The OECD’s body for assessing compliance with international tax transparency standards plans to tell an upcoming summit in Hamburg, Germany, that Trinidad and Tobago is the world’s only tax haven, reports BNA.
Group of 20 country leaders meeting last year in China asked that body, the Global Forum on Transparency and Exchange of Information for Tax Purposes, to come up with “objective criteria” for identifying jurisdictions that haven’t made enough progress toward implementing the agreed international standards, which include standards for both the exchange of information on request, and for the automatic exchange of information (AEOI).
The Global Forum is scheduled to report its findings at the July 7-8 Hamburg summit, according to a June 28 statement from the Organization for Economic Cooperation and Development. Last summer, as many as 15 countries and jurisdictions approached appearing on that report’s blacklist; they received “less than satisfactory” ratings in the peer reviews of compliance with the exchange-on-request standard—a process that took years to complete.
The OECD in 2015 had asked the G-20 to consider “incentives” to get the most recalcitrant jurisdictions—Panama and a few others—to get their acts together.
Now, after a “fast-track” review to take into account “continuing efforts by some jurisdictions” right up to the Hamburg summit, it turns out that only Trinidad and Tobago was “unable to demonstrate progress to warrant any upgrade to its rating,” while the Marshall Islands was deemed “partially compliant,” the OECD said.
The OECD said the forum’s criteria considered:
whether the country or jurisdiction got at least a “largely compliant” rating for implementing the OECD standard on exchange of tax information on request;
the country’s commitment to automatic exchange of tax information starting in 2017 and, at the latest, 2018; and
the country’s implementation of legal instruments needed to carry out information exchange—particularly the multilateral convention on mutual assistance, now signed by more than 100 countries, or a sufficiently large exchange network permitting both exchange on request and AEOI.
The OECD cautioned that the fast-track review doesn’t substitute for a full peer review. Still, it said the forum’s provisional ratings show “massive progress” by jurisdictions in implementing the exchange-on-request standard and on dismantling bank secrecy. It also said the forum plans a second round of tougher peer reviews taking into account new requirements for exchanging information on the ultimate owners, or “beneficial ownership,” of entities such as trusts or companies, among other new criteria.
Jurisdictions that escaped the forum’s list as a result of getting fast-tracked to last-minute “compliant” or “mostly compliant” ratings will be reviewed first in the new round, the OECD said.
The London-based Tax Justice Network said in a June 28 statement that the OECD’s list including only one tax haven is “nonsense!“
“Far from the success which is being trumpeted, this meaningless gesture instead threatens the genuine progress that the OECD has in fact been making,” it said.
TJN said the purported massive progress on transparency relates only to exchange on request, although that standard has been “superseded” by automatic exchange, which the Global Forum itself now considers the international standard. Although many jurisdictions have committed to implement AEOI, “many have failed to commit to information sharing outside a small group of rich economies, so there are grave challenges to ensure lower-income countries benefit,” the network said.
TJN said the U.S., the biggest OECD member, should be on the list because it is the “world’s biggest financial center” and “has flatly refused to participate in automatic exchange.” At the same time, it said, the U.S. demands automatic exchange from all others, through “skewed, bilateral arrangements agreed in support of the Foreign Account Tax Compliance Act.”
OECD tax chief Pascal Saint-Amans has called the U.S. failure to commit to automatic information exchange “a problem” but has also noted that the U.S. is exchanging information through its large bilateral treaty network.
Meanwhile, the European Union is said to be assessing 92 countries for its own list of jurisdictions that fall short of transparency and corporate taxation criteria, for release later this year. Those 92 include the U.S. and Switzerland, several offshore finance centers such as Bermuda, the Bahamas, the Cayman Islands, Jersey, Guernsey, and the Isle of Man. None of those made the Global Forum’s list.