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Delaware is where it’s at

posted Nov 3, 2009, 12:35 PM by Stacey Riggs   [ updated Nov 3, 2009, 12:45 PM by Yale ReiSoleil ]
Gwen Robinson - Financial Times -- So all those hedge funds that are threatening to pull out of the UK and move to Switzerland amid the threat of more draconian EU legislation should really be heading for… beautiful downtown Delaware!

That’s according to the latest findings from the 2009 Financial Secrecy Index, a ranking compiled by the Tax Justice Network, a UK-based organisation that the FT described last week as a “respected campaign group” (and which describes itself as an” international, non­aligned coalition of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens”) and Christian Aid, a UK development NGO.

In its 2009 index, the group found that the US state was the most secretive financial jurisdiction — and by implication, the most attractive to companies because it does not tax profits realised outside the state and does not require companies to be physically present.

The survey of laws, practices and size of inflows in 60 jurisdictions put Delaware first, followed by Luxembourg and then Switzerland. According to the index, the 10 most secretive havens are: (1) The US (Delaware); (2) Luxembourg; (3) Switzerland; (4) Cayman Islands; (5) UK (London); (6) Ireland; (7) Bermuda; (8) Singapore; (9) Belgium; (10) Hong Kong.

The “loser” — or rather, the winner in disclosure terms — was, of all places,  Monaco. That is because the ranking is based on a composite of total offshore activity and measures such as whether a jurisdiction “obtains beneficial ownership information about companies” and the degree of cooperation in turning over requested financial information — and apparently Monaco comes up trumps on most of those fronts.

As for the Swiss, before regulators could breathe a collective sigh of relief for not topping the TJN ranking, the country’s NGOs, including Alliance Sud, an umbrella group of development organisations, and the Berne Declaration — both founder members of the Tax Justice Network — said Switzerland’s third place was “nothing to be proud of”.

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