Gabriel Makhlouf, Chair of the OECD’s Committee on Fiscal Affairs today released a statement on the organisation’s work on “Harmful Tax Practices” and “Improving The Exchange Of Information”. Mr. Makhlouf said that during the last 2 days, the Committee has reviewed its overall work programme including these two areas (see below).

The Statement also made reference to the close working relationship established with the 11 “committed” jurisdictions, viz. Aruba, Bahrain, Bermuda, Cayman Islands, Cyprus, Isle of Man, Malta, Mauritius, Netherlands Antilles, San Marino, and Seychelles. The Chairman said, *”These jurisdictions have actively participated in the Global Forum Working Group on Effective Exchange of Information, which was established to develop a legal framework that could be used to achieve an effective exchange of information.”*

Reportedly, the Forum’s Working Group has had extensive discussions on the legal, technical and administrative aspects of exchange of information, and the OECD’s Committee on Fiscal Affairs reviewed the status of its work during this week’s meeting. Continued Mr. Makhlouf, *”The valuable contribution made by the committed jurisdictions in this joint endeavour has greatly enhanced this work. The implementation of their commitments will strengthen their role in the international financial system. We look forward to an ongoing involvement of the jurisdictions in our broader dialogue on international tax issues.”*

Statement From OECD Committee on Fiscal Affairs:

Harmful Tax Practices

The Committee welcomes the progress made in taking forward the review of potentially harmful preferential tax regimes in Member countries. The Forum on Harmful Tax Practices will meet in March to discuss this work and to review the application notes with a view to finalising them by June. They will also have a meeting with the Business and Industry Advisory Committee to the OECD.

The Committee has decided that its work with non-OECD economies (the second part of this project) will focus in the coming months on financial centres that have not been identified as tax havens. At the same time, the co-operative dialogue with other non-OECD economies is being taken forward by a series of bilateral and multilateral initiatives.

The third part of this project – relating to tax havens – has over the last six months focussed on assisting the uncommitted jurisdictions to have a clearer understanding of what the commitment process involves.

The Committee has devoted considerable resources to discussions with the uncommitted jurisdictions including visits to the Caribbean, Pacific and other regions. They have enabled us to complete our technical discussions with almost all of these jurisdictions. Considerable progress has been made in developing a common understanding of the project. We believe that all jurisdictions are now well placed to make a decision to commit before the 28 February 2002 to improve the transparency of their tax and regulatory systems and establish effective exchange of information.

Improving The Exchange of Information Between Tax Authorities

For over more than three decades the Committee has worked towards improving the exchange of information between tax authorities.

Effective exchange of information is needed for tax authorities to be able to enforce their own tax laws in an increasingly globalised world. To advance further in this area, the Committee has decided to give a new mandate to its Working Party on Tax Evasion and Avoidance to undertake a fundamental review of Article 26 of the OECD Model Convention – this is the article which deals with Exchange of Information – to ensure that it reflects the experiences of countries over the last two decades and incorporates recent developments in this area.