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IDC: GLOBAL OUTSOURCING IN THE IT INDUSTRY TO CONTINUE TO INCREASE
An IDC presentation pointed out that the trend of moving as much work as possible to countries with the lowest wages is not new. In the case of the U.S., it started with apparel and electronics manufacturing in the 1960s, and the offshore trend in those industries has been so complete, said one IDC person, that today “there is not one TV manufactured in the U.S.”
Now IT hardware development and manufacturing, software development, business process functions (like HR and customer service), and IT services, including infrastructure monitoring and management, are leaving high-wage countries.
IDC warns that Bangalore, India’s primary IT hub, may no longer offer the world’s best IT outsourcing value; that the infrastructure there is saturated; and wages for skilled workers are being bid up, with many new grads demanding annual salaries of $4,000 or more -- not only in Bangalore but all over India.More on this story here.
BRITISH PASSPORT CHECKS TO BE TIGHTENED
A security crackdown at British airports under which every passport will be examined is expected to cause chaos for millions of holidaymakers this summer.More on this story here.
SPAIN MAY TAKE UK TO COURT DUE TO DISAGREEMENTS OVER GIBRALTAR
Britain’s plan to incorporate Gibraltar into one of its constituencies for elections to the European Parliament may be disrupted by an official objection to the move by the Spanish government, which is lodging a formal notice of action in the European Court of Justice.More on this story here.
GUERNSEY PLANTS TO ADOPT RETENTION TAX
Following the European Union’s decision last week to adopt the EU Tax Package, which comprises the Code of Conduct on Business Taxation, the Directive on Taxation of Savings, and the Directive on Interest and Royalties, Guernsey’s Advisory and Finance Committee president, Deputy Laurie Morgan, confirmed the jurisdiction’s intention to recommend legislation introducing a retention tax.More on this story here.
SWISS MAY ALLOW RESIDENT FOREIGNERS TO VOTE
The “J’y vis J’y vote” campaign (I live here, I vote here) argues that long term, tax-paying foreign residents should have the right to vote on local issues in their own communities.More on this story here.
SOUTH AFRICAN OFFSHORE TAX AMNESTY
Before you rush off to SA Revenue Services to declare your offshore “grey money”, be aware that many people may not automatically qualify for the tax amnesty.More on this story here.
Huge response to forex amnesty.
There has been an “overwhelming response” to the government’s foreign exchange amnesty since it became effective this month, said Finance Minister Trevor Manuel.More on this story here.
BAHAMAIN STOCK EXCHANGE FLOUNDERS
The Bahamian government’s plans to revive the beleaguered Bahamas International Securities Exchange (BISX) have been criticised as “fundamentally flawed” by financial analysts, who argue that more radical action is needed to turn around the loss making institution.
Bahamian Prime Minister, Perry Christie, is hoping that the development of a local capital market through the privatisation of the Bahamas Telecommunications Company and other state assets, and their subsequent listing on the BISX will help to improve trading volumes which have consistently declined over the last couple of years.
However, observers maintain that reform is needed at a much more fundamental level if investors are to be attracted back to the BISX in the future. For instance, many lay the blame for the exchange’s decline squarely at the door of its board. Observers have suggested that a general lack of vision and an appropriate business plan have forced the government to step in with its cash lifelines on numerous occasions. “The board knew that it was burning cash at a significant rate, hence a plan should have been implemented long before now and not waiting on the mercy of the Government,” experts recently told the Nassau Guardian.More on this story here.
HONG KONG NEARS FREE TRADE AGREEMENT WITH MAINLAND CHINA
Hong Kong and mainland China expect to conclude a broad and detailed free-trade agreement by the end of this month, according to senior officials.More on this story here.
UK PUTS OFF DECISION TO ADOPT EURO YET AGAIN
UK prime minister Tony Blair will seek to persuade voters that he is united with chancellor Gordon Brown over Europe, a day after the Treasury ruled Britain was not yet ready to adopt the euro.
On Monday Brown set the British government on course for another nine months of wrangling over the euro, promising to revisit the economic case for joining in next year’s Budget.More on this story here.
UK MONEY LAUNDERING LAWS ATTACKED
Fraud experts warned yesterday that new rules designed to catch money-laundering gangs will place pressure on the police and could jeopardize thousands of legitimate business deals.More on this story here.
London is a money laundering hot spot.
Money launderers are being allowed to operate freely throughout the City because much-trumpeted regulations are not being enforced effectively.
