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Tuesday, 24 September, 2002, 17:28 GMT 18:28 UK
Tax havens fight back against OECD
Man at computer
Times have changed, say the 'tax havens'
The rash of corporate scandals plaguing the US and other countries will continue so long as rich nations fail to tackle the loopholes in their own backyard, a report has said.

The report comes from the International Tax & Investment Organisation, set up by a group of so-called "tax havens" in response to the international push against havens led over the past three years by the Paris-based Organisation for Economic Co-operation & Development.

The ITIO has surveyed regulation among its own members and the 30 countries which make up the OECD, sometimes referred to as the "rich nations' club".

And it concludes that anyone wanting to hide who really owns a company or draws benefits from it - a key element in both corporate tax evasion and financial crimes such as money laundering and terrorist finance - would do well to stay onshore.

Biggest culprits

"Times have changed," said Owen Arthur, who as prime minister of Barbados has been one of the prime movers behind ITIO, "and many small and developing countries are very well regulated.

"OECD members should recognise that the problem of international corporate crime needs to be addressed in all countries, including themselves."

The report, "Towards a Level Playing Field", was prepared by ITIO together with the Society of Trust & Estate Practitioners, the worldwide association of lawyers, accountants and bankers working in the field of taxes and inheritance.

It singles out the US as one of the biggest culprits, pointing to laws in Delaware and Nevada in particular that make it very difficult to tease out the identity of a company's owner - a situation recognised in 2000 by US Senator Carl Levin in a report from the Senate Subcommittee on Investigations.

In their own time

Other culprits include the UK, where corporate service providers are unregulated, unlike in a number of havens such as Jersey, the British Virgin Islands and Bermuda.

ITIO says these gaps are a symptom of the OECD's push against both tax havens and its more recent proposals to tackle corporate crime.

The organisation, it says, has concentrated on forcing non-members to reform while leaving its own members to follow in their own time.

Some observers point out, though, that ITIO has its own agenda - to try to divert attention from the fact that its regulatory record is a long way from spotless.


Even ITIO and STEP members admit that before the OECD started cracking down on tax havens in 1999 - a process which has whittled down a blacklist of potential targets for sanctions from 35 to seven - many havens were lax at best and crooked at worst.

The OECD itself was not prepared to comment on ITIO's report.

But one official close to its tax and corporate crime initiatives dismissed the report as irrelevant.

"Our touchstones are transparency and the free exchange of information," he told BBC News Online. "We don't want to get involved with any smokescreen which could get in the way of that."

See also:

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