Global Links


Towards a Level Playing Field,
second edition.

Report undertaken by Stikeman Elliott on behalf of the ITIO and STEP.



Financial Times (European edition, FRONT PAGE)

10 October 2003

By Andrew Parker, Financial Correspondent

A flagship global initiative by leading industrialised countries to crack down on tax evasion is in danger of collapse.

Member countries of the Organisation for Economic Co-operation and Development, have failed to reach agreement on a key element of the initiative they will be discussing with representatives of offshore tax havens in Ottowa next Tuesday.

Switzerland and Luxembourg have objected to proposals for improved access to bank infor-mation which leading OECD members, including the US and the UK, say is crucial to the fight against money-laundering and tax evasion.

The split among OECD members is threatening to undermine the organisation's efforts to persuade tax havens to stick with the initiative.

At the September meeting of the OECD's governing council, Switzerland and Luxembourg blocked agreement on a common definition of tax fraud that could apply when exchanging bank information between nations.

They also objected, together with Austria and Belgium, to a deadline of December 2005 for access to bank information for verification of residents' tax liabilities.

Switzerland and Luxembourg are believed to have demanded more time to eradicate harmful tax practices identified by the OECD - which should have been abolished by last April.

Switzerland's federal department of finance said it could not support the proposals at the OECD meeting last month because they clashed with national laws and the European Union savings tax directive. Luxembourg's ministry of
finance also said it could not support the proposals because they contradicted the EU directive.

The OECD initiative has been damaged by the EU's decision in June not to insist on a commitment from Austria, Belgium and Luxembourg to exchange information about non-residents' savings income from 2005.

Glenroy Forbes, chairman of the International Trade and Investment Organisation, which represents offshore centres, said: "The OECD has praised our co-operation but is sadly unable to deliver its own key members.

"The [Ottawa meeting] will need to consider whether to take the OECD's road or the EU's or whether to make no further progress."

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In a groundbreaking decision, the OECD has committed itself to working with members of the ITIO and other countries that provide international financial services to achieve a level playing field for the exchange of tax information.

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