Keith Johnston, Head of Policy and Communications at STEP Worldwide, says the professional body that represents the trust and estate profession worldwide welcomes OECD’s support for mutual benefits in information exchange. He warns, however, that the process is still flawed and calls on both the OECD and EU to ensure an inclusive process to achieve a level playing field.
STEP recently issued a release on the outcome of the OECD’s Global Forum meeting in Melbourne, particularly noting that the OECD process has moved forward significantly as a result of its recognition of the need for mutual benefits to be achieved in bilateral agreements for tax information exchange. It says the entire process is still flawed, though, because jurisdictions with major finance centres are still refusing to commit to the OECD principles of exchange of information and transparency.
Commenting on the outcomes of the Melbourne Global Forum, Mr. Johnston says, *””STEP welcomes the ground-breaking decision of China and Hong Kong to endorse the OECD principles and their agreement to work towards a level playing field in standards. However, it is worrying that a large number of the other jurisdictions that attended the Forum for the first time, such as Austria – which is a member of both the OECD and the European Union – continue to refuse to offer this endorsement.”*
Other major finance centres, including Luxembourg and Belgium, also both OECD and EU members, reportedly refused to attend the Forum, and Mr. Johnston maintains that there has been no attempt to bring US states, such as Delaware and Wyoming, into the process, *”despite these being in competition with major finance centres across the world.”*
STEP believes the OECD and European Union must now concentrate on bringing their own members, as well as US states, up to the standards expected of smaller jurisdictions. It is only through a genuinely inclusive process that the OECD will achieve its goal of a level playing field in standards.
STEP Worldwide has also commented on the OECD’s ‘technical’ list of so-called tax havens issued in 2000, indicating that another practical step forward would be an end to arbitrary blacklisting based on this outdated list. *” “We are pleased that Forum participants took account of STEP’s research into the errors made by many current blacklists. The Forum was right to recognise that the OECD’s list has been misused and to call on countries to review any lists based on it. STEP now calls on the OECD to be more proactive in pressing all countries to review their blacklists to ensure these are not unfair and discriminatory.”*
STEP further welcomes the Global Forum’s acknowledgement that bilateral tax information exchange agreements should be based on bringing benefits to both parties. It is only sensible to recognise that all territories enter negotiations expecting to reach a mutually beneficial outcome. *”It is unfortunate it has taken so long for the OECD to acknowledge this fact, but at least now it is possible to have a sensible dialogue on this issue,”*says Mr. Johnston.
STEP published a report on **”Deconstructing National Tax Blacklists”** in September 2005. This revealed that the blacklists operated by large and powerful countries against smaller and weaker ones are often based on arbitrary criteria and not objectively justified.