OECD Close To Deal With Jersey, Guernsey And Isle of Man

Lisa Ugur, Tax-news.com, London

17 August 2000

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Jersey, Guernsey and the Isle of Man have been pretty uptight since the publication of the OECD's blacklist of harmful tax havens, in which all three featured. The list caused nothing short of outrage in these three British offshore dependencies and over the last two months, key players from their respective financial scenes have lambasted the OECD's initiative against them and 32 other offshore financial centres, and in particular the threat of sanctions should the three islands not co-operate with the international crackdown on tax evasion within one year. However, it emerged last week that the OECD has said that it is confident of an agreement being reached with the Channel Islands and the Isle of Man.

The OECD said it was "very optimistic" of forging a settlement which would enable the UK Crown dependencies to avoid sanctions threatened against havens that fail to fall into line. Frances Horner, head of the tax competition unit at the OECD, said: 'I would be very surprised if, after due discussions, we don't come to a meeting of minds with these jurisdictions.'

The so-called "meeting of minds" would entail an obligation on the part of the Channel Islands and the Isle of Man to co-operate or face punitive measures such as the removal of tax treaties with the OECD's 29 members. The OECD will publish a definitive list in a year's time of havens which have not conformed and warrant action being taken.

Ms Horner said the UK dependencies had the potential to follow the lead of six havens, including the Cayman Islands and Bermuda, that avoided the list by giving a commitment to co-operate. However, the three islands have from the very beginning taken the line that they will not bow to pressure. They had the opportunity to evade the list too, but did not seize it. They are seemingly all for discussion and cooperation but have been critical of the way the OECD has gone about its "naming and shaming" campaign. Richard Pratt, director-general of Jersey's Financial Services Commission, said that the OECD had "culled the names from airline magazines", whilst Isle of Man Treasury Minister Richard Corkill branded the OECD approach "illogical and unfair".

This latest statement by the OECD has received a cautious welcome in the dependencies. John Mills, chief executive of Jersey's Policy and Resources Committee said: 'The fact remains that there are some issues. The first is the very, very poor process in which the OECD engaged to get to these names.' Richard Pratt, director general of Jersey's Financial Services Commission, said it was time for reconciliation with the OECD. He said: 'We are all grown up and we are willing to move forward.'

As for Guernsey, the island is said to be "fairly positive" about co-operating but first requires clarification of exactly what changes are needed to meet the OECD requirements. The Isle of Man seems confident that a deal can be reached with the OECD. Michael Gates, head of the international services division at the Isle of Man treasury, said: 'There are things that they want and things that we want. But we are certain there is a deal there.'

It could be that a deal will come much sooner than anticipated. It is reported that the OECD is considering a "fast-track" approach to obtaining co-operation agreements from certain jurisdictions by the end of the year, and that Jersey, Guernsey and the Isle of Man are three jurisdictions of which lesser changes are required than from a number of others on the list.

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