January 11, 2001

Smaller jurisdictions secure conference victory

     -1250 GMT, Jan 11-The small offshore countries unilaterally classed as tax havens by the Organisation for Economic Co-operation and Development have succeeded in moving the debate on their classifications to a multi-lateral forum in future, James Mawson writes.

     A joint working group of 13 representatives is to be set up following the two-day meeting earlier this week in Barbados co-organised by the OECD and the Commonwealth.

     The purpose and implications of the OECD's initiative on harmful tax practices such as non-transparency, discrimination and financial privacy were discussed at the meeting.

     Delegates from international organisations and 40 jurisdictions agreed that the working group would try to get agreement and commitment from countries to stop harmful practices and encourage tax co-operation through an expansion of the Global Forum. The forum was set up last June by the OECD's committee for co-operation with non-member economies.

     However, in a sign that the OECD is not content to try to achieve full co-operation on existing mal-practices, it said in a statement that the working group, would "also identify further relevant tax issues for consideration by such a Forum".

     The provisional members of the working group, co-chaired by Australia and Barbados, are: Antigua and Barbuda, the British Virgin Islands, the Cook Islands, France, Ireland, Japan, Malaysia, Malta, the Netherlands, the UK and Vanuatu.

     The group will meet in London before the end of January and make a first report at the Tokyo conference on February 15 and 16. The regional conference will address similar issues to the Barbados meeting.

     The UK's dependent territories, such as Gibraltar, the Channel Islands and the Isle of Man, were notable absentees from the Barbados meeting. Neither they, nor the US, have representatives in the working group.

     The OECD failed to add any more of the remaining 33 countries to its list of eight that have made an advance commitment to co-operate with the OECD and so avoid potentially punitive penalties being imposed on them from July 31.

     The Center for Freedom and Prosperity, a US non-profit interest group against the OECD report and for tax competition and financial privacy, was forced to leave the Barbados conference on Monday, despite being an accredited member of the Antigua government, due to OECD pressure.

     Daniel Mitchell, chairman of the CFP and a senior fellow of the Heritage Foundation, a US organisation for free trade, said that this happened despite private sector advisers being allowed in for jurisdictions. The CFP complied with the OECD request to avoid the group becoming an issue.

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