Silence In Paris As OECD Plans Changes To Tax Initiative

by Ulrika Lomas, Tax-News.com, Brussels

28 June 2001

The OECD's Fiscal Affairs Committee finished its meeting in Paris yesterday without calling the customary press conference or issuing a press release or statement. This was the meeting that was due to review the blacklist of offending offshore jurisdictions giving 'unfair tax competition', but the OECD has been rocked by opposition to its campaign from the new US administration.

It's believed that changes have been proposed to the initiative, and it's likely that these will be discussed today between representatives of the OECD's 30 member states before they are announced. At the minimum though the OECD is expected to announce that it is delaying the publication of a revised blacklist of jurisdictions which would have faced punitive action for their failure to co-operate.

It's thought likely that in the face of American opposition the OECD will have backed off its threat to apply widespread sanctions to jurisdictions which don't agree to its demands, leaving individual members or groups of them to take action individually. The organisation had already been forced to say that it had no plans to oblige offshore jurisdictions to increase tax rates; now it will probably also have abandoned efforts to end 'discriminatory' tax practices. Typically, the 'International Business Companies' which are much used by offshore investors offer privileged tax regimes to non-residents, and the OECD had wanted such practices to end.

That would leave only 'transparency' as a major goal of the initiative, amounting to a request that low-tax and no-tax jurisdictions exchange information with the home countries of investors. Here also the US has opposed the indiscriminate exchange of information, but agrees that tax evasion should somehow be prevented. It will be interesting to see whether a set of practical suggestions has been drawn up, or whether, as is more likely, the issue has been fudged.

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