Business and Development

How To Use-And Not To Use-The

New Hebrides As A Tax Haven

The New Hebrides, as a tax haven, will play a dominant role in Australia’s future international tax planning, according to a Sydney public accountant, Mr Anthony Two hill.

The group is relatively unknown in international circles, but it will attract a great deal of attention.

Countries like Japan, the US, the UK, France, and, to a lesser extent.

New Zealand, are using the New Hebrides in international monetary transactions and in tax-planning operations.

The New Hebrides, in spite of the major problem of obtaining exchange approval for remission of funds from Australia, may be used by Aus tralian residents in international tax planning techniques. There are ways which satisfy the tax authorities.

About 18 months ago, the Aus tralian Government moved to stop the flow of funds to the New Heb rides, and other tax havens, if there was any suggestion of tax avoidance or evasion. But as Australia is committed to helping developing countries, and the New Hebrides is largely under-developed, funds may be sent to those countries for invest ment in local industry. So far Aus tralia has been generous in its assist ance to the newly-emerging countries of the South Pacific, and to territories which it feels are in need of assist ance.

There are many investment oppor tunities in the New Hebrides, says Mr Twohill. Australian interests have several projects under way in the condominium, not the least of which is beef cattle development. Other current investment opportunities are in a joint timber and cattle project, a piggery on Efate, and unit and housing projects, also on Efate.

Mr Twohill, at a recent inter national tax conference in Sydney, outlined how the New Hebrides met the criteria of a good tax haven. One of these was low, or no, taxes, on at least one important category of income. The New Hebrides has no income tax, and no estate or death

duties. It must be politically stable.

The New Hebrides is politically stable, and is likely to remain so if the UK and France remain there.

It must be acceptable, physically and legally, and it meets both those criteria, said Mr Twohill.

The New Hebrides offers those tax advantages, plus sophisticated com pany laws, and the services of a financial community, highly com petitive with those of the better known tax havens of the Caribbean or Atlantic.

He mentioned the Bahamas as a tax haven which became a highly developed settlement because it was a tax haven. Fifteen to 20 years ago the United States tried various tech niques to stop the use of the Bahamas as a tax haven for US citizens and residents, and failed. The Bahamas proved a good tax haven, and has been used by multi-national com panies to avoid the heavy incidence of income tax. A parallel could be drawn of what the Bahamas is now and what the New Hebrides could be.

Mr Twohill warned against some techniques in attempting to use the

New Hebrides as a tax haven. For example, a company should not be set up to engage in a re-export trade.

In such a case payment for the im ported goods would almost certainly be refused, unless the Australian authorities were satisfied about the bona fides of the New Hebrides com pany.

Professional men and other tax payers could benefit directly in in vestment in the New Hebrides, pro vided that their particular type of investment was approved by the Aus tralian authorities.

Mr Twohill said one of these would be New Hebrides Beef Developments, in which he has an interest. It would provide 50 Australian residents and taxpayers with the opportunity to benefit from a development operation in an under developed country.

Apart from a proposal to buy a property in New South Wales, NH Beef Developments intends to manage, and ultimately purchase a large cattle station near Vila over the next three years, which would give certain tax advantages to Aus tralian residents.