As part of the agenda for the G20 summit, stimulus packages and further spending were high on the list of priorities, the American administration for one hoping to pursue and achieve the agreement of all parties involved to further spending as a way of delivering the world from the grasp of the continuing recession. Although observers around the world will have had different opinions on the success or otherwise of the summit, one thing is certainly clear: the governments of the world’s leading nations have found a common focus and, notwithstanding the perhaps limited benefit emanating from such talks, it is undeniable that the Summit could be a starting point from which the world’s economies can work to cure the various and serious ailments of the world’s financial system. There is widely held consensus that restarting the housing market and driving small business through greater investment and the unfreezing of credit will form two key aspects of any successful recovery plan.
Important as the G20 Summit was in a world context, the eve of the summit played an even more significant role for Gibraltar than the summit itself. It was in London, on the occasion of the attendance by top US officials to the Capital that Gibraltar entered into the first tax information exchange agreement with the United States of America, a move which was entirely unavoidable yet wholly beneficial for Gibraltar as the prestigious financial centre it has become in recent years.
The pomp and circumstance of the signing of the treaty between our Chief Minister, Peter Caruana and the Head of the US Treasury, Timothy Geitner, must certainly have come as somewhat of an unexpected bonus for our Government which, not being able to script it any better themselves, were presented with the golden opportunity of sitting the Chief Minister and the Head of the US Treasury together at the same table, American and Gibraltarian flags side by side, to enter into the historic arrangement.
The first of a number of tax information exchange agreements which Gibraltar will enter into with other countries during the course of the coming months, the American agreement will see Gibraltar’s removal from a list of uncooperative jurisdictions which was brought into existence by the Stop Tax Haven Abuse Act in 2000. The local government has confirmed that a further eleven agreements will be entered into with governments of other countries, bringing the total number of agreements to twelve in the near future, at which point it is expected the OECD will then remove Gibraltar from a recently published blacklist of jurisdictions.
Some criticism has been levelled at our Government for having taken too long to enter into the tax information exchange agreement with the US and that, in fact, Gibraltar was one of the last jurisdictions to enter into this arrangement with them and, further, that the local Government had no choice but to sign up as the time frame for doing so was shortly to expire. While it may be true that the list did in fact come into existence in the year 2000 and that many of the countries on that list entered into tax information exchange agreements with the US very shortly thereafter, it is also true to say that Gibraltar was, at the time of the publishing of the list, a very different animal to what it is today. With the loss of the exempt company, our victory in the European courts in respect of our independence in fiscal matters, in addition to the imminent arrival on scene of our new flat rate corporate tax scheme, Gibraltar has fallen squarely within the lines of an internationally recognised and accepted finance centre with modern regulation, cooperation and compliance with all relevant international directives and regulations from all manner of international bodies.
Furthermore, it is clear that Gibraltar was never, for one reason or another, ever in the cross hairs of the American Government’s sights, which was in fact trained on jurisdictions which had caused the fleeing of American jobs to other, mostly Caribbean, offshore jurisdictions like the Cayman Islands or the Bahamas.
This move will no doubt prove to be another significant step on Gibraltar’s journey towards international acceptance as a legitimate and cooperative financial jurisdiction. Considering it was the first agreement Gibraltar was signing, we couldn’t have hoped for any better publicity, at a better time than the G20 summit. To suggest that the circumstances of the signing could have been brought about at the insistence of anybody but the Americans is ridiculous in the extreme and, frankly, if publicity like that should ever fall into our laps again, we’d be fools not to take it.