Wednesday January 24, 2001
Tax, Budget & Accounting
Strategy Offered to Tax Haven Targets
Includes 'Watch New U.S. Administration'
Tax-haven target countries should consider a number of strategies in upcoming negotiations with the Organization for Economic Cooperation and Development--including delay until the
Bush administration is able to demonstrate its intent in the foreign tax arena--the Center for Freedom and Prosperity (CFP) said in a Jan. 22 letter.
Negotiations between the tax-haven targets and the OECD are impossible until OECD nations withdraw their memorandum of understanding on harmful tax practices, suspend the threat of
sanctions, and eliminate the July deadline for compliance with the group's policy, the letter said.
CFP President Andrew Quinlan and Dan Mitchell, the group's chairman of the board, Jan. 22 said the group's memorandum to low-tax countries offers public policymakers guidance on
discussions with OECD set for Jan. 27-28 in London. Mitchell charged that 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 (8 DTR G-2, 1/11/01; 15 DTR G-4, 1/12/01).
Task Force Strategy Memo
According to the letter, "neither the OECD nor the nations it represents have a right to unilaterally manufacture international rules that are designed to help one tiny slice
of the world population--politicians and tax collectors from OECD nations--at the expense of every other group."
To this end, the center added that there should be an equal number of experts who believe in tax competition, financial privacy, and fiscal sovereignty at the London
Among the nine suggestions the center made for low-tax countries' participation in the negotiations were:
If low-tax countries are supposed to agree to transparency and nondiscrimination, then OECD nations should eliminate the "myriad credits, deductions, preferences, loopholes, shelters, subsidies, exemptions, and preferences that litter their tax code," the letter said.
Withholding is a more effective method of stopping tax evasion than information exchange, which OECD seeks from low-tax countries, and withholding preserves competition, privacy,
and sovereignty, the group said.
CFP encouraged the discussion of a worldwide system of taxation and taxpayer rights to protect privacy and diminish unreasonable search and seizure.
The new U.S. presidential administration; existing support for tax competition, financial privacy, and fiscal sovereignty in the U.S. Congress; and the change of treasury secretary from Lawrence Summers to Paul O'Neill indicate that OECD may not be capable of imposing its desired restrictions, the memo said.
Text of the CFP letter is in BNA TaxCore.
By Myrna Zelaya-Quesada
Copyright © 2001 by The Bureau of National Affairs, Inc., Washington D.C.