Caribbean Community Slams OECD "Self-Preservation", Forms Regional Group

Lisa Ugur, Tax-news.com, London

08 April 2000

See Discussion Forum Topic: The OECD Vs Offshore - add a comment!

Certain offshore jurisdictions have had a lot to contend with since being branded "harmful tax havens" in the June report by the Organisation for Economic Cooperation and Development (OECD) and "noncooperative" in the global fight against money laundering by the Financial Action Task Force (FATF). Fifteen Caribbean nations were named in the OECD list and five in the FATF list, but now they have decided to stage a fight-back by forming a regional group to tighten regulations against money laundering and to challenge the right of the OECD to declare their low tax regimes "harmful" and threaten sanctions.

St. Kitts and Nevis Prime Minister Denzil Douglas said that the Caribbean Community (CARICOM) has agreed to form the Caribbean Association of Regulators of International Business to help respond to the charges levelled at them by the FATF. The association also will coordinate a legal defense against the blacklist of 35 tax havens deemed by the OECD to have unfair tax practices and to which the OECD has given a deadline to eliminate these practices or face sanctions.

CARICOM has in the past called the harmful tax competition report the "developed countries gain, Caribbean pain" as the threatened penal actions pose dangers not only for the financial services sector of the jurisdictions concerned but also for the other areas of their economy. The majority of the Caribbean nations have been making efforts to strengthen their individual economies and upgrade their incentive regimes and strengthen their supervisory and regulatory arrangements. These policy actions have coincided with the general movement to liberalise cross-border flows of goods, services and investment. Increased activity has been seen in the financial services sector, particularly the offshore sector.

CARICOM says that the OECD is clearly uncomfortable with the competition for mobile capital and investments and its members are out to protect their own interests. A CARICOM press release stated: 'The OECD Report purports to address issues of harmful tax competition in one particular area, financial services. This results in a discriminatory and distorted view of the world economy. The OECD's own initial mandate proposed a wider review. Further, and to be consistent, the OECD would need to consider, in the social field, the impacts on Caribbean and other developing countries of issues like 'harmful drug consumption practices', 'harmful violent cinematic practices', 'harmful gun control practices', and 'harmful criminal deportation practices'. All these emanate from their jurisdictions.'

Whilst the Caribbean countries have pledged to continue to co-operate with any attempt to develop international best practices, they say that the process must be "even handed" and take into account the special situation of small and disadvantaged economies in seeking to establish a level playing field. CARICOM said: 'The Caribbean believes that a process of dialogue and negotiation, leading to genuine international cooperation, is the best way forward. These negotiations should be carried out in appropriate international fora based on known rules and practices free of threats, arbitrary deadlines and ultimatums. In this regard, the Caribbean is concerned about the effort of some OECD members to influence and use the international financial institutions to effect their national policies.'

See Discussion Forum Topic: The OECD Vs Offshore - add a comment!

.

Recommended

Write a comment