The world is aware that the likes of the OECD (Organisation for Economic Cooperation and Development), G20 nations’ leaders and the EU have been putting excessive pressure on tax havens to comply with OECD guidelines, to eradicate global taxation avoidance and bring the willing and open exchange of tax information to the fore.
Well, now this pressure has stepped up a gear.
Not content with the fact that the vast majority of legitimate tax havens in the world have all agreed to comply and are working to get TIEAs (tax information exchange agreements) in place, the British Prime Minister and the French President are pushing for a very tight deadline for full cooperation. The countdown to tax haven compliance has begun it seems…but why are Brown and Sarkozy so interested?
In a meeting held between the French and British leaders last month, Brown and Sarkozy declared their joint belief that tax havens should only be given until next year to comply with the guidelines from the OECD. The two leaders are expected to push for this deadline to become set in stone at the next meeting of the G20 leaders in September.
President Sarkozy pointed out that he, presumably speaking on behalf of the EU, would not be happy with tax havens having long-term plans for compliance. He reiterated his government’s position that a 2010 deadline for complete compliance and reporting transparency be set and met, otherwise the introduction of threatened sanctions should become a reality.
The proposed sanctions to be applied against uncooperative tax havens were finally agreed upon back in June. They include the revision of current international investment policies with a given non-compliant nation, the imposition of taxes on funds held in such offshore tax havens, or finally the withdrawal of any aid or international fiscal support in place in that country.
The sanctions are certainly pressure enough for the vast majority of offshore tax havens to comply – from Andorra to Zurich in Switzerland – but Brown and Sarkozy seemed strangely keen to throw their weight about on this issue last month when they met in Evian-les-Bains. They made the point that when the G20 meets next month in Pittsburgh they will be angling for very strong targets to be laid out and tight deadlines to be set.
None of this is really news to the offshore tax havens complying with the OECD directives – it’s probably more about two people with bankrupt economies trying to deflect attention from their own failings! But it also shows that both Britain and France are doing all they can to remove tax competitiveness from the global arena so that they don’t have to even consider the issue in their own nations. We think that Gordon Brown for one should worry more about his own nation’s taxation position and the fact that heavily taxing the populous will result in strong levels of migration, a further brain drain, dissatisfied voters and ultimately, it won’t even begin to fill the gaping void created when the current government attempted to bail out bankrupt banks drowning in their toxic loans.
