jueves, 9 de abril de 2009

TAX HAVENS

According to the pure meaning of the term, TAX HAVEN is a place where individuals and/or companies do not support a heavy load of taxation.
Better said, a place where the tax rate is much lower than in other jurisdictions.

To finish the definition this way, would let many people out of the real impact of these countries, islands or places into the global economies.

First of all, we must distinguish between TAX HAVEN and BANK SECRECY. TAX HAVEN is a place where you do not pay income taxes, or capital gains taxes or even company taxes,... but this does not mean that this place will have a BANK SECRECY...that is, the obligation to the local banks to inform about the statements of the customers registered on them.

In Switzerland, for instance, people pay taxes, but the country has on its legislation the fulfilling of the bank secrecy. This does not allow local banks to provide information to other countries about the statements of their customers.

So, what is the G-20 trying to do ???... Do they want to abolish TAX HAVENS or BANK SECRECY ??... If we look into "the list" displayed at the conclusion of the G-20 summit in London last week, this is not a list of TAX HAVENS only, but a list of countries with a strong BANK SECRECY.

With the economic turmoil ocurring at full speed around the world, many politicians found out that some hedge funds were located in these places, using the BANK SECRECY to hide their leveraged operations. Hedge funds are out of control, because they do not suffer any regulation and their investments are ilimited and may well hit companies, currencies or even raw materials.

How do you explain a BRENT price of 150 dollars per barrel, when the real production did not accomplish this price ???... The answer is simple: Especulation. With little money, but with a 100 times leverage, these hedge funds pushed hard to low or rise its quotation price.

The game is simple. If general sentiment is bear, I play short. If sentiment changes, I turn myself into a long position.

So, they always earn. That is the answer to the most commonly spread question of: Where is the money ???
A question that many people asked themselves today when the banks have begun to tumble.

So, I agree that the lack of regulation as well as the bank secrecy is really hurting the economies, to allow others to become multibillionaire.

But, my surprise is, that it seems we have discovered a new world with this idea.

20 years ago, a good friend of us, called Georghe Soros, already played with hedge funds located in the so called TAX HAVENS. Also I shall remember the BARINGS BANK case where a young trader called Nick Leeson bankrupted the most traditional banking house in England, by playing leveraged operations in Singapore... another country in the "list" that our "genius" politicians have now displayed.

Most of these tax havens belong to the United Kingdom. They are islands like Bahamas, Cayman, Bermuda, Guernsey, etc... that for many years have been obtaining huge profits of these now considered "illegal" transactions. Most of the banks located in these places are british...Should they now give back all the money they have earned during all these years ???

Mr Brown, prime minister of the United Kingdom, with a thrill face expression, announced last week that the "era of bank secrecy" was over... Great!!! the question now is, when are you going to begin dismantling all the islands and countries under your sovereignity that have been doing this for ages ???

Is USA ready to change their laws in states such as Delaware or Nevada, where bank secrecy is also a reality ???

Why do they lie to us ??
Why do the politicians think we are idiots ???

These are the questions I always ask myself.





Jose Luis Revilla Escudero
CEO
WWShares, Inc

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