The rise of the " Freeport " !

For centuries the tax cheats of the world had a willing accomplice in the Swiss banking system.   The secrecy surrounding those numbered bank accounts was legendary.  Gradually, pressure is forcing more disclosures and the tax man is closing in relentlessly.

The tax avoidance industry is fighting back and we are now seeing the emergence of the" Freeport " industry in various cities of the world.   This is based on what used to be called " Bond stores ".    The Bond store was a tax free area where goods could be stored until their final destination was decided - at which time any tax or excise was then payable.

What was held within a Bond store was deemed " goods in transit " and in some cases in the days of sail it was simply waiting trans-shipment until the arrival of a ship which would convey it to another part of the world.    It was also handy to hold goods in bond until cheques cleared or a buyer could be found.  There was no time limit on how long contents could remain in that " in transit " stage.

Tax dodging has taken a new form.   Freeports are now used to store art, antiquities, rare wine or items that may increase in value.   They resemble a fortress in their mode of construction because they need to offer an incredible standard of fire protection and burglary security.   Rates charged range from about a $ 1000 per annum for the storage of a medium sized painting, to somewhere between $ 5,000 - $ 12,000 for the space of a small room.   Some Freeports mirror the facilities of banks, with storage boxes to hold cash or gold bars.

One of the benefits of Freeports is that the wealthy of the world may quietly trade their treasures amongst themselves.   In many cases,  this simply involves the item being transferred from the holding area of one owner - to the holding area of the buyer.   That is reminiscent of the days of the Gold Standard, in which countries settled their trade debts by transferring gold bars within a central gold storage area.

The other change from the past is the location of Freeports.    Traditionally, they were sited in sea ports to handle the merchandise carried by ships, but today are more likely to be in close proximity to a major airport.    The trend started with Geneva, Singapore and Luxembourg, but it is rapidly growing and taking trade away from remote tax havens like the Cayman islands - and becoming an adjunct to the big cities of the world.

Once again the tax avoidance industry and the tax man face each other across the Chess board as they make move - and counter move.    As one door closes - another door opens.  Inevitably, all this is reliant on the legislation in place to confer legality - and that will become the real battleground !