No. 15

Tuesday January 23, 2001

Page G-4

ISSN 1523-567X

Tax, Budget & Accounting

International Taxes

Tax Haven Targets Offered Strategy
For London OECD Task Force Meeting

     The Center for Freedom and Prosperity Jan. 22 said it is circulating a memorandum to low-tax countries offering strategic advice for addressing Organization for Economic Cooperation and Development accusations of harmful tax practices at a London task force meeting later in the week.

     "The memo is being sent today to the delegates from the low-tax countries," Dan Mitchell, chairman of CFP's board told BNA. "The main thrust of the memo, although we go through a lot of specific recommendations, is that the OECD is acting in bad faith," he said.

     Mitchell said OECD officials misrepresented the agreement, reached at a Jan. 8-9 meeting in Barbados with representatives of tax haven target countries, to hold the London task force meeting. Comments by OECD officials, he said, implied the low-tax countries had conceded to the organization's complaints.

     Gabriel Makhlouf, OECD's fiscal affairs committee chair, Jan. 10 had called the decision for a task force meeting 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, Makhlouf said (8 DTR G-2, 1/11/01.) 

     OECD has said the Barbados conference gave participants an opportunity to exchange views on the purpose and the implications of the OECD's initiative on harmful tax practices.

     Group Faults OECD

     Mitchell and Andrew Quinlan, president of CFP, disagreed with the OECD assessment. "What happened in Barbados was that [the OECD and participating countries] agreed to a task force meeting that was supposed to focus on reshaping the process," Quinlan said. 

     Mitchell said the OECD is now pointing to the preamble language of The Framework for a Collective Memorandum of Understanding on Eliminating Harmful Tax Practices and saying that the task force discussion will focus on subjects like information exchange, transparency, and nondiscrimination--goals set OECD has set for its member countries.

     "The OECD is acting as if the low-tax countries have, in effect, capitulated to not only those principles, but to the OECD definition of those principles," Mitchell said.

     London Task Force Meeting

     The London task force meeting, scheduled for Jan. 27- 28, will report its conclusions at another OECD tax-haven meeting in Tokyo Feb. 16, Jeffrey Owens, OECD's head of fiscal affairs, told BNA Jan. 18. 

     Quinlan said the OECD is using "bullying tactics" to get low-tax countries to agree with OECD policies. "How can you have a task force meeting and say you are representing all these targeted countries when there are only seven countries there?" he asked. 

     The working group will be co-chaired by Barbados and Australia. The low-tax countries are Antigua and Barbuda, the British Virgin Islands, the Cook Islands, France, Ireland, Japan, Malaysia, Malta, the Netherlands, the United Kingdom, and Vanuatu.

     OECD's expectation that representatives in London will leave the task force, inform their respective governments, discuss issues with other countries, and prepare a report for the Tokyo meeting is unrealistic, Mitchell said.

     By Myrna Zelaya-Quesada

     Copyright © 2001 by The Bureau of National Affairs, Inc., Washington D.C.

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