23 October 2003

IT’S OFFICIAL: OECD TAX PROJECT DEPENDS ON LEVEL PLAYING FIELD

Finance centres expect joint working group to meet soon

See also HARMFUL TAX PRACTICES - STOP PRESS

In a groundbreaking decision, the Organisation of Economic Cooperation and Development (OECD) has committed itself to working with members of the International Trade and Investment Organisation (ITIO) and other countries that provide international financial services to achieve a level playing field for the exchange of tax information.

In a joint statement with non-OECD countries, the OECD has “agreed that the level playing field is fundamentally about fairness” but that it “does not yet exist” in the OECD’s five-year-old harmful tax practices initiative.

A new Level Playing Field Joint Working Group, comprising OECD and non-OECD states, has been asked to develop proposals for achieving a global level playing field and a process for taking this forward.

The ITIO and other small countries have long pointed out that the OECD has allowed its own members like Switzerland and Luxembourg to escape the scrutiny to which it has subjected non-members. They have also objected to the exclusion of finance centres like Hong Kong and Singapore from the OECD’s project.

Now the OECD has also agreed that “ways should be explored to involve significant financial centres that are not currently participating in the Global Forum process”.

“Without a level playing field, small countries fear that OECD members like Switzerland will simply win business at our expense”, explained ITIO Chair Deborah Drummond, “We are pleased the OECD has acknowledged the fundamental unfairness of its tax project”.

Ms Drummond continued: “ITIO members are looking forward to working closely with the OECD to achieve a level playing field. We expect the joint working group to be up and running as soon as possible.”

The OECD and small states reached agreement at a meeting of the OECD’s Global Forum on Taxation in Ottawa on 14-15 October. At the meeting, the ITIO tabled a paper, “Levelling the Playing Field”.

- ENDS -

NOTES TO EDITORS

1. The OECD Global Forum on Taxation, a meeting of the OECD and other finance centres, including ITIO members, took place on 14-15 October in Ottawa, Canada.

2. The participating non-OECD jurisdictions were those who had committed to the OECD’s principles of transparency and exchange of information on a level playing field basis.

3. Before the Forum, the OECD’s attempt to get countries across the world to exchange tax information had looked doomed to failure. Last year, numerous small finance centres committed to work with the OECD on the clear understanding that a level playing field would be put in place. This was always going to be problematic, given that key OECD members (Switzerland, Luxembourg, Belgium and Portugal) had opted out of the project, while non-OECD centres such as Hong Kong and Singapore were never targeted.

4. In June 2003, the EU savings tax directive undermined the level playing field further by excusing Switzerland, Luxembourg, Austria and Belgium from complying with OECD standards and timelines and by permitting Switzerland to set its own timetable for moving forward.

5. Now, however, OECD countries have agreed to work with ITIO countries and other small states to develop an objective process for introducing the same information exchange rules on the same timetable, with the same sanctions for non-compliance.

6. The Level Playing Field Joint Working Group is comprised of five OECD and five non-OECD countries. ITIO members comprise the bulk of the non-OECD members, who will alternate as necessary, and who are Cayman Islands/St Kitts and Nevis, Isle of Man/Jersey, Panama/Bahamas, Cook Islands/Samoa and Seychelles/Mauritius.

7. The level playing field principles are: universal participation in setting new rules; uniform standards applied on a uniform implementation timetable; and same sanctions for non-co-operation

8. The International Trade and Investment Organisation (ITIO) works for a level playing field in the trade in services. It includes Anguilla, Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Isle of Man, Labuan (Malaysia), Panama, St Kitts & Nevis, Samoa, St Lucia, St Vincent & the Grenadines, Turks & Caicos and Vanuatu. The Commonwealth Secretariat, CARICOM, Pacific Islands Forum, Caribbean Development Bank and Eastern Caribbean Central Bank have Observer status. See www.itio.org.

9. At the ITIO’s AGM in Ottawa on 12-13 October, Cayman Islands (previously Deputy Chair) assumed the Chair in rotation from the British Virgin Islands.

10. For more information, please contact Ben Coleman on +44 (0) 20 8743 7640 or +44 (0) 7958 616 444.

Return to News Releases