16 January 2002
ITIO calls on OECD to justify 'double standards'
International Tax and Investment Organisation (ITIO)
today called on the Organisation for Economic Cooperation
and Development (OECD) to explain its refusal to provide
assurances that it will operate a level playing field
for OECD and non-OECD countries.
ITIO has consistently argued that, without a level
playing field, the OECD's project could end up enriching
OECD members at the expense of small and developing
economies. Increasing anecdotal evidence now suggests
this to be the case.
this week, the London Times (13 January 2001) reported
that virgin.net, a joint venture between Virgin and
the cable group NTL, had set up the financial base
of its flat-rate service on the tax-free Portuguese
island of Madeira.
spokesman Ben Coleman commented, "While Portugal
refuses to sign up to the OECD's 'harmful tax' project,
its tax haven territory of Madeira avoids scrutiny
and draws in business. Tax professionals also tell
me they are seeing an increasing amount of business
going from 'offshore' centres to Switzerland. In the
absence of a stated level playing field, OECD members
such as Switzerland and Portugal are able to promote
themselves at small countries' expense.
making a commitment to the OECD's so-called 'harmful
tax practices' project, small countries across the
world want a public assurance that a level playing
field will apply for OECD and non-OECD countries alike.
In particular, they want a public assurance both that
they will be equally involved in setting any new international
rules and that OECD countries will apply these rules
countries should either state their reason for not
providing this public assurance, or put an end to
what looks dangerously like double standards."
1. The OECD is currently demanding that 30 offshore
finance centres "commit" to its "harmful
tax practices" project by 28 February 2002 or
face unspecified "coordinated defensive measures"
(sanctions). Meanwhile, four OECD members - Switzerland,
Luxembourg, Portugal and Belgium - who are among the
offshore world's principal "onshore" competitors,
have opted out of the OECD project.
2. Offshore centres believe that a level playing field
should apply to OECD and non-OECD countries alike.
They are deeply concerned that, if OECD countries
are not obliged to adhere to the same standards, business
will just migrate to OECD members. Similar problems
are raised by the exclusion of offshore centres such
as Hong Kong, Singapore and Dubai from the OECD's
3. Numerous offshore jurisdictions have said they
do not see how they can be expected to commit to the
OECD's project unless they have an assurance that
a level playing field across the board will be applied.
Yet the OECD has consistently failed to give such
an assurance and has threatened sanctions.
4. The International Tax and Investment Organisation
(ITIO) is a grouping of small and developing economies
(SDEs) set up in March 2001 to help SDEs respond to
global tax and investment challenges. It explicitly
considers the development implications of these challenges.
5. The ITIO currently comprises Anguilla, Antigua
and Barbuda, Bahamas, Barbados, Belize, British Virgin
Islands, Cayman Islands, Cook Islands, Malaysia, St
Kitts & Nevis, St Lucia, Turks & Caicos and
Vanuatu. The Commonwealth Secretariat, Pacific Islands
Forum Secretariat and CARICOM Secretariat have observer
6. For further information, please contact Ben Coleman
on 07958 616 444.
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