Hong Kong businesses may be affected as EU urges tax havens to open their books

Much of the city's offshore business is done through places that may act against tax evaders

PUBLISHED : Thursday, 02 May, 2013, 12:00am
UPDATED : Thursday, 02 May, 2013, 3:47am

In a move with implications for Hong Kong, more tax havens are to open their books under pressure from the European Union.

At a meeting on May 13, EU finance ministers may reach an agreement on measures to eradicate tax evasion and tax havens, said Finnish Finance Minister Jutta Urpilainen at an international seminar on tax fraud and evasion in Helsinki on Monday, the Finland Times reported.

A letter on April 24 by the Irish finance minister, Michael Noonan, and EU tax commissioner Algirdas Semeta urged the European Commission to start talks with five tax havens - Andorra, Liechtenstein, Monaco, San Marino and Switzerland - to reveal information. It proposed six other measures, including a package against value-added-tax fraud.

"Our common goal should be the rapid adoption of all these measures before the end of June," said the letter.

Semeta said: "The EU will be an active partner in seeking automatic exchange of information as the global standard. We will do everything necessary to secure commitments on this at the G8 Summit in June and the G20 Summit in September."

China is a member of the G20.

Last week the Cayman Islands said it would join a pilot scheme with the UK, France, Germany, Italy and Spain on automatic exchange of tax information. Cayman Islands Prime Minister Juliana O'Connor-Connolly said: "We would call on other jurisdictions to commit to this initiative, which will remove hiding places for those who seek to evade tax."

A significant part of Hong Kong's offshore business is transacted through the Cayman Islands, said John Bruce, Macau director of Hill & Associates, a Hong Kong risk consultancy.

Manisha Mirchandani, Asia director of the Risk Resolution Group, a UK risk consultancy, said: "For Cayman Islands, people in Hong Kong and China are going to see what the implications are."

Luxembourg has also said it will share confidential data on multinationals' bank accounts.

The EU's actions come after revelations by the International Consortium of Investigative Journalists (ICIJ) of offshore havens that include dealings through Portcullis Trustnet, a financial services firm based in Singapore with a Hong Kong office.

On its website, Portcullis has said it has identified an unnamed individual "whom it strongly suspects as having been involved in the data theft that has led to information published by ICIJ".

Portcullis said it had filed a report with the Royal Virgin Islands Police Force, which is investigating. It has also engaged KPMG to conduct an IT security review for itself.