EIB Reviews Lending To Offshore Jurisdictions

by Ulrika Lomas, Tax-News.com, Brussels

02 June 2009

The European Investment Bank (EIB) has announced that it is conducting a review of its lending policies in the light of the latest crackdown against offshore financial centres by the major high-tax countries.

The EIB said on May 27 that its board of directors “took the initiative to encourage a review” of lending policies to certain countries following the conclusions of the G20 summit of world leaders in London in April 2009 regarding offshore financial centres.

The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The bank is tasked with contributing towards the “integration, balanced development and economic and social cohesion of the EU member states.”

The review, according to the EIB, will aim to ensure that the institution’s lending activities “continue to mitigate against lost income from assets that are kept hidden in tax havens in developed and developing countries.”

The bank stated that the review will be undertaken in “close cooperation with other international financial institutions” to ensure that the EIB continues to comply with the latest requirements and “remains at the forefront of compliance in this respect.”

Commenting on the Bank’s offshore financial centres policy, EIB President, Philippe Maystadt said: “The EIB is committed to ensuring that its loans are used for the purposes intended, the promotion of European Union priority objectives.”

However, the bank’s initiative was publicized on the same day that the Organization of Economic Cooperation and Development (OECD) finally removed the last three jurisdictions – all located in Europe, if not strictly EU members - from its original ‘blacklist of uncooperative tax havens’, Andorra, Monaco and Liechtenstein. The OECD has also removed the only four nations placed on its new blacklist published shortly after the G20 meeting in April, which included Costa Rica, Malaysia (Labuan), Philippines and Uruguay. These territories are all now categorized as jurisdictions that have committed to implementing the internationally agreed standard on tax information exchange, but have not “substantially” implemented it.

Indeed, many of the European ‘tax havens,’ the Channel Islands included, have been placed on the OECDs ‘white list’ of jurisdictions which have “substantially implemented” the agreed standard of 12 Tax and Information Exchange Agreements.

“We have always been confident that Jersey’s position as a well-regulated finance centre which meets global standards of financial regulation and information exchange would be recognised internationally,” the island’s Chief Minister Terry Le Sueur has said.

“We are delighted that the OECD confirmed this in a report published after the G20 summit earlier this month, which highlights Jersey as one of the jurisdictions that have substantially implemented the internationally agreed tax standard, alongside jurisdictions like the UK, USA, France and Germany,” he added.

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