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taxation should be exploited in such a way as to enable the taxpayer to escape liability altogether in both countries or to reduce his liability to a nominal amount. The Double Taxation Agreement may need to be amended to deal with this problem. The Agreement would also need to be amended if specific legislation were introduced to tax brass plate companies at a nominal rate (ie "International Business Corporation" legislation).
13. As regards import duties, it is suggested that exemptions, if considered essential to attract particular developments, should be limited to the construction materials and equipment required for those developments. It is reasonable that exemptions should continue to the full term of the agreement in relation to materials and equipment introduced for the purpose of carrying out public works to which the development is committed under the agreement. As regards any other materials and equipment it is considered that any exemptions granted should be for a limited period only – say up to 10 years.
14.
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It is important that governments should retain the means of obtaining additional revenue from developments as they proceed or from the registration of companies, if the latter appears to be the only source of potential wealth. So far as property developments are concerned, this aim might be achieved through the introduction of an effective system of land and property taxation from which no exemptions would be granted in any agreements. Such taxes are however complicated to devise and administer and the closing of loopholes is a difficult matter; expert advice is normally required to work out a suitable system. In the case of the registration of companies, revenue can be obtained by charging initial registration and annual fees at rates in line with those charged in other tax havens.
Exchange Control
15. Developers often seek exemption from exchange control requirements. This should never be conceded. If any exchange control gaps are allowed to develop, Her Majesty's Government may have to take action to protect the interests of the sterling area. The Foreign and Commonwealth Office should always be consulted therefore about any proposals involving exchange control. Care must be taken to ensure that agreements do not contravene exchange control requirements and drafts must be cleared with the Foreign and Commonwealth Office before any commitments are entered into.
Banking
16. If there is any likelihood of banks being set up under an agreement with a commercial organisation, proper banking legislation is essential to ensure the protection of depositors. The Foreign and Commonwealth Office will provide a model banking ordinance and will obtain expert advice on banking matters in general. If newly established banks are to be given exchange control authority, the Foreign and Commonwealth Office should be consulted in order to eliminate the possibility of any loophole being created in the exchange control system.
Company Registration
17.
Governments should reserve to themselves the registration of companies and the granting of licences of establishment and should not delegate these functions to a commercial organisation.
Land
18. Where Crown land is involved it is preferable to offer such land on leasehold rather than freehold terms. Any genuine developer will generally be satisfied with a ninety-nine year lease. If he is
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