Paris Meeting Discusses Global Implications Of Tax Havens

Lisa Ugur, Tax-news.com, London

07 July 2000

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At the end of last week, French Finance Minister Laurent Fabius, France's Secretary of State for the Budget Florence Parly and the Secretary General of the OECD, Donald J Johnston, hosted a 60-country meeting in Paris to discuss the global implications of the spread of tax havens and other taxes deemed by the OECD, and indeed the French government, to be "harmful".

The meeting, which brought together ministers and senior officials from 60 economies, along with representatives from the European Commission, the IMF, the World Bank, the Commonwealth Secretariat and four tax-administration organisations, aimed to put to rest fears that the major G7 countries were out to establish a global tax system. OECD Fiscal Affairs Committee chairman Gabriel Mahklouf said 'Globalisation poses challenges for everybody. It's clear to countries, to many countries, that working together is the best way to meet these challenges. I don't think there is any work on tax harmonisation going on in the OECD.'

At the meeting was Financial Secretary of the Cayman Islands, George McCarthy, who said 'This meeting should, we hope, have helped the OECD countries have a better understanding of the Cayman Islands, what our fiscal regime is about and also clear up quite a lot of misunderstandings which seem to have emanated over the years. What this (OECD) process has shown is that when we sit down to a dialogue it can help to resolve differences and take us to a point of mutual understanding.' The Caymans were amongst six jurisdictions which pledged to work with the OECD over supposed harmful tax practices.

Mr Fabius said he hoped that the work so far accomplished by the OECD would continue to ensure "une veille concurrentielle internationale", and emphasised that co-operation with non-member economies was essential for the success of this work. The OECD Secretary General reiterated that there was a need for improved cross-border co-operation, calling on tax authorities to 'develop global co-operative networks amongst themselves and with other law enforcement authorities.'

OECD Deputy Secretary General Seeiichi Condo admitted that the OECD had, in the past, been known as "the rich man's club" but he insisted that was no longer the case, saying 'globalisation has forced us to change our nature from rich man's club to more a globally orientated organisation which tries to assist good Government throughout the world based upon best practices we have developed over the years. I think all people of the world will benefit from globalisation, being free from criminal activities. This kind of dialogue with non member economies has proven to be very useful. We can learn from experiences of non member economies because of the diversity of their systems, background and culture.'

Support for a unified fight against harmful taxation practices seemed to come from all corners. Maria Ramos, Director General of the South African Ministry of Finance, said 'we need to ensure that globalisation does not exacerbate poverty. A failure of this work on harmful tax competition would lead to a race to the bottom with potentially catastrophic results for developed countries.' Russia’s Deputy Minister of Taxes, Sergei Shulgin, stated his country’s support for the project: Russia is concerned about harmful tax competition and welcomes greater co-operation to counter it. One country alone cannot combat these issues.' Morocco’s Director of Taxation, Noureddine Bensouda, told the meeting that 'we share a collective ambition to fight against the growth of tax havens.'

See Discussion Forum Topic: The OECD Vs Offshore - add a comment!

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