Tax havens : OECD efforts yield rich dividends; Standards become global benchmark for exchange of tax information

•      Jurisdictions that have substantially implemented the internationally agreed tax standard.

•     Tax havens that have committed to the internationally agreed tax standard, but have not yet substantially implemented it.

•     Other financial centres that have committed to the internationally agreed tax standard, but have not yet substantially implemented it.

•      Jurisdictions that have not committed to implement the internationally agreed tax standard.

    Welcoming the outcome of the G20 meeting, OECD Secretary General Angel Gurria said, “Recent developments reinforce the status of the OECD standard as the international benchmark and represent significant steps towards a level playing field. We now have an ambitious agenda, that the OECD is well placed to deliver on. I am confident that we can turn these new commitments into concrete actions to strengthen the integrity and transparency of the financial system”.

OECD’s future challenges :

•      Achieving a rapid and effective implementation of standards : Many of these commitments will require legislative changes and the negotiation of specific bilateral agreements in order to become effective, and the OECD stands ready to assist jurisdictions in their implementation.

•      Speeding up the negotiations of tax information exchange agreements (TIEAs) : Small tax havens lack the resources to enter into negotiations with a large number of countries. The OECD’s 2002 Model Agreement on Exchange of Information on Tax Matters sets out an option for multilateral rather than bilateral TIEAs that the OECD intends to explore over the coming weeks. The OECD is also examining how the Nordic experience of multilateral negotiations leading to simulta-neous bilateral agreements could be adopted more widely.

•      Extending the scope and role of the OECD’s action : The OECD Global Forum currently encompasses more than 80 jurisdictions and carries out self reviews and peer reviews to assess progress in implementation of the standard.

•      The time has now come to re-examine the membership, the architecture and the role of the Global Forum in setting standards and evaluating progress. The Global Forum will undertake more robust reviews to strengthen the implementation of the standard.

    Politics behind listing of tax havens : Since China and France locked horns over naming of tax havens, US President Obama had to broker a peace. And that is how Hong Kong and Macau escaped from being named as non-compliant tax havens. They were in the declaration mentioned only as China’s Special Administrative Regions. Even Swtizerland was named as a non-compliant ‘financial centre’ rather than tax haven. Three other tax havens which escaped the dragnet prepared by the OECD are Isle of Man, Guernsey and Jersey.

    Three European Union Members which have been put in the gray list are Belgium, Austria and Luxembourg. All of them have protested but agreed to legislative amendments to peel off banking secrecy regulations.

    (Source : Media Reports & Internet, 05.04.2009)