OECD Postpones Sanctions Deadline Over Anglo-Spanish Stalemate

by Ulrika Lomas, Tax-News.com, Brussels

02 August 2001

The 300 year old dispute between Spain and the United Kingdom over Gibraltar continues to interfere with OECD plans.

In June, the 30 OECD member countries put forward a compromise, whereby the deadline for agreement on action to be taken against countries which refused to cooperate regarding information exchange and 'harmful' tax practices would be put back until November 30th. However, Spain is blocking the agreement because it wants the UK to take responsibility for ensuring that Gibraltar, one of the blacklisted havens, changes its tax laws.

The UK has refused to agree to this, saying that such a measure would violate Gibraltar's sovereignty on taxation matters, and so the two countries remain stalemated, and threaten to bring the machinery of the OECD to a grinding halt as well.

OECD Secretary General, Donald Johnston, has not yet fixed a new date, merely stating that: 'Because negotiations are continuing, the July 31 deadline will have to be changed.' As well as pushing the date forward, June's unratified compromise redefined the conditions and start date for sanctions against uncooperative havens. It would also mean that offshore jurisdictions would no longer be required to end 'ring fencing' practices whereby preferential tax rates are offered to foreign-owned companies doing little or no business in the country.

Recommended