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Tax-News.Com

London 1st February 2001

OECD And Offshore Task Force Members
Failed To Agree In London Talks

by Jason Gorringe, Tax-News.com

     A statement released on last weekend's London OECD talks by Antigua and Barbuda High Commissioner Sir Ronald Sanders reveals that the OECD spent most of the time trying to claw back ground it was seen to have lost in Barbados on January 8th/9th.

     The meeting in London was hastily arranged after the idea of a Global Tax Forum emerged in Barbados, with a 13-member Task Force composed of OECD members and offshore jurisdictions charged with the task of creating a framework within which the OECD's 'harmful tax competition' agenda could be discussed in a less threatening way.

     The London meeting was supposed to provide a basis for further multilateral talks to proceed as planned in Tokyo later in February, but seems not to have succeeded in reaching enough of a compromise for that - instead, yet another meeting is now planned prior to Tokyo at which the Task Force will try to agree on procedures for the multilateral talks which are acceptable to both sides. 

     Sir Ronald, senior ambassador with ministerial rank and Antigua and Barbuda's representative on the Working Group concerned with the OECD initiative on Harmful Tax Competition, issued the following statement:

     "The non-OECD members of the Working Group, established in Barbados after a high-level consultation on 8-9 January 2001, between the OECD and non-OECD jurisdictions, remain committed to the creation of a consultative political process that includes the widest possible participation, and to the creation of a truly global forum. The non-OECD members believe such a forum should consider the legitimate interests of all jurisdictions, and establish standards that command the respect and support of the international community with respect to tax matters which have cross border implications. 

     It is true to say that the non-OECD members were unanimous and firm in their positions under the chairmanship of the prime minister of Barbados, Owen Arthur.

     I believe that we came to London ready and willing to cooperate fully with the OECD members of the Working Group to achieve this objective that was clearly set at the Barbados meeting. 

     We were dismayed that, at the outset of the meeting on Friday, 26th January, the OECD members of the Group made no reference to the considerable progress that had been made at the Barbados meeting; instead they repeated the unilateral and arbitrary process that the OECD Secretariat had been demanding in the months prior to the Barbados consultation.

     In a spirit of genuine good faith and with a strong commitment to finding an acceptable process, the non-OECD members of the Working Group made a formal proposal to the OECD members in which we: 

    - recalled the clear remit of the Barbados meeting; 

    - offered, by 31st July 2001, to publicly confirm our commitment to the three broad principles of transparency, non-discrimination and effective exchange of information to which we had agreed at Barbados; 

    - resolved to establish, by 31st July 2001, a truly global tax forum with membership open to all jurisdictions that publicly committed to the three principles;

    - committed to implementing the decisions of the global forum by 31st December 2005, the very date that the OECD Secretariat had itself set for accomplishing the implementation of a plan to end harmful tax practices;

    - committed to the establishment of a dispute resolution mechanism for matters of international taxation.

     I believe that it is true to say that the non-OECD members of the Working Group were deeply disappointed when the response of the OECD members continued to insist on the original unilateral process created by the OECD Secretariat and on the retention of a forum devised and controlled by the OECD, including insisting that there could be no negotiation of the definition and details of the three broad principles.

     I believe it is also true to say that we were also alarmed that, in their proposal, the OECD members persisted in their desire to name and shame jurisdictions as non cooperative even though it is evident both from the Barbados consultation and the high level of participation in the present London meeting that all the targeted jurisdictions are willing to cooperate with the OECD and other members of the international community in fully addressing all tax matters. 

     Nonetheless, we persevered in our desire to find a mutually acceptable solution by repeating the firm commitments we had made in our first proposal and adding to it that the truly global forum should use, as one of its working documents, the OECD interpretation of the three principles as set out in the Memorandum of Understanding which the Secretariat sent to targeted jurisdictions. In this connection, the non-OECD members undertook to present its own understanding of the three principles by 31st July 2001. 

     We further proposed that by 1st May 2001, the Working Group should produce detailed proposals and a timetable for the creation of a global tax forum.

     We took account of the position of the OECD members that they have no authority from their ministers to negotiate beyond the remit given to them at the last ministerial meeting of the OECD. Therefore, we suggested that they should transmit our proposal to their ministers and seek authority to negotiate in a context in which the threat of sanctions is removed to allow for good faith negotiations. In this connection, we proposed that the meeting of Working Group should be adjourned, but not closed, to allow it to resume at an early date with a view to continuing to seek an acceptable way forward.

     At the end of the day, I believe it is true to say that the meeting achieved a better understanding of each side's position, and, in this context, progress was made. It remains our hope that the OECD members of the Working Group will recommend to their governments that (a) they withdraw the threat of sanctions so that we could enter into good faith discussions, (b) they agree to the establishment of a truly global forum in which the OECD will play an important part, and (c) the OECD definition of the three broad principles transparency, effective exchange of information and non-discrimination) should be an important part of the agenda of the proposed Global tax Forum."

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