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OECD Clarifies Position On Tax Havens But Still Wields The Axe

Jason Gorringe, Tax-news.com, Paris

20 October 2000

The OECD held a tax conference forum in Paris this week to clarify how individual countries and jurisdictions can amend their business practices to avoid the threat of sanctions. Since the organisation launched its crackdown on "harmful" tax havens, it has been criticised by several jurisdictions for being unclear in exactly what it wants to see done. Jersey, for example, has been incredibly vexed by the lack of clarity from the OECD as to what constitutes a harmful tax regime.

Dismissing claims in Paris this week that the OECD was forcing its will on non-OECD members, chairperson Philip West of the US Treasury's International Tax Council and co-head of the Forum on Harmful Tax Practices said feedback from all jurisdictions has helped to clarify the OECD's position.

He said a key development at the forum this week was the introduction of collective applications, saying that this 'was spurred by the suggestions of tax havens.' By introducing collective applications, the OECD hopes to improve dialogue and ensure that its own procedures are transparent. The OECD says it will also ensure that all jurisdictions are aware of what the others are doing so that they can all proceed at the same pace.

Mr West said: 'The approach involves allowing those jurisdictions which are interested to join in publicly with other jurisdictions, to take the same measures at the same time and in the same direction, so that everyone is aware of what everyone else is doing and they're all doing it reasonably in tandem.' There is still an option for jurisdictions to make their own individual applications but they will be under the same pressure to eradicate tax evasion in the end.

The OECD's blacklist of 35 countries that operate tax havens has rocked the countries named and caused a veritable uproar. However, since its publication in June, 23 countries have approached the OECD on how they can cooperate and have themselves removed form the list. Having cleared up some confusion areas, the OECD says it is confident that it will be able reach agreement with roughly two thirds of the world's jurisdictions in the near future, and hopes to win over the other third in due course. Mr West said: 'The ultimate goal is that we have a tax haven list that has no names on it.'

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