Global Links


Towards a Level Playing Field,
second edition.

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



Financial Times (UK edition, page 9)

10 October 2003

By Andrew Parker, Financial Correspondent

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

Member countries of the Organisation for Economic Co-operation and Development failed to reach agreement on improved access to bank information last month because of objections from Switzerland and Luxembourg.

Leading countries, including the US and the UK, say exchange of bank information between nations is crucial to the fight against money laundering and tax evasion.

But 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 during exchange of 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 also believed to have demanded more time to eradicate harmful tax practices identified by the OECD, and which should have been abolished by last April.

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

A total of 31 offshore centres are supposed to scrap harmful tax practices, and exchange bank information, by December 2005.

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

Under the EU savings tax directive, the three countries will be able to apply withholding taxes until at least 2010.

Next Tuesday, offshore centres will meet OECD officials for talks about the tax initiative in Ottawa.

Glenroy Forbes, chairman of the International Trade and Investment Organisation, which represents offshore centres such as the British Virgin Islands and the Cayman Islands, 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."

The US Treasury department said: "The exchange of information with other countries for tax purposes is critically important to the full and fair enforcement of our tax laws.

"Whilst we regret all OECD countries did not endorse the recommendations put forward last month, we intend to continue to work together with our partners around the world to further common understandings in this area."

Return to ITIO in the News index





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.

Google I.T.I.O