Hong Kong used by US tax evaders

18th August 2009, Comments 0 comments

The United States reports that Swiss banking giant UBS helped clients hide money in Hong Kong to avoid paying taxes.

Hong Kong -- A United States crackdown on wealthy Americans accused of hiding their money overseas to avoid paying taxes at home has spread to Hong Kong, a report said Monday.

Court documents in the United States detail how Swiss banking giant UBS helped clients set up enterprises in the southern Chinese hub to hide money, the Wall Street Journal reported Monday.

John McCarthy, a UBS client in California, in mid-August agreed to plead guilty to one count of failing to file an annual report to the Treasury Department, the financial daily said.

A document filed with the plea showed he directed the transfer of more than USD 1 million (CHF 1.07 million) to a Swiss UBS account held in the name of a Hong Kong entity named COGS Enterprises Ltd.

The case follows that of Jeffrey Chernick, from New York, who pleaded guilty in July to filing a false tax return. He also used a Hong Kong corporation.

Hong Kong has been criticised in the past for not sharing tax information with other authorities.

A law that would align the Asian financial centre with international standards on exchange of tax information was submitted to lawmakers in July and is awaiting approval.

In a statement emailed to AFP, a Hong Kong government spokesman said the city did not make "special tax concessions" to attract foreign capital and had "stringent and effective anti-tax avoidance legislation".

Hong Kong "should not be compared" with authorities who seek to attract tax-evading foreign capital "through zero or nominal tax rates, complicated and opaque tax rules, as well as bank secrecy laws," the statement said.

AFP / Expatica

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