UK tax havens act to avoid blacklist

Anguilla, the British Virgin Islands, Montserrat and the Turks and Caicos Islands are understood to be preparing a joint statement endorsing the Organisation of Economic Co-operation and Development’s plan to end harmful tax practices.

Victor Banks, Anguilla’s finance minister, was reported in the FT today as saying the four territories would commit to the treaty, provided the standards they are subject to are the same as those observed by OECD members.

They are expected to agree to improve financial transparency, better co-operation with overseas tax authorities and to scrap laws that favour overseas investors, giving a much-needed boost to the OECD initiative.

The OECD has threatened economic sanctions from its member countries against all the tax havens named on a blacklist for refusing to commit to tax reforms. The organisation claims the measure is aimed at ensuring both member and non-member OECD countries can recover tax revenues lost due to favourable tax policies offered by tax havens.

Currently 32 havens appear on the OECD blacklist and face the possibility of having favourable tax treaties with OECD members abolished if they do not comply by 31 July 2001.

Those offshore financials centres which refuse to commit to reform argue the OECD ignores harmful tax laws practised by its own member countries, who collectively represent the majority of the world’s developed nations.

An OECD meeting with tax haven representatives in London at the end of January failed to resolve the dispute. Both parties could not agree on the composition of a world tax forum.

Jersey, Guernsey, Bermuda, the Cayman Islands, Cyprus, the Isle of Man, Malta, Mauritius, the Netherlands Antilles, San Marino and the Seychelles have already committed themselves to OECD reforms.

Links

OECD progresses on tax practices

No solution to tax havens row in sight

OECD report on global tax co-operation