HAVENS PLANS FACING COLLAPSE, SAYS OFFSHORE FINANCIAL
Tax Report, Bureau of National Affairs
Lawrence J. Speer and Joe Kirwin (Luxembourg)
treatment offered to several European banking centers
under the European Union's savings tax directive has
undermined the principle of a "level playing
field" under which offshore financial centers
agreed to participate in an ongoing crackdown on tax
havens, and could threaten the future of the Organization
for Economic Cooperation and Development-led project,
a lobbying group representing offshore financial centers
said Oct. 10.
member countries are slated to meet representatives
of offshore financial centers during an Oct. 14-15
meeting in Ottawa of the Global Forum on Taxation.
International Trade and Investment Organization--which
represents 17 of the offshore financial centers cooperating
with the OECD--warned that discussions on implementing
the banking secrecy and information exchange requirements
of the OECD initiative have reached an "impasse."
progress will be difficult" as long as OECD
members Austria, Belgium, Luxembourg, and Switzerland
continue to benefit from information exchange standards
and timelines different than those offered to non-OECD
members, the ITIO said.
for EU Members an Issue
crisis between offshore financial centers and the
OECD has been brewing for months, ever since the European
Commission--the Brussels-based executive body for
the 15-member EU--allowed Austria, Belgium, and Luxembourg
to opt out of information exchange requirements in
the EU's savings tax directive slated to go into effect
than requiring them to share banking information and
cooperating with tax authorities, the Commission accepted
a commitment from the three governments to implement
mandatory withholding on interest income earned in
accounts held by foreign nationals.
OECD warned the Commission that the compromise would
jeopardize its wider tax havens initiative, which
has since 2000 sought to oblige offshore financial
centers to share banking information and carry out
other sorts of cooperation in tax matters with officials
from OECD member countries.
ITIO countries were slated to meet Oct. 12-13 in Ottawa,
prior to the meeting with the OECD, to discuss a unified
response to the "new realities"
posed by the EU position, a source told BNA Oct. 10.
Officials Deny Impact on Initiative
Commission officials Oct. 10 denied that the recently
agreed terms of the European Union cross-border savings
tax directive are a hindrance to the OECD negotiations.
is nothing in the terms of the EU savings tax directive
that prevents the OECD agreement to go further when
it comes to issues such as defining tax fraud or exchanging
information," said Commission spokesman
Todd acknowledged that the OECD had written in January
to the European Commission calling for a delay in
the EU savings tax directive (14 DTR G-6, 1/22/03),
the final terms of which were agreed in June, because
it would undermine the OECD negotiations. The EU savings
tax agreement is supposed to take effect in 2005.
EU agreed to let Luxembourg, Belgium, and Austria
not commit to an information exchange system after
failing to get Switzerland to agree to give up bank
secrecy laws and commit to a system of information
'Unable to Deliver.'
member countries have acted in good faith,"
said ITIO Chairman Glenroy Forbes. "The OECD
has praised our cooperation, but is sadly unable to
deliver its own key members," who are being
allowed to avoid tax information exchange until 2010,
at the earliest, Forbes said. "The Global
Forum will need to consider whether to take the OECD's
road, or the EU's, or whether to make no further progress,"
Forbes said. "For the ITIO, any way forward
must be on a level playing field."
Hay, co-chairman of the international committee of
the Society of Trust and Estate Practitioners, seconded
Forbes's statement, noting that the European Union
"has undermined the OECD's harmful tax project.
International finance centers have confirmed their
willingness to support the principles of transparency
and exchange of tax information on a level playing
field basis, but EU finance ministers have handed
Switzerland an effective veto on further OECD progress,"
Hay, the question of cooperation should no longer
be asked of offshore financial centers, but rather
whether "the OECD's European Union members
and Switzerland meet the OECD's information exchange
International Trade and Investment Organization (ITIO)
brings together Anguilla, Antigua & Barbuda, Bahamas,
Barbados, Belize, British Virgin Islands, Cayman Islands,
Cook Islands, Isle of Man, Labuan (Malaysia), Panama,
St. Kitts & Nevis, Samoa, St. Lucia, St. Vincent
& the Grenadines, Turks & Caicos, and Vanuatu.
The Commonwealth Secretariat, CARICOM, Pacific Islands
Forum, Caribbean Development Bank, and Eastern Caribbean
Central Bank have observer status with the group.
information on the group's interaction with the OECD
is available at http://www.itio.org.
© 2003 by The Bureau of National Affairs, Inc.,
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