Wednesday, April 15, 2009


Richard Hay is a leading and vocal supporter of tax havens, and represents the Society of Trust and Estate Practitioners (STEP) as well as acting as a lawyer on behalf of some secrecy jurisdictions.

We note an old speech of his from 2005 entitled "Beyond a Level Playing Field: Free(r) Trade in Financial Services?" (we only have a hard copy, no link).

In that speech, there is an interesting little section, which includes the passages:

"While the OECD project experiences a hiatus (TJN: as a result of lobbying by people like Hay), many offshore cenres feel empowered to deny cooperation to OECD on its tax information exchange program. This is understandable, but it is dangerous
. . .
The OECD tax information exchange philosophy is based on a moderate program of information exchange on request. Automatic information exchange would be much more onerous.
. . .
Hard line European countries are successfully pursuing a competing information exchange philosophy - comprehensive and automatic information exchange - in the recently adopted Savings Tax Directive. If the OECD plan sinks, the EU philosophy will gain ground as the accepted international standard for tax information exchange."

TJN emphatically supports the EU's style of automatic, comprehensive and multilateral exchange of information - see here for the general principles - and believes that the OECD is seeking to have its own - pathetically weak (but perhaps better than nothing as a temporary measure) approach become the accepted international standard. This would be a pernicious development - and we have been especially critical of the OECD's destructive hypocrisy on this.

All of us need to put our weight behind the comprehensive, multilateral approach, which would include things like trusts and foundations, and bring developing countries to the table. We stress that the EU model is far from perfect - it is in the process of being improved, but it is limited by the fact that it is aimed only at individual interest income. So: a) it is easy to avoid, by using shell companies etc, and (ii) it does nothing about corporate tax avoidance or evasion. The proposed amendments may close some of the loopholes, but it would still remain limited to individual interest income. Our draft briefing paper gives more pointers.

The political terrain has changed beyond recognition from the days when Richard Hay was writing - and things must, and will, move in the right direction.


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