The OECD assault on so-called “harmful tax practices” is approaching an important deadline. Over the last six months the Committee on Fiscal Affairs of the OECD has sought to bully the 35 offshore tax havens named in its June 2000 blacklist of “harmful” tax competitors to abandon attractive tax breaks for foreigners and share information about their income and assets with tax authorities in the rich countries which make up the membership of the OECD.
Offshore tax havens have until 28 February to agree to do this or be listed on a second blacklist and face economic sanctions, including withdrawal of tax treaty privileges. So far, 11 jurisdictions – Aruba, Bahrain, Bermuda, Cayman Islands, Cyprus, Isle of Man, Malta, Mauritius, Netherlands Antilles, San Marino and the Seychelles – have signed up. They have participated in a Global Forum Working Group on Effective Exchange of Information, established to decide the legal framework within which the information will be disclosed. But others – especially those in the Caribbean and the Pacific – are understandably reluctant either to appease a bully, commit commercial suicide or comply with standards rich countries such as Luxembourg and Switzerland find intolerable.
Meanwhile, an Orwellian statement from OECD Fiscal Affairs Committee chairman Gabriel Makhlouf on 31 January described the discussions of the last six months as “assisting the uncommitted jurisdictions to have a clearer understanding of what the commitment process involves. The Committee has devoted considerable resources to discussions with the uncommitted jurisdictions including visits to the Caribbean, Pacific and other regions. They have enabled us to complete our technical discussions with almost all of these jurisdictions. Considerable progress has been made in developing a common understanding of the project.”
The OECD is already at work identifying other poor countries “that have not been identified as tax havens.”