Sir Ronald Sanders, Antigua and Barbuda’s High Commissioner to the United Kingdom, has released a Paper providing a Caribbean perspective on the OECD’s Harmful Tax Competition Initiative.
Entitled *”The Fight Against Fiscal Colonialism: The OECD And Small Jurisdictions”*, the document provides a background on developments since the publication of the OECD’s 1998 Report on Harmful Tax Competition, its follow up 2001 Progress Report, the formation of the Joint Working Group of OECD and non-OECD countries, and the Global Forum Working Group charged with addressing the two principles of “transparency” and “effective exchange of information”.
The report covers the conditional commitments given by most targeted jurisdictions by March of 2002; i.e. the commitment to work with the OECD, but only on the condition that a level playing field is established among all OECD members countries and those non-member jurisdictions with which there is material competition in the provision of cross border financial services. *(Note: The Bahamas signed such a commitment letter – see Special Reports March 19 item)*
Sir Roland Sanders says it is left to be seen whether the OECD will honour its commitment to a level playing field for all, particularly as this will mean applying sanctions against its own member states such as Switzerland and Luxembourg who have, so far, shown no inclination to accept the principles set out in the HTCI. According to the High Commissioner, a level playing field also means that countries such as the US and UK may have to change existing regimes in financial services that compete with many of the targeted jurisdictions. Before this test, however, the OECD countries will have to convince the targeted jurisdictions that their participation in the Global Forum is meaningful and that their views will carry equal weight in the definition and application of the concepts of transparency and effective exchange of information.
The Paper claims that Caribbean countries and other small jurisdictions have the same right as others to compete in the global financial services sector. Reportedly, their well-educated populations, high propensity for computer literacy, the relatively lower costs of business in comparison with others, first class telecommunications and low tax levels give them international competitiveness. Caribbean countries have moved rapidly to better-supervised financial systems, onshore and offshore, with most now meeting international standards that compare favourably with the best practices.