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Bureau of National Affairs

Thursday January 11, 2001
Tax, Budget & Accounting
International Taxes

OECD-Tax Haven Task Force Called
Win-Win Outcome for Tax Conference

 By Myrna Zelaya-Quesada

   The creation of a task force to identify potential compromises by the Organization for Economic Cooperation and nations it has identified as engaging in harmful tax practices, following a two-day regional conference, represents a hopeful sign of greater cooperation between the sides, observers said following the gathering. 

     The Jan. 8-9 meeting in Barbados gave participants an opportunity to exchange views on the purpose and the implications of the OECD's initiative on harmful tax practices, OECD said in a Jan. 10 news release. 

     The resulting task force created an opportunity for "the persecuted low-tax nations" to negotiate with OECD rather than capitulate to OECD demands, according to Andrew Quinlan, president of the Center for Freedom and Prosperity in Washington, D.C.

     The OECD initiative, The Framework for a Collective Memorandum of Understanding on Eliminating Harmful Tax Practices, a memorandum of understanding unveiled Nov. 24, set out steps the Paris-based organization of the world's industrialized democracies said 35 jurisdictions it identified as tax havens should take to demonstrate their commitment to transparency, nondiscrimination, and effective cooperation and to avoid the sanctions by the organization's members (228 DTR GG-1, L-1 11/27/00).

     " The OECD had hoped this conference would lead to more nations signing the MOU," Quinlan said. "The task force not only represents a step in the other direction, but it finally gives the persecuted low-tax nations a seat at the negotiating table." 

     Gabriel Makhlouf, OECD's fiscal affairs committee chair, called the agreement to continue discussions a "genuine win-win situation." Essentially, the agreement allows the OECD to pursue its goal of seeking cooperation from the offending jurisdictions while enabling those jurisdictions to participate as equals in a discussion of what needs to be done and how to do it.

     At a news conference following the meeting, Barbados Prime Minister Owen Arthur said that the sides had reached a shared perspective that would enable further progress. "You can only reach a conclusion if you start with a perspective that is shared," Arthur said. "We do have a shared perspective now."

Barbados, Australia to Co-Chair Panel

     The working group will be co-chaired by Barbados and Australia, and provisionally includes representatives from Antigua and Barbuda, the British Virgin Islands, the Cook Islands, France, Ireland, Japan, Malaysia, Malta, the Netherlands, the United Kingdom, and Vanuatu, OECD said.

     The group is set to meet in late January in London to begin its discussion of three key goals, including how to:

    - modify the process outlined in the OECD memorandum of understanding,

    - explore how the recently created global forum on taxation can be made a truly inclusive global forum to promote     cooperation on tax matters, and

    - identify further relevant tax issues for consideration by the forum.

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