Ethics and governance in the European Financial centers

19/02/2008 - Disclosures concerning alleged widespread tax evasion by German citizens through Liechtenstein highlight a much broader challenge in today's globalised economy: how to respond to countries and territories that seek to profit from tax dodging by residents of other jurisdictions.


"This is a fundamental issue in our increasingly interdependent world," OECD Secretary-General Angel Gurría commented.


OECD countries and a number of co-operative financial centres have been working together for a number of years to address the problems posed by anti-competitive tax practices, both in OECD countries and offshore, by developing standards of transparency and exchange of information in tax matters that balance the interests of financial privacy with the need for countries to be able to enforce their own tax laws.

Despite these efforts, however, a few jurisdictions still fall short of best-practice standards, effectively providing a basis for illegal tax evasion on the part of some of their customers.


In 2002, OECD published a list of un-cooperative tax havens, initially including seven countries. Several have now made commitments to work with OECD and its partners to improve transparency. But three remain on the list: Andorra, Monaco and Liechtenstein.


"As long as there are financial centres that refuse to co-operate in bilateral tax information exchange and that fail to meet international transparency standards, residents in other countries will continue to be tempted to continue to evade their tax obligations," Mr. Gurría commented.


"The openness of the global economy can only be sustained if participants assume mutual responsibilities, as well as sharing benefits. Excessive bank secrecy rules and a failure to exchange information on foreign tax evaders are relics of a different time and have no role to play in the relations between democratic societies," he stated.


For further information, please contact Nicholas Bray, OECD's Media Division (tel. 33 1 4524 8090).

Source : OECD

"And it’s time to shed some sunlight not only on companies that abuse the tax code, but also on the secretive offshore tax havens that shelter them. We’ll create a list of countries where tax evaders hide their income and cost America untold billions of dollars every year. We’ll lead the international community to new standards of information sharing. And we’ll penalize companies and individuals who use those havens and illegally evade their tax obligations. "
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"To ensure that we are fiscally responsible, we’ll gain revenue by shutting down corporate loopholes and tax havens."

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Reuters quoted Sen. Carl Levin who said it would become easier for federal authorities to pursue possible tax evaders by putting more onus on them to show that offshore shelters are legitimate. "It's got to end, and it's going to take a change in the law," Levin said at the Reuters Regulation Summit

Levin; Obama, an Illinois Democrat who is campaigning for his party's nomination for president; and Sen. Norm Coleman, a Republican from Minnesota, last year introduced a text to crack down on tax evasion strategies : the Stop Tax Haven Abuse Act.

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