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Thursday, 18 April, 2002, 08:00 GMT 09:00 UK
Seven tax havens come under fire
Monte Carlo skyline
Monaco has objected to the OECD's decision
A club of the world's rich nations has listed seven states or territories as uncooperative tax havens.

Named and shamed
Marshall Islands
The Organisation for Economic Cooperation & Development (OECD) said the seven had failed to meet its standards on financial transparency and effective exchange of information.

They now face the threat of sanctions from the 30 OECD member states - a move that could, if implemented, sharply reduce their attractiveness to foreign investment.

The named and shamed territories are Andorra, Liberia, Liechtenstein, the Marshall Islands, Monaco, Nauru, and Vanuatu.

Monaco's government said it had taken steps to increase the exchange of information on tax and felt it was subject to unfair treatment by the OECD.

"The principality is unable to understand the reasons why it is subject to treatment different from that applied to neighbouring countries," it said in a statement.

Double standards

The government of Vanuatu decided in February not to join the tax policy initiative, arguing that it was being asked to accept standards yet to be embraced by Switzerland, Luxembourg, Belgium and Portugal.

"The fact that significant OECD members have not committed to the standards being demanded of non-OECD states is an important reason behind Vanuatu's decision," it said in a statement.

The OECD said it remained open to further talks with the named countries and looked forward to the possibility of their future commitment to its standards.

The blacklist of uncooperative states, which initially contained 35 names, was drafted in 2000.

Many of those states later made commitments on transparency and information exchange.

Nations that have appeared on the blacklist since it was created include Russia, Egypt, Israel, Guatemala, Hungary, Indonesia, Lebanon, Myanmar and the Philippines.

Possible sanctions against uncooperative states include imposing a withholding tax on funds transferred to the territories, analysts said.

John Christiansen, former economic advisor to Jersey
"The process of globalisation... is exposing very serious flaws in the world's tax systems"
OECD, spokesman, Geoffrey Owens
"We're not talking about sanctions, but defensive measures."
Gabriel Makhlouf, OECD Committee on Fiscal Affairs
"The globalised economy of the 21st century is going to rely on greater openness"
See also:

15 Mar 02 | Business
How to hide a million
27 Feb 02 | Business
Channel Islands agree tax haven deal
30 Jan 02 | Business
Emergency meeting on terrorist funds
17 Nov 01 | Business
Wealthy nations target terrorists
07 Nov 01 | Business
Will Bush's asset freeze work?
07 Nov 01 | Business
Following the money trail
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