Small and developing economies respond to OECD, pursue
equal treatment, agree to continue working together
At a meeting in London on 21-23 March, the non-OECD
members of the OECD-Commonwealth Joint Working Group
on Harmful Tax Competition made significant progress
on addressing common concerns about tax cooperation.
meeting discussed the OECD's response to the group's
proposal for a truly inclusive Global Tax Forum.
afterwards on behalf of the meeting, Lynette Eastmond
of Barbados said, "Our position stresses the
importance of all countries in the process, whether
members of the OECD or not, receiving equity of participation
and treatment. For example, as regards monitoring
compliance with commitments, we are suggesting that
a form of peer review be put in place which applies
to non-OECD and OECD countries alike. This would build
general confidence in the fairness of the process".
meeting also agreed to put in place structures to
enable small and developing economies (SDEs) and others
to continue working together on international tax
and investment issues, with a particular focus on
the meeting agreed to remind the OECD of its undertaking
to provide written answers to seventeen points of
clarification sought by non-OECD countries and discussed
at the previous meeting of the Joint Working Group
in Paris on 1-2 March 2001.
further information, please contact Ben Coleman
(Tel. +44 20 7526 3603, + 44 7958 616 444)
Following recognition late last year that it needed
to improve the quality of its dialogue with small
and developing economies (SDEs) on "harmful tax
competition" matters, the OECD held regional
meetings in Barbados in January 2001 and in Tokyo
in February 2001. At the Barbados meeting, it was
agreed to set up a small Joint Working Group to explore
ways of taking matters forward.
Joint Working Group is co-chaired by Rt Hon. Owen
Arthur, Prime Minister of Barbados, and Mr Tony Hinton,
Australia's Ambassador to the OECD. It has met twice:
first in London on 26-28 January and second in Paris
on 1-2 March.
the Paris meeting, the SDEs formally restated their
desire for a truly inclusive Global Tax Forum. The
OECD maintained reservations on some aspects of the
SDE proposal and offered to draft a revised proposal.
This draft formed the basis of discussion at the London
meeting this week.
OECD has unilaterally named 35 small and developing
economies (SDEs) as potential "tax havens"
and has demanded they commit by July 2001 to amending
their systems or face (as yet unspecified) sanctions.
SDEs insist they should receive no less favourable
treatment than OECD member countries. They note that,
although the OECD has also identified "harmful"
tax practices among its own member countries, such
as Switzerland and Luxembourg, it has given them until
2003 to decide their response. Other non-OECD countries,
such as Hong Kong, also fit the OECD's harmful tax
practices criteria yet have somehow escaped being
also fear that, if they are forced to close down their
offshore centres, they will suffer significant economic
damage, and business will just shift to bigger centres,
which may be located in OECD countries. This feeds
concerns about whether the OECD is seeking a level
Commentators often confuse the OECD's remit and that
of other bodies. The OECD's remit does not extend
beyond tax matters. The separate Financial ;Action
Task Force has the remit of dealing with money laundering
issues, the Financial Stability Forum examines ways
of strengthening the global financial architecture,
and so on. The exchange of types of information other
than tax information is not an OECD matter.
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