Secrecy Jurisdictions

Banking secrecy laws strengthen the normal contractual obligation of confidentiality between a bank and its customer by providing criminal penalties to prohibit banks from revealing the existence of an account or disclosing account information without the owner’s consent. Found in a majority of secrecy jurisdictions, banking secrecy laws can help to obstruct information gathering requests from both national and international competent authorities such as tax administrations or financial regulators. Until 2005, most of the concluded double tax agreements did not specifically include provisions to override banking secrecy laws when responding to information requests by foreign treaty partners. Bank secrecy was, and remains in these cases, a massive obstacle to progress in obtaining information required to secure tax enforcement.

A bare trust is a trust in which the beneficiary has an absolute right to both the income and capital of the trust and may as such ask for them to be paid to them at any time. The result is that the trustees are simply nominees for the beneficiary. This means that the trust income and gains are also the property of the beneficiary and should therefore be taxed as their own in whatever jurisdiction they are resident.

A bearer share differs from a normal share because no record is kept of who owns it. Whoever physically has the bearer share is for legal purposes its owner. Bearer shares are used to preserve anonymity on the part of owners. Because of their potential use for money laundering and in tax evasion they are severely frowned upon but some states, including the UK, still allow their use regardless.

The person who actually has the right to enjoy the income or capital that possession of property might provide. The terms is used to contrast with the legal or nominee owners of property and with trustees, all of whom might be recorded as having legal title to property without possessing the right to enjoy the benefits of using it.

The “Big 4” are the four firms of accountants who dominate the world’s audit, accountancy and taxation advice markets. They are, in order of significance, PricewaterhouseCoopers, Deloittes, KPMG and Ernst & Young. No other firms compare in terms of influence, size and market share. All 4 are present in almost every major, and many minor, secrecy jurisdictions. They dominate accounting standard-setting worldwide and can therefore be said not only to comply with the rules of accounting, but to at the very least heavily influence the composition of the rules themselves. See http://www.pwc.com , http://www.deloitte.com/ , http://kpmg.com/ and http://www.ey.com/

Exchange of information between the tax authorities of states can be done bilaterally or multilaterally. When done bilaterally, two main types of agreements are used. The first are Double Taxation Agreements (DTAs). The second are Tax Information Exchange Agreements (TIEAs). Bilateral Double Taxation Agreements and Tax Information Exchange Agreements are agreed between the two participating states: no other state is party to the agreement. In multilateral agreements more than two states are parties to the agreement. Bilateral agreements are relatively common; multilateral agreements are very rare.

See Shell Corporation.