A year-long survey of banks, financial institutions, regulators and government departments found a level of money laundering so high that it poses “one of the most significant threats to our future prosperity and growth.” The report from Transparency International, the anti-corruption campaign group, challenges government assertions that it is cracking down on terrorists, drug dealers and organised criminals who use London’s financial institutions to clean their dirty cash.More on this story here.
OFFSHORE CAPTIVE INSURANCE INDUSTRY BOOMING
The traditional insurance industry is facing a wave of client defections as more commercial and industrial groups cover their risks by setting up mutual insurers offshore.More on this story here.
DOES GOLD HAVE A BRIGHT FUTURE?
Most investors still value it as a currency, a role it has played for most of its history, although some see it like any other metal where the price is determined by supply and demand trends. However, gold’s recent performance reinforces the idea that gold has an inverse relationship with the world’s most traded currency.More on this story here.
MONEY, MARRIAGE AND BOOZE = THE SECRET TO HAPPINESS
Happy Russians are likely to be richer, married... and down at the tavern, according to a recent study.More on this story here.
YOUR PAPERS, PLEASE
America is becoming the Nazi Germany we feared in my childhood. For those who were not around during those years, you can get a flavor for the anti-tyrannical sentiments of the time by watching any number of movies depicting the Nazi police-state. The constant presence of police; the insistence upon showing “your papers” to whichever government underling demanded them; the awareness that neither your person nor home was immune from state searches or seizures; the disappearance of people into unknown prison camps; neighbors spying upon neighbors, and children betraying their parents to the state; and the domination of society by a military and bureaucratic arrogance, arbitrariness, and absolutism, were constantly chilling examples of the dangers of state power.More on this story here.
CHANNEL ISLANDS AND ISLE OF MAN ADOPT WITHHOLDING TAX
Savers with offshore bank accounts in the Channel Islands and the Isle of Man will have to pay a new tax on their interest -- unless they reveal the contents of their holdings to officials in their own countries. The change follows the decision by the islands to refuse the automatic exchange of information with European Union countries on non-residents’ savings. The initiative is part of an alleged drive by the EU to catch fraudsters and cheats.
Instead, the islands have opted to levy a “withholding tax”, a concession the EU has also given to Luxembourg, Austria and Belgium to preserve banking privacy.More on this story here.
Isle of Man sees rise in company registrations
The Isle of Man’s Financial Supervision Commission has recorded a modest increase in the number of companies registered in the island, arresting a downtrend witnessed in the last few years.More on this story here.
GENERAL ELECTIONS IN BERMUDA SET FOR JULY 24
Bermuda voters will go to the polls on July 24 in the first general elections since the mid-Atlantic British colony revamped its voting system. Premier Jennifer Smith, whose ruling center-left Progressive Labour Party is committed to seeking independence from Britain, announced the election but did not disclose whether her party will campaign for independence at the upcoming election.More on this story here.
BAHAMAS ACTIVE IN FIGHT AGAINST MONEY LAUNDERING
The Bahamas enacted laws against money laundering in 1987, and remains concerned over the threat which the illegal activity coupled with terrorist financing poses to the financial system and reputation. The Government is also presently drafting legislation for the prevention of Terrorism and Terrorist financing.More on this story here.
JAMAICA JOINS CARIBBEAN APEALS COURT
Moving to shed a colonial vestige, Jamaica on Monday became the latest nation to formally join the Caribbean Court of Justice. Scheduled to open this fall and sit in Trinidad, the court will handle trade disputes and serve as the court of last resort for as many as 14 nations.
By ratifying the treaty Monday, Jamaica became the eighth nation officially to sign on to the idea, joining Barbados, Belize, Dominica, Guyana, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago.More on this story here.
CONTINUED CONFLICTS OVER GIBRALTAR
In an interview conducted with Spanish daily El Pais this week, British Foreign Office minister Denis MacShane suggested that there is unlikely to be a resolution to the Gibraltar question for at least thirty years.More on this story here.
SWISS BANKS RE-AFFIRM ANTI-MONEY LAUNDERING STANCE
Swiss bankers have pledged to do more to combat money laundering at a seminar in the Swiss capital, Bern. But Switzerland’s largest bank, UBS, said the country could not shoulder all the responsibility for tracking illegal funds.
Switzerland, with its tradition of client confidentiality, has long suffered from a reputation for being a safe haven for dirty money. But Urs Roth, chief executive of the Swiss Bankers Association (SBA), said Switzerland was taking more than its fair share of the blame for the existence of dirty money in Europe, despite having some of the toughest anti-money laundering rules in the world.More on this story here.
