Monday, April 06, 2009

OECD's Jeffrey Owens - some more positive news

We have been hugely critical of the OECD recently, particularly with respect to its appalling new tax haven list. Read more here. In that piece we also quoted a major criticism of Jeffrey Owens, head of tax at the OECD, for his role in this. However, we can temper this with a couple of different observations.

In recent comments at a Brussels Tax Forum last week ( a video is available here - click on Day 1 Part 2) Owens rightly said that the work is only just beginning, and spoke in particular of the challenge of getting the countries which have made commitments to deliver on those promises. He made at least three interesting suggestions, which we hope will be pursued.

For countries such as Switzerland, which has indicated that it would have to renegotiate all its treaties to implement the OECD's (better than pure bank secrecy, but still hopelessly flawed) information exchange approach, Owens suggested that an accelerated way should be found to implement this in all the Swiss treaties as quickly as possible. Renegotiation of all the treaties could take 10 years, but the G20 wants action within 10 months.

So Owens suggested that the Swiss should follow the method used by Belgium: draw up a standard Protocol for all the treaties and get it approved for all treaty partners in one go. Certainly, political problems are likely in Switzerland, given the vested interests, and the Swiss love for direct democracy through referendums - and the willingness of Swiss right-wing parties to use referendums as hurdles to transparency. But the suggestion by Owens seems a practical way to test whether the Swiss can deliver on their commitment.

Next, Jeffrey Owens said that methods must be found to multilateralise tax assistance arrangements. This of course is a central plank in TJN's platform. Without this, it is hard to see how tax assistance can be extended to developing countries, as the G20 Communiqué pledged, with proposals to be made in 2009. He suggested that cooperating countries could establish unilaterally provisions in their laws allowing them to provide tax assistance even without a treaty. Even the Cayman Islands has apparently done this, in 2008 extending tax information assistance to several countries under a new law that does not require Cayman to sign bilateral treaties to achieve this.

Third, Owens stated that in his view the commitments made mean that the transitional regime in the EU Savings Directive is now dead. That means that all 27 EU member states should immediately move to automatic information exchange, rather than the withholding tax. We would also add, why not also others such as Switzerland?

These could be important further steps along the road.


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