DRIVE
TO END TAX EVASION RUNS INTO NEW OBSTACLE
Financial Times (UK edition, page 9)
10 October 2003
By
Andrew Parker, Financial Correspondent
A flagship global initiative by leading industrialised
countries to eradicate harmful fiscal practices and
to crack down on tax evasion is in danger of collapse.
Member
countries of the Organisation for Economic Co-operation
and Development failed to reach agreement on improved
access to bank information last month because of objections
from Switzerland and Luxembourg.
Leading
countries, including the US and the UK, say exchange
of bank information between nations is crucial to
the fight against money laundering and tax evasion.
But
at the September meeting of the OECD's governing council,
Switzerland and Luxembourg blocked agreement on a
common definition of tax fraud that could apply during
exchange of bank information between nations.
They
also objected, together with Austria and Belgium,
to a deadline of December 2005 for access to bank
information for verification of residents' tax liabilities.
Switzerland
and Luxembourg are also believed to have demanded
more time to eradicate harmful tax practices identified
by the OECD, and which should have been abolished
by last April.
The
split among OECD member countries is threatening to
undermine the organisation's efforts to persuade tax
havens to stick with the initiative.
A
total of 31 offshore centres are supposed to scrap
harmful tax practices, and exchange bank information,
by December 2005.
The
OECD initiative has been damaged by the European Union's
decision in June not to insist on a commitment from
Austria, Belgium and Luxembourg to exchange information
on non-residents' savings income from 2005.
Under
the EU savings tax directive, the three countries
will be able to apply withholding taxes until at least
2010.
Next
Tuesday, offshore centres will meet OECD officials
for talks about the tax initiative in Ottawa.
Glenroy
Forbes, chairman of the International Trade and Investment
Organisation, which represents offshore centres such
as the British Virgin Islands and the Cayman Islands,
said: "The OECD has praised our co-operation
but is sadly unable to deliver its own key members.
"The
[Ottawa
meeting] will need to consider whether to take
the OECD's road or the EU's or whether to make no
further progress."
The
US Treasury department said: "The exchange
of information with other countries for tax purposes
is critically important to the full and fair enforcement
of our tax laws.
"Whilst
we regret all OECD countries did not endorse the recommendations
put forward last month, we intend to continue to work
together with our partners around the world to further
common understandings in this area."
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