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Towards a Level Playing Field,
second edition.


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

 


16 January 2002


ITIO calls on OECD to justify 'double standards'

The 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.

The 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.

Only 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.

ITIO 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.

"Before 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 equally".

"OECD countries should either state their reason for not providing this public assurance, or put an end to what looks dangerously like double standards."

NOTES TO EDITORS

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 project.

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 status.

6. For further information, please contact Ben Coleman on 07958 616 444.

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ITIO THANKS COMMONWEALTH SECRETARY-GENERAL

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