• The tax landscape for wealth-owning families has been fast-changing - a positive development.
But the road to transparency is not a smooth one. Implementation of automatic exchange of information will not be without problems, and among these will be the question of whether all countries are ready for full transparency. An alternative system is urgently needed for those that are not.
• The wealth-management industry and traditional offshore financial centres have directly or indirectly supported the misuse of bank secrecy to the detriment of both interested governments and wealth-owning families, who are increasingly realising that, apart from being the right thing, tax compliance can be far cheaper and safer than tax evasion. Wealth-owning families need to hear the truth, and to be guided by their advisors as to how to best navigate a fast-changing and increasingly transparent landscape.
• The wealth-management industry has not done a good job of proactively leading on developments in and around growing transparency. To a large extent, the industry has been reactive, defending the past rather than working out how best to cooperatively address the needs of all stakeholders. This lack of strategy has resulted in the future of the industry being dictated not by the industry itself, but by others, including onshore governments, which themselves are not necessarily achieving their real objectives.
• For many years, arguments on behalf of offshore centres seeking to preserve the past have focused on the notion of a ‘level playing field’, pointing to bank secrecy and the use of opaque structures in countries such as the US as a rationale for continuing past practices. The reality, however, is that onshore countries have every right to tax their residents (and sometimes citizens), as well as foreigners who invest in their countries. But onshore governments need help from those who really understand the world of trusts and other tools used by wealth owners to arrive at ways to balance the need for information with proper privacy protection
The industry failing to recognise this reality has led to a tsunami of over-reaction, to the detriment of the industry and the families it serves.
• Professional associations, such as STEP, have a special and important role to play in not only educating their own members on global change, but also in helping to educate onshore and offshore governments and smoothing out the rough road to transparency ahead. To date, the industry has not done enough.
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