A leading Jersey lawyer is calling time on the island’s offshore status following the Paradise Papers revelation that huge sums of Apple profits were being funnelled through the Crown Dependency to minimise the MacBook and iPhone maker’s tax obligations,.
Jersey-based advocate Philip Sinel, pictured left, told the Jersey Evening Post that he believed it was only a matter of time before tax avoidance comes to be viewed with the same distaste as tax evasion, and will accordingly be outlawed.
For this reason, he argued, it was imperative that Jersey diversify its economy and weaned itself off its reliance on financial services based on its offshore status.
Attitudes to tax avoidance were hardening, said Sinel, in the light of the revelations contained in the Paradise Papers.
Those revelations include the fact that when Ireland, in the face of international pressure, was forced to tighten up its tax law, Apple decided to move two subsidiaries to Jersey.
Consequently, said the International Consortium of Investigative Journalists (ICIJ), which broke both the Panama Papers and the Paradise Papers stories, the US technology behemoth “settled on Jersey . . . [which was to] play a significant role in Apple’s newly configured Irish tax structure set up in late 2014.
“Under this arrangement, [Apple] has continued to enjoy ultra-low tax rates on most of its profits and now holds much of its non-US earnings in a $252bn mountain of cash offshore,” it added.
Apple reverberations will be ‘long felt’
“The reverberations in relation to Apple will be long felt,” Sinel told the Jersey Evening Post. “We are in a new scenario,” he added.
He pointed out that the fall-out would not happen overnight, saying “It will take time. There’s going to be a lot of hypocrisy because the biggest repositories of dirty money are really places like London and parts of the United States, which has its own tax havens in places like Delaware.
He said that Jersey had “played its hand quite well” because the island had tried to get rid, or keep clear, of “the mucky stuff and throw out the rubbish”.
He added that, while Jersey does have checks and balances to keep out “international criminals and despots”, they are not always effective.
That said, Sinel felt, what Jersey deemed to be acceptable would not concur with what governments and media observers internationally held to be acceptable, meaning the island would be out of step with the rest of the world.
‘Shameful and hostile behaviour’ by advisers
He pointed to a recent case on the island called Crociani v Crociani, which revolved around a dispute between family members over £200m of assets.
The case focused on dubious practices by advisers, including lawyers – specifically, Appleby, whose Bermuda outpost was the target for the data breach that resulted in the ICIJ’s reports dubbed the Paradise Papers.
The Royal Court found that Appleby Mauritius had manufactured correspondence, transferred a promissory note worth millions ‘in a brazen attempt’ to evade the court’s jurisdiction and acted in a ‘shameful and hostile’ manner towards one family member after apparently siding with her mother.
The court found that the evidence showed the company ‘in a poor light’.