Antigua Tells OECD: 'All Bets Are Off'

Tax-News.com, London

29 January 2003

Antigua and Barbuda's Chief Negotiator on international financial services, Sir Ronald Sanders, wrote this week to the Secretary General of the Organisation for Economic Cooperation and Development (OECD) informing him that his country wants a meeting of the OECD Global Tax Forum so that "all jurisdictions could collectively decide whether there is any basis for further commitment to the OECD's initiative to eliminate tax competition".

Sir Ronald's letter follows the decision six days ago by the European Union Council of Economics and Finance Ministers in Brussels according to which twelve out of fifteen member states will adopt information sharing, but the remaining three, Austria, Belgium and Luxembourg will not be required to exchange information on tax matters even though this is central to the OECD's "harmful Tax Competition Initiative".

The OECD had threatened over 40 jurisdictions with sanctions unless they made a commitment to exchange information with OECD countries on tax matters. Consequently, these jurisdictions committed in February 2002 to work with the OECD in its Global Tax Forum to implement new standards including automatic exchange of information.

However, on 22nd January 2003, the EU council decided that Austria, Belgium and Luxembourg will not be required to exchange information on tax matters. Instead, they will be allowed to apply a withholding tax on savings held by residents of other member states (15% from 1st January 2004; 25% from 1st January 2007 and 35% from 1st January 2010) in an open-ended arrangement.

With regard to Switzerland which is not an EU member but is a member of the OECD, the Council decided that it could apply the same rates of retention and withholding tax as Belgium, Luxembourg and Austria.

A further decision agreed that the EU should enter into similar agreements with Liechtenstein, Monaco, Andorra and San Marino.

In his letter to the OECD Secretary-General Mr Donald Johnston, the Antigua and Barbuda diplomat said, "It is now patently and blatantly obvious that no level playing field exists and jurisdictions, such as Antigua and Barbuda, that have committed to participate in the OECD Global Tax Forum are being placed at a severe disadvantage".

Sir Ronald told Mr Johnston, "Your organisation has continued to issue documents adumbrating new standards as if nothing has changed. However, everything has changed, and my Government does not see how it would be possible to continue to respond to OECD documents purporting to set new standards which will clearly apply only to non-OECD jurisdictions".

The Antigua and Barbuda representative, who has headed his country's negotiations with the OECD since 1999, said, "All the non-OECD jurisdictions are being placed in a very disadvantageous position in relation to competition in the provision of international financial services".

Sir Ronald said that his government would not be responding to anything from the OECD until such time as there is a meeting of the Global Tax Forum to decide the future of the OECD's plan to stop tax competition internationally.

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