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‘People still prefer piracy to paying for world ci...

: Bermuda, a British territory in the North Atlantic, proudly announced this month that it had made it on to the OECD’s white list of benign tax regimes. That puts it among the countries that have “substantially implemented” internationally agreed tax standards, as monitored by the OECD, a club of industrial nations. Since January 2007 a stampede of offshore tax havens, many of them British one way or another, have rushed to sign enough bilateral tax-information exchange agreements, known as TIEAs, to get on the white list. The arbitrary threshold is 12.

The Channel Islands (Jersey and Guernsey) and the Isle of Man squeaked in before a meeting of G20 countries in London in April, where tax dodging was on the agenda. The Cayman Islands and British Virgin Islands (BVI), with eight and ten TIEAs respectively, are still on the grey list. All have gone the Nordic route to get TIEAs in a hurry: wooing the Nordic block brings seven TIEAs at one blow, including tie-ups with the Faroe Islands and Greenland.

These tiny outcroppings of British authority-dependencies and overseas territories-are a motley crew. They range from the Channel Islands, the Isle of Man and Bermuda, which have legal and financial frameworks roughly like Britain’s, to archipelagos with a reputation for corruption. All have made a living by enticing the tax- and publicity-shy through their discretion and low tax rates. All are now under pressure from the OECD, America and the European Union to raise standards of transparency and financial vigilance.

For Britain, which exercises at least nominal sovereignty over these tax havens, their survival matters. The Channel Islands argue that their proximity and similar legal framework bring business to the City of London. More concretely, if a dependency were to fail, Britain would almost certainly have to bail it out. How far British obligations could extend is unclear: Michael Foot, a former British regulator, is due to report on the matter in October.