November 27, 2001

Macthavious denies that territory is
preparing to sign OECD agreement

by Susan Henighan

Director of Financial Services Robert Macthavious said there is no truth to a memo sent by the Center for Freedom and Prosperity last Wednesday saying that the BVI is about to sign on to the OECD's harmful tax initiative.

An e-mail sent Wednesday saying that the OECD is bragging that the territory is about to sign on. "Two independent and usually reliable sources in Europe have told us that the OECD is boasting that the British Virgin Islands is about to capitulate and sign away its fiscal sovereignty," the e-mail stated.

Macthavious said Thursday that this is not true. "Maybe the Center knows something we don't," he said.

Last week the OECD announced it was scaling back its imitative and extending the deadline.

The OECD agreed that coordinated defensive measures won't apply to uncooperative tax havens before they apply to OECD member countries and eliminated "no substantial activities" from its list of points used to determine whether a jurisdiction is uncooperative.

The BVI has long said that it will not sign onto an agreement that is not applied equally to OECD members and non-members.

The right-wing Center for Freedom and Prosperity is a loud voice in Washington lobbying against the OECD initiative.  It warned the BVI that even in its water-down state, the imitative is dangerous for countries like the BVI.

"The OECD initiative represents a "foot in the door" for the European Union's infamous Savings Tax Directive. This EU scheme is the real danger.," Dan Mitchell, senior fellow of the Heritage Foundation said.

Mitchell said that if jurisdictions are going to sign on, they should at least wait until the last minute. "That strategy at least gives us more time to demonstrate why the OECD and EU can and should be defeated."

The new deadline for the imitative is the end of February.

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