Thursday, April 02, 2009

Panama stays out of list of non-cooperative centers

Following G20 OECD delivers on tax pledge

02/04/2009 - Following the G20 meeting and communiqué , the OECD Secretariat has provided a detailed report on progress by financial centres around the world towards implementation of an internationally agreed standard on exchange of information for tax purposes. The report available here consists of four parts:
• jurisdictions that have substantially implemented the internationally agreed tax standard.
• tax havens that have committed to the internationally agreed tax standard but have not yet substantially implemented it.
• other financial centres that have committed to the internationally agreed tax standard but have not yet substantially implemented it.
• jurisdictions that have not committed to implement the internationally agreed tax standard.
Welcoming the outcome of the G20 meeting, OECD Secretary General Angel Gurria said “recent developments reinforce the status of the OECD standard as the international benchmark and represent significant steps towards a level playing field. We now have an ambitious agenda, that the OECD is well placed to deliver on. I am confident that we can turn these new commitments into concrete actions to strengthen the integrity and transparency of the financial system”.

OECD’s Future Challenges:
1. Achieving a rapid and effective implementation of standard: Many of these commitments will require legislative changes and the negotiation of specific bilateral agreements in order to become effective, and the OECD stands ready to assist jurisdictions in their implementation.
2. Speeding up the negotiations of tax information exchange agreements (TIEAs). Small tax havens lack the resources to enter into negotiations with a large number of countries. The OECD’s 2002 Model Agreement on Exchange of Information on Tax Matters sets out an option for multilateral rather than bilateral TIEAs that the OECD intends to explore over the coming weeks. The OECD is also examining how the Nordic experience of multilateral negotiations leading to simultaneous bilateral agreements could be adopted more widely.
3. Extending the scope and role of the OECD’s action: The OECD Global Forum currently encompasses more than 80 jurisdications and carries out self reviews and peer reviews to assess progress in implementation of the standard.The time has now come to re-examine the membership, the architecture and the role of the Global Forum in setting standards and evaluating progress. The Global Forum will undertake more robust reviews, to strengthen the implementation of the standard.

Full text in,3343,en_2649_34487_42496569_1_1_1_1,00.html


Progress made as at 2nd April 2009

Jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented

Jurisdiction Year of Commitment Number of Agreements
Panama 2002 (0)

Jurisdictions that have not committed to the internationally agreed tax standard
Jurisdiction Number of Agreements
Costa Rica Malaysia (Labuan) Philippines Uruguay (0)


Tax havens and non-cooperative jurisdictions
It is essential to protect public finances and international standards against the risks posed by non-cooperative jurisdictions. We call on all jurisdictions to adhere to the international standards in the prudential, tax, and AML/CFT areas. To this end, we call on the appropriate bodies to conduct and strengthen objective peer reviews, based on existing processes, including through the FSAP process.

We call on countries to adopt the international standard for information exchange endorsed by the G20 in 2004 and reflected in the UN Model Tax Convention. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of information. We welcome the new commitments made by a number of jurisdictions and encourage them to proceed swiftly with implementation.

We stand ready to take agreed action against those jurisdictions which do not meet international standards in relation to tax transparency. To this end we have agreed to develop a toolbox of effective counter measures for countries to consider, such as:
• increased disclosure requirements on the part of taxpayers and financial institutions to report transactions involving non-cooperative jurisdictions;
• withholding taxes in respect of a wide variety of payments;
• denying deductions in respect of expense payments to payees resident in a non-cooperative jurisdiction;
• reviewing tax treaty policy;
• asking international institutions and regional development banks to review their investment policies; and,
• giving extra weight to the principles of tax transparency and information exchange when designing bilateral aid programs.
We also agreed that consideration should be given to further options relating to financial relations with these jurisdictions We are committed to developing proposals, by end 2009, to make it easier for developing countries to secure the benefits of a new cooperative tax environment.
We are also committed to strengthened adherence to international prudential regulatory and supervisory standards. The IMF and the FSB in cooperation with international standard-setters will provide an assessment of implementation by relevant jurisdictions, building on existing FSAPs where they exist. We call on the FSB to develop a toolbox of measures to promote adherence to prudential standards and cooperation with jurisdictions.
We agreed that the FATF should revise and reinvigorate the review process for assessing compliance by jurisdictions with AML/CFT standards, using agreed evaluation reports where available.
We call upon the FSB and the FATF to report to the next G20 Finance Ministers and Central Bank Governors’ meeting on adoption and implementation by countries.
Full text in

