Russians are increasingly abandoning one of their favorite destinations: the British Virgin Islands, according to Moscow-based lawyers Sergei Alimirzoev and Mikhail Zimyanin. Increased financial transparency between governments and tighter local tax laws on overseas companies mean rich Russians can no longer anonymously accumulate tax-free funds in the territory, said the attorneys, who help set up offshore accounts for clients.
Legislation adopted this year in the BVIs and other tax havens also requires companies registered locally to show real economic activity -- including hiring employees and renting offices -- or face fines.
To help abolish offshore secrecy, Christensen and the Tax Justice Network are campaigning for public registers of company owners. And there are early signs of success. The U.K.’s overseas territories and crown dependencies, from Jersey to the BVIs, are set to introduce such legislation by the end of 2023.
But change isn’t coming fast enough for Christensen.
“It took the allied powers six months to plan and successfully carry out the D-Day landings,” he said last month after Jersey, Guernsey and the Isle of Man announced the same time frame on public registers as the U.K.’s overseas territories. “It took Thomas Edison two years to create the light bulb.”
Tea and Cake
Christensen had a head of dark hair when he helped to expose the Jersey currency scheme, which resulted in UBS’s Jersey unit and accounting firm Touche Ross & Co. -- now Deloitte -- paying almost $40 million to settle lawsuits. Regular bike rides keep Christensen as trim as two decades ago, but his hair has turned pearl white.
The Tax Justice Network traces its origins to three Jersey natives visiting Christensen in 2002. Over tea and cake, the trio expressed concern over the growing grip of the financial industry on Jersey’s economy. The advocacy group was officially founded a year later, with some initial funding from cake and yard sales.
By writing reports, posing questions at conferences and working with nonprofit groups, the network eventually caught the attention of policymakers. Two ideas that Christensen and his colleagues championed from the start -- country-by-country breakdowns of multinational firms’ finances and improved exchanges of tax data between nations -- helped shape global tax reforms this decade by the Organization for Economic Cooperation and Development.
‘Proper Facts’
“Their campaigning work is grounded in good analysis and proper facts,” said Labour Party lawmaker Margaret Hodge, who grilled executives from Google, Starbucks Corp. and Amazon.com Inc. seven years ago over U.K. tax matters. “Without them, I wouldn’t have achieved as much as I’ve been able to do in Parliament.”
Two years ago, the OECD introduced its tax-disclosure system -- known as the Common Reporting Standard -- with tropical locations including the Cayman Islands and British Virgin Islands among early adopters. Both territories have avoided the European Union’s blacklist of alleged tax havens, which now singles out 15 jurisdictions -- including Bermuda and the U.S. Virgin Islands, where disgraced financier Jeffrey Epstein has a private island.