AUSTRALIAN TAX OFFICE THREATENS INCREASED ENFORCEMENT
Receipts and records to back up tax deductions will be vital this year as the Australian Taxation Office moves from educating taxpayers over GST to ensuring compliance. Tax experts are warning that the ATO has committed significant resources to uncovering tax dodgers this time with particular emphasis on the cash economy.More on this story here.
BRAZIL JOINTS THE “WAR” AGAINST MONEY LAUNDERING
Brazil took action against money laundering by increasingly powerful criminal gangsby creating a government agency to recover funds from illegal activities. In a package of measures designed to “start the fight” against money laundering, Justice Minister Marcio Thomaz Bastos said banks will have to begin reporting money transfers of more than 100,000 reais ($35,000) to the Central Bank.More on this story here.
U.S. DEPARTMENT OF JUSTICE TAKES HEAT OVER INTERNET SURVEILLANCE
The Justice Department’s statements -- and what it did not say -- in a congressional inquiry on the use of broadened surveillance powers authorized after the Sept. 11 attacks is raising a red flag among civil liberties groups. A central concern is the lack of clarity regarding the scope of Internet surveillance powers granted in the controversial USA Patriot Act.
In response to testimony last week by Attorney General John Ashcroft before the House Judiciary Committee, the American Civil Liberties Union published a memo criticizing the government’s attempts to apply the methodology for tracing phone calls to tracking Internet use.More on this story here.
ECONOMIC MURDER-SUICIDE FOR THE EU
On June 3, 2003, the European Commission adopted measures to “tackle harmful tax competition”. If the term “harmful tax competition” sounds to you like an oxymoron, you are thinking clearly. The EU’s measures are designed to make it easier for them to tax savings but, in reality, will largely destroy the small amount of remaining legal savings by EU citizens.
Because of confiscatory levels of taxation, many of those who reside in the EU have moved their savings to the United States and other relatively low tax jurisdictions. For the last several years, many economic scholars and public policy organizations have warned the EU that attempts to reach beyond their borders to tax this so-called flight capital would end in disaster.More on this story here.
JERSEY AND ISLE OF MAN PLUMP FOR WITHHOLDING
Jersey and the Isle of Man revealed that they will both be following Guernsey’s example, and will, from January 2005, levy a withholding tax rather than exchange information on the savings interest of EU residents.
According to the Jersey Evening Post, Policy and Resources president, Senator Frank Walker observed that although Jersey does not belong to the EU, it is in the jurisdiction’s best interests to cooperate with the European body and adopt a “good neighbour” attitude.More on this story here.
ISLE OF MAN’S ZERO CORPORATE TAX STRATEGY REMAINS ON COURSE
Manx Treasury Minster Alan Bell announced this week that the Isle of Man remains on course to achieve its goal of a zero rate of income tax for businesses, after the European Union confirmed that the measure would not conflict with the recently agreed EU tax package.More on this story here.
Jersey wrestles with concept of zero company tax.
As a Jersey working party comes to grips with the implications of a zero company tax regime, experts have warned that the jurisdiction has many obstacles to overcome in the sphere of taxation in the coming months as it works towards compliance with European business Code of Conduct rules.
John Riva, the president of the Jersey Taxation Society and a member of the aforementioned working group told the Jersey Evening Post recently that a single workable solution to the tax conundrum has yet to be found. “The real issue here is zero taxation, and so far no one has cracked it. Essentially we are tearing up the current tax law and starting again,” he observed.More on this story here.
NO DIMINISHED CONFIDENCE IN FINANCIAL SERVICES SECTOR FOR BVI
Chief Minister and Minister of Finance Honourable Ralph T. O’Neal affirms that the British Virgin Islands will continue to be a significant player in the industry worldwide.More on this story here.
EX-HOUSE LEADER LAMBASTS OECD’S TAX POLICIES
Addressing a two-day economic forum hosted by the Caymanian Chamber of Commerce recently, Former United States House majority leader and Texas Republican Dr. Dick Armey was severely critical of the Organisation of Economic Cooperation and Development’s initiatives to curb “harmful tax competition” around the world.
Armey was the key-note speaker on the last day of the event, which attracted business people and government law-makers from the Cayman Islands, as well as members of prominent think tanks and lobby groups from the United States. Mr Armey was harshly critical of the quasi-governmental manner in which the OECD conducts its affairs, chastising the organisation’s “lack of respect for other human beings.”More on this story here.
