Media reports from the across the pond claimed a ‘tentative agreement’ between the US and the OECD had been approved and would be released today.
Under the agreement, offshore havens could be subject to economic sanctions starting in 2003 if they do not provide information to tax authorities in OECD countries seeking data in specific tax inquiries.
Countries would be expected to hand over information about taxpayers to other countries tax authorities and could not refuse such a request on the grounds that the alleged tax violation did not break any local tax laws.
As part of the new arrangement, OECD members had agreed to scrap demands that tax havens end all tax perks offered to foreign companies, which are unavailable to local businesses and individuals.
In addition, they have also agreed not to impose sanctions until 2003, the same date as the deadline for non-compliant members states. This should ease concerns of non-co-operative countries which claim the OECD had adopted a hypocritical stance by not recognising harmful tax regimes in their own member states, and placing an unrealistic deadline for reform.
An official from the OECD told the Washington Post the agreement was ‘a compromise that allows everybody to save face’.
The blacklist was originally due to be published on the 31 July, but the Bush administration withdrew support for the scheme and the date was put back until November.
The official position from the White House was that the US had little to gain from supporting the OECD. Treasury Secretary Paul O’Neill said backing the proposal would place a burden on the US’s financial industry.
Currently 35 tax havens appear on the OECD blacklist, which dates back to November last year. The countries are threatened with economic sanctions and having favourable tax treaties scrapped if they did not co-operate with OECD by July 2001.
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