Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Only Jersey, Guernsey and Isle of Man source their clients strongly from their home region, making them vulnerable to single country tax amnesties 2
There are five key determinants of a tax amnesty's ability to pull money from offshore centres 2
Substantial 'carrots' will threaten offshore business 3
But without 'sticks', offshore wealth will stay offshore 4
Table of Contents 5
Table of figures 6
Table of tables 7
Clients served from the Offshore Banking Centers Today 8
The offshore client base is balanced within most centers, with clients domiciled worldwide 8
Only Jersey, Guernsey and Isle of Man source their clients strongly from their home region, making them vulnerable to single country tax amnesties 8
Investment opportunities and service entice clients offshore much more than tax avoidance 9
Offshore clients are motivated by a combination of fear and opportunity in moving money back onshore 10
The US tax amnesty's success makes offshore banks fear for another 11
Assessing the impact of tax amnesties 13
The tide has turned on offshore banking centres 13
A number of 'carrots' and 'sticks' will continue to drive client wealth back onshore 13
The benefits of the tax amnesty combined with the threat credibility of enforcement, push money onshore 13
Investors are less likely to take advantage of an amnesty if they don't believe it is a one-time opportunity 14
Onshore structural dynamics pull investors' wealth back home 14
For some investors, security is an important motivator 14
But for most, high taxes onshore have historically been the key boost to offshore business 15
Opportunities, and service, must be strong in the home market to be a threat to offshore banks 15
There are only two 'hold steady' factors that might encourage investors to keep their wealth offshore 16
Substantial 'carrots' will threaten offshore business 19
But without 'sticks', offshore wealth will stay offshore 19
America's IRS clamps down on offshore credit cards 19
Australia's ATO threatens that "all bets are off" 20
Italy's high-profile raids and border patrols give threat credibility to its amnesty 20
Deconstructing the impact of recent amnesties 20
The likely threat of an amnesty to a centre's offshore business can be assessed using 15 criteria 20
Incentives tempt investors onshore 21
Consequences threaten investors who don't comply 21
Publicity strikes fear of getting caught into investors 21
Frequency of announced amnesties reduces chances of success 21
Home market changes are necessary to keep investors' wealth onshore 22
Putting the Tax Amnesty Assessment Index into practice: Italy 22
Putting the Tax Amnesty Assessment Index into practice: US 24
Putting the Tax Amnesty Assessment Index into practice: UK 26
Putting the Tax Amnesty Assessment Index into practice: Australia 28
APPENDIX 31
Definitions 31
Domicile 31
Offshore 31
Tax Amnesty 31
TIEA 31
Methodology 31
Bibliography 31
Further reading 31
Ask the analyst 31
Datamonitor consulting 32
Disclaimer 32
List of Tables
Table 1: Assessing Italy's tax amnesty, January 2010 24
Table 2: Assessing the US's tax amnesty, January 2010 26
Table 3: Assessing the UK's tax amnesty, January 2010 28
Table 4: Assessing Australia's tax amnesty, January 2010 30
List of Figures
Figure 1: Offshore banking is under threat from both 'push' and 'pull' factors 3
Figure 2: Western Europe is an important source of offshore clients for all of the centers 8
Figure 3: Channel Islands/Isle of Man and Switzerland are all heavily reliant on a single domicile within Western Europe 9
Figure 4: Tax avoidance is not one of the most important reasons that clients bank offshore 10
Figure 5: Offshore clients will continue to take advantage of amnesties to move money back onshore 11
Figure 6: A US amnesty is most feared by offshore banks, although the Channel Islands/IoM are nervous about the UK government's next move 12
Figure 7: Offshore banking is under threat from both 'push' and 'pull' factors 13
Figure 8: There are five key determinants of an amnesty's threat to offshore centers 18
Figure 9: Datamonitor's Tax Amnesty Assessment Index considers 15 criteria 21
Figure 10: Sweet incentives and strong, publicized consequences combine to drive wealth back onshore in Italy 23
Figure 11: America's enforcement powers, and strong publicity around the government's pursuit of UBS clients, were important drivers of its success 25
Figure 12: The UK's relatively low incentives, and failure to effectively publicize the amnesty, contributed strongly to investors' 'muted response' 27
Figure 13: The lack of strong consequences or significant publicity make Australia's amnesty unlikely to be a big success 29
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