BAHAMAS SAYS FATF SHOULD ENSURE LEVEL PLAYING FIELD
The chairman of the Caribbean Financial Action Task Force (CFATF) and Bahamian Attorney General, Alfred Sears, has urged UN intervention to ensure that anti-money laundering principles are fairly applied to all countries.More on this story here.
BERMUDA -- A COUNTRY OF CHOICE FOR CANADIANS WISHING TO STASH MONEY
A study shows that Canadians are stashing away more and more of their money in tax haven countries renowned for their secrecy laws, creating an enormous problem for tax authorities, according to the Toronto Globe and Mail. Bermuda is one of the countries of choice, according to the report.More on this story here.
WORLD ON THE MOVE
A new report shows a sharp rise in the numbers of migrants worldwide. In many cases, it makes economic sense for richer countries to accept workers from poorer ones. But even countries that traditionally welcome immigrants are having doubts.More on this story here.
EXPAT NUMBERS SOAR AROUND THE WORLD
GENEVA: Governments face an unprecedented challenge in coping with about 175 million migrants in the world, the International Organisation for Migration (IOM) said in a report. The number of migrants has doubled in the last 35 years and the world migration landscape has been affected by “sweeping changes” over the past decade, according to the IOM’s second-ever report on the state of global migration flows.More on this story here.
WEALTH DECLINING IN THE UNITED STATES
The number of millionaires around the world increased last year at the slowest rate in at least seven years and declined in the United States, as sinking stock prices depleted their wealth, according to a recent survey.More on this story here.
Wealth on the rise in Switzerland.
The number of dollar millionaires in Switzerland grew by 6% to 175,000 last year.More on this story here.
KPMG FACES LAWSUITS OVER TAX SHELTER ADVICE
KPMG says the that the suits, including the first to be filed in a West Coast court following a string of similar actions in the South and South East, are unfounded and maintains that the advice given in these instances was entirely appropriate. “We provide clients with appropriate tax-planning services, which are fully supported” by the tax code and related regulation, KPMG said in a statement.More on this story here.
LAW FIRMS IN US EXPANDING TRUSTS AND ESTATE BUSINESS
According to a recent report from the New York Law Journal, despite what amounts to an industry-wide dismissal of the sector -- and the high profile and exceedingly messy intergenerational dispute over trusts established by the Pritzker family, owners of the Hyatt hotel chain -- several major law firms in the United States are expanding their trusts and estates practices.More on this story here.
COSTS OF SENDING DOLLARS TO MEXICO MAY TUMBLE
The cost of sending money between US and Mexican banks could fall dramatically upon implementation of a new clearing-house system announced by the US Federal Reserve and the Banco de México. The clearing house will make Mexico the second country after Canada to have a harmonised transfer system with the US. The automated system will lower transaction costs for banks handling an estimated $200 billion in commercial payments and remittances each year, said Manuel Galan, director of operating systems and payments for the Banco de Mexico.More on this story here.
US-UK TREATY IS GOOD FOR EXPATRIATE EMPLOYEES
The United States and United Kingdom have finally ratified their 2001 tax treaty, providing significant relief for expatriate employees in both countries -- but particularly for U.S. participants in British “approved pension schemes”, the U.K. equivalent of U.S. qualified retirement plans, according to the consulting firm Watson Wyatt Worldwide.More on this story here.
MARC HARRIS INDICTED FOR MONEY LAUNDERING AFTER FORCED RETURN TO U.S.
The offshore financier, who boasted of managing $1 billion in assets, was expelled from Nicaragua and confronted with an indictment Wednesday charging him in a five-year money-laundering plot. Marc Harris has been a target of U.S. investigators for years and has had operations in Panama and Montserrat shuttered by government action.More on this story here and here.
VACANCIES IN US DEPARTMENT OF THE TREASURY SPELL TROUBLE
Four months after becoming U.S. Treasury Secretary, John Snow is seeking a deputy and a chief economist and faces the departure of other policy makers. Of the department’s 12 divisions listed on its Web site, just three have all their senior positions filled. At least six of the 13 jobs requiring Senate confirmation are open or will be by year’s end as staffers run for office or take new jobs in government or industry, people familiar with the matter said.
The openings risk undermining the Treasury’s role in policy making at a time of slow economic growth, rising budget deficits and other challenges that include underfunded corporate pensions and tracking terrorism financing, an investor said.More on this story here.
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