London Summit – Leaders’ Statement
2 April 2009
1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.

15. To this end we are implementing the Action Plan agreed at our last meeting, as set out in the attached progress report. We have today also issued a Declaration, Strengthening the Financial System. In particular we agree:

• to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information;

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Sources: Obama Plays Peacemaker in French-Chinese Smackdown Over Tax Havens
April 02, 2009 11:15 AM

Huma Khan-->
According to sources inside the room, President Obama just played peacemaker in a spat between French President Nicolas Sarkozy and Hu Jintao, President of the People's Republic of China.
In the finaly plenary session among the G-20 leaders, Sarkozy and Hu were having a heated disagreement about tax havens.
France and other European nations have been pushing for rules and regulations to apply to various tax havens;
Germany's Finance Minister Peer Steinbrueck has said "these tax havens are also places where unregulated financial market deals are made."
But Chinese leaders fear a crackdown would hurt banking centers in Macao, Shanghai and Hong Kong. Other countries agree, though they are less outspoken publicly.
The exchange between Sarkozy and Hu got so heated, said a source -- who is not a member of the Obama administration -- it was threatening the unity of the G-20 leaders' meeting.
"They were going through the revised draft," a senior Obama administration official said.
The issue: Sarko wanted "a list of non-compliant jurisdictions," tones that allow tax havens, he senior official said. "Other countries wanted it too, but (Sarkozy) was the most outspoken."
Sarkozy specifically was pushing for a list from the Organisation for Economic Co-operation and Development (OECD) to be included in the G-20 Leaders' Statement.
Headquartered in Paris, the OECD has
30 member countries -- all capitalist democracies.
China opposed any such list being included in the final Leaders' Statement.
"China tends to have a problem endorsing the documents of organizations like the OECD that they're not a party to," the senior administration official said.
But Mr. Obama, according to this account, stepped between the two men, urging them to try to find consensus, and giving them a "pep talk" about the importance of working together.
The senior adminstration official said that Mr. Obama pulled Mr. Sarkozy aside, took him to a corner, "and discussed possible alternatives," the senior official said.
Once they arrived at one, President Obama "sent a message to the Chinese" that a counter-offer was on the table. The Chinese spent some time considering the offer. But they took a few minutes.
So Mr. Obama, with the assistance of translators, suggested that he and Mr. Hu have a conversation as well. They, too went to the corner to talk. After a few minutes, Mr. Obama called upon Mr. Sarkozy to join them.
"Translators and sherpas in tow, they reached an agreement," the official said. "There was a multiple shaking of hands."
The agreement: the final G-20 document would state that the G-20 nations "stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information."
The Obama administration official described this compromise as a "meeting in the middle." The word "note" -- as in "we note the OECD has today published a list" -- doesn't necessarily carry any weight.
Moreover, any sanctions are "future-oriented," the senior official said, meaning there are as of now no actual sanctions.
The OECD also has yet to publish any such list, though Obama adminstration officials said the organization would do so today.
Soon after Mr. Obama helped to resolve the problem, British Prime Minister Gordon Brown announced that "we have agreed to tough standards for those (tax shelters) who don't come into line in the future," which seems to overstate the case.
"I'd suggest we'd still be in there had he not done this," the senior Obama administration official said.
-- jpt

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