in some cases, operate shell companies that hide the ownership of investments often, it seems, without robust checks on, or concern for, how the money was obtained! It’s been attractive to drug dealers, organised crime syndicates and fraudsters - as well as perfectly legal, above board, individuals. The name of the game for all, however, is total secrecy.
British Overseas Territories (OTs) have been widely described as tax havens and their actions called into question. There has been only passing mention of Gibraltar. The trouble is that simply by being an OT may prompt a ‘guilt’ by association impression, and that could set back all Gibraltar has done to establish itself as an attractive, fully compliant, on-shore finance centre.
Unlike the other OTs and Crown Dependencies, Gibraltar is part of the EU and has led the way in adoption of a myriad of tax information exchange treaties – 135 with 80 countries – and in adoption of OECD and EU anti money laundering practices.
Gibraltar committed to early formation of a central Register of Beneficial Ownership, which but for uncertainty over the mechanics of the EU anti-money laundering Directive that requires implementation by mid-2017, would have been operational in January. The actual launch is imminent, although Gibraltar law already requires all financial entities retain a list of beneficial owners to be produced on demand for law enforcement or tax authority enquiries.
Continued substantial financial backing for the Financial Services Regulator, demonstrates the government’s determination to see the jurisdiction regarded as welcoming and safe, with high standards of licensing and enforcement.
In June, The Rock’s residents will vote in the referendum to keep the UK in the EU to protect their free movement and business model that has seen the economy grow around 10% pa for each of several years now.
Being out of the EU would hit hard. Gibraltar could, for example, find it nigh impossible to maintain much of its eGaming, financial services and tourism and hospitality business if the border was shut, as Spain has threatened in event of Brexit. Gibraltar’s airport receives an increasing number of flights and passengers, growth fuelled mostly by holidaymakers wanting to cross into Spain. Block, or severely restrict the border and demand will reduce along with airlines’ commitment to the number and frequency of flights.
Even extensive disruption by the Spanish at the border makes business difficult given that 12,000 people now daily cross the isthmus to work, spurred by expanding e-gaming operations, construction activity, hospitality and finance centre employment.
Gibraltarians will be hoping they remain part of the EU and their key business sectors are unaffected by the turmoil around them.
Ray Spencer
Published by Gibraltar International Publications Ltd. 21 Bell Lane PMB 104, PO Box 561 Gibraltar
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4 Gibraltar International www.gibraltarinternational.com
Contents
News p6
Brexit concerns cause businesses to pause
Insurance p10
Insurance Sector Challenges in 2016
Law p12
Making a judgment on cases for expansion to maintain progress
May/June/July 2016
Volume 22/ Number 2
Regulation p16
Government pledges more to remain competitive
Tourism p18
Planning to become a ‘true’ destination
Funds p22
Alternative Investment Funds
Tax p24
The tax efficient Mediterranean Lifestyle
Business round up p29