17 FUNDAMENTAL CLARIFICATIONS SOUGHT
FROM THE OECD ON 28 FEBRUARY 2001
following paper was submitted by small and developing
economies to the OECD on 28 February 2001, at a meeting
in Paris of the OECD-Commonwealth Joint Working Group
on Harmful Tax Competition.
the meeting, OECD member countries gave brief verbal
replies to some of the points. A written response
was promised by Tony Hinton, Co-Chair of the meeting
and Australia's Ambassador to the OECD, and by Gabs
Makhlouf, Chairman of the OECD Fiscal Affairs Committee.
OECD's promised response has still not been received
and the OECD has not explained the delay.
THE SMALL AND DEVELOPING ECONOMIES of the Joint Working
Group established at the Barbados High Level Consultations
on the OECD Harmful Tax Competition Initiative reaffirm
their belief that the proposal tabled by them at the
London Meeting of the Group remains the optimal solution.
This proposal envisaged a co-ordinated programme of
action to develop and implement international standards
in the area of cross-border taxation.
small and developing economies wish to continue their
genuine efforts to move the process of constructive
number of issues, raised in the 1998 Report entitled
"Harmful Tax Competition - an Emerging Global
Issue" (the 1998 Report) and the document entitled
"Framework for a Collective Memorandum of Understanding
on Eliminating Harmful Tax Practices" (the MOU),
enable the Group to continue work on the development
of a politically acceptable commitment process as
set out in the Barbados remit, these small and developing
economies must be in a position to understand comprehensively
the scope of the commitment sought by the OECD, as
articulated in the annexed OECD interpretation of
the three broad Principles of Transparency, Non-Discrimination
and Effective Exchange of Information (the Principles),
which was also tabled at the London meeting in January.
this purpose, the small and developing economies would
welcome an early and detailed and written response
to the following questions:
In light of paragraph 6 of the 1998 Report which states
that the report focuses on geographically mobile activities
such as financial and other services, and having further
reference to paragraphs 10 and 18 of the Report, could
the OECD please confirm that the commitments being
sought are confined in their scope only to geographically
mobile financial and other services?
In light of paragraph 12 of the 1998 Report which
states that the treatment of cross-border saving instruments,
particularly bank deposits is not considered at this
stage, please confirm the understanding that the affairs
of individual physical persons (e.g. interest on bank
accounts, portfolio investments and property holding)
are not covered by the commitments?
Having reference to the Principles mentioned above,
please confirm that all of the undertakings sought
from the listed economies in relation to transparency,
information exchange and non-discrimination are the
subject of identical, specifically enumerated commitments
given severally by OECD member countries?
Please provide specific cross-references in the 1998
Report to the express and detailed provisions of the
that members of the OECD will implement any necessary
programmes of reform to will enable them to comply
with the standards set out in the MOU;
what steps will be taken to monitor the effective
implementation of such commitments by OECD members;
that individual OECD member countries are prepared
to apply the same defensive measures to non-complying
OECD members as may be applied to any listed countries;
that failure of OECD members to comply with standards
set out in the MOU will be grounds for the committed
tax havens to resile from the implementation of the
Is the OECD able to confirm that the transparency
criterion (set out in the Principles) relating to
governmental access to beneficial ownership and financial
information would be satisfied if the government could
obtain such access in the event of an investigation
Is the underlying standard to which reference is made
in the area of beneficial ownership information deemed
to be satisfied through compliance with the Financial
Action Task Force Recommendation 11 and more specifically
to the Interpretative Notes to Recommendations 11
and 15-18? If not, to what alternative or additional
standards should Working Group members have reference?
To what extent is the transparency criterion relating
to access to bank information the same as the standard
unanimously agreed among OECD countries as reflected
in paragraph 21 of the report entitled "Improving
Access to Bank Information for Tax Purposes"
(OECD, Paris, 2000 at p. 14).
Can the OECD confirm that it supports the development
of a Global Forum, in which ALL countries and economies
which wish to participate and are committed to international
co-operation in cross border tax issues, will be equal
partners and that it will be this body through which
agreement will be sought on international standards
on cross border taxation (for example, in the definition
of "civil tax matters" for the purposes
of international tax information exchange agreements).
Can the OECD give a definition, as accepted by OECD
member countries, of what is covered by the term "criminal
Can the OECD give a definition, as accepted by OECD
member countries, of what is covered by the term "civil
Would the anticipated commitment to provide exchange
of information in criminal tax matters be satisfied
through the utilisation of procedures for the provision
of mutual assistance in criminal matters? If not,
Please confirm that the reference to the absence of
impediments to the disclosure of exchanged information
contained in the Principles is intended to operate
only to permit such information to be utilised for
matters falling within the scope of an arrangement
relating to geographically mobile financial and other
Which OECD member states have identified and agreed
their own harmful tax practices and what are those
Which OECD countries have taken specific steps to
remove identified harmful tax practices and what are
Could the OECD please outline its proposed programme
for involving countries other than "tax havens"
in the process of entering into and implementing the
same commitments as committed "tax havens"?
Is it expected that such countries will have implemented
these commitments by the end of 2005. If not, when
is the expected date and when would they be subject
to any defensive measures if they remain uncommitted?
What action has been taken by the OECD members to
identify and list any measures in their tax regimes
which constitute "ring fencing" and what
steps are being taken to eliminate such measures?
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