Offshore Jurisdictions Welcome New Zealand's Support

by Jason Gorringe, Tax-News.com, London

09 July 2001

The International Tax and Investment Organisation (ITIO), which represents the interests of a number of offshore jurisdictions, has welcomed New Zealand's opposition to proposed sanctions by the Organisation for Economic Cooperation and Development (OECD) against small and developing economies.

New Zealand's Finance Minister, Dr Frank Cullen, said in a radio interview on Thursday that international sanctions should not be imposed on small nations accused of being tax havens and money laundering centres.

A confrontational approach could be counterproductive, he said. He added that, while it was important to eradicate abuse, "We're not going to see excessively heavy-handed action taken against poor countries which have great difficulty generating economic growth".

Dr Cullen will press other countries to take the same approach. He raised the matter yesterday in a meeting with UK Chancellor of the Exchequer (Finance Minister) Gordon Brown. Before the meeting, Dr Cullen said he hoped to get Mr Brown's agreement that countries that have difficulty generating economic growth should not be dealt with harshly.

ITIO Spokesperson Ben Coleman commented: "We welcome New Zealand's concern about the OECD's sanctions threat. It is not acceptable for developing countries to undermine the sovereignty of small states through a course of intimidation.

"The OECD's tax project would have a better chance of success if it involved small and developing economies as equal partners. The OECD should lift its sanctions threat and move towards inclusive dialogue."

The offshore jurisdictions included on the OECD's blacklist have persistently demanded to be included in discussions on international fiscal structures, and the ITIO was formed earlier this year after most of them were excluded from the Global Tax Forum, a multilateral fiscal talking shop set up by the OECD after resistance began to build to its 'unfair tax competition' initiative. The ITIO members particularly object to the fact that the OECD has encouraged over 55 other non-member countries, such as Argentina and South Africa, to participate in the Global Tax Forum on the basis that they accept the OECD's broad principles. Unlike the small and developing economies - who have also accepted the broad principles - these countries have not been required to make detailed commitments to the OECD process as a precondition for participation.

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