The OECD's project on harmful tax practices [electronic resource] : the 2001 progress report

14 Pages·2002·0.45 MB·English

by  Organisation for Economic Co-operation and Development

THE OECD’S PROJECT ON
HARMFUL TAX PRACTICES:
THE 2001 PROGRESS
REPORT
OECD
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ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT
PursuanttoArticle1oftheConventionsignedinParison14thDecember1960,andwhichcame
intoforceon30thSeptember1961,theOrganisationforEconomicCo-operationandDevelopment
(OECD)shallpromotepoliciesdesigned:
• toachievethehighestsustainableeconomicgrowthandemploymentandarisingstandardof
livinginMembercountries,whilemaintainingfinancialstability,andthustocontributetothe
developmentoftheworldeconomy;
• tocontributetosoundeconomicexpansioninMemberaswellasnon-membercountriesin
theprocessofeconomicdevelopment;and
• tocontributetotheexpansionofworldtradeonamultilateral,non-discriminatorybasisin
accordancewithinternationalobligations.
TheoriginalMembercountriesoftheOECDareAustria,Belgium,Canada,Denmark,France,
Germany,Greece,Iceland,Ireland,Italy,Luxembourg,theNetherlands,Norway,Portugal,Spain,Sweden,
Switzerland,Turkey,theUnitedKingdomandtheUnitedStates.Thefollowingcountriesbecame
M(2e8mtbheJrasnusaurbyse1q9u69e)n,tlAyustthrraoluigah(a7tchceJsusnieon19at71t)h,eNdaetwesZienadliacnadte(d2h9etrheaMfateyr:1J9a7p3)a,nM(e28xtihcAopr(i1l8t1h9M64a)y,F1i9n9l4a)n,d
theCzechRepublic(21stDecember1995),Hungary(7thMay1996),Poland(22ndNovember1996),
EKuorroepae(a1n2tChomDmeucneimtbieers1t9a9k6e)sapanrdtSilnotvhaekwRoerpkubolfitche(1O4tEhCDDec(eArmtbieclre210300o)f.tTheheOCEoCmDmiCsosnivoenntoifont)h.e
ThisReportwasdeclassifiedbytheOECDCouncilon14thNovember2001.
PROJETDEL'OCDESURLESPRDAiTsIpoQnUibElSeeFnIfSraAnLgaEiSsDsoOusMlMeAtiGtrEeABLES:RAPPORTDETAPE2001
2
1
TABLEOFCONTENTS
THEOECD’SPROJECTONHARMFULTAXPRACTICES:THE2001PROGRESSRF.PORT 4
L INTRODUCTION 4
IT. MEMBERCOUNTRYWORK 6
IH NON-MEMBERECONOMYWORK 7
BL TAXHAVENWORK 7
MPCIormodopmiglmrfeieimsctesamntetiiannottntihssoenttCooootTfmhreCmaoniTmstapmxmaierHtneamntvecenDynitassWncodusrEskfifoencst„iveExch.angeofIn..f.ormation«. ......«., .11J28J
AssistingCommittedJurisdictions 12
V. FRAMEWORKOFCO-ORDINATEDDEFENSIVEMEASURES 13
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THEOECD’SPROJECTONHARMFULTAXPRACTICES:THE2001PROGRESSREPORT1
I. INTRODUCTION
1. Themoreopenandcompetitiveenvironmentofthelastdecadeshashadmanypositiveeffectson
taxsystems,includingthereductionoftaxratesandbroadeningoftaxbaseswhichhavecharacterizedtax
reformsoverthelast15years. Inpartthesedevelopmentscanbeseenasaresultofcompetitiveforces
whichhaveencouragedcountriestomaketheirtaxsystemsmoreattractivetoinvestors.Inadditionto
loweringoveralltaxrates,acompetitiveenvironmentcanpromotegreaterefficiencyingovernment
expenditureprograms.
2. However,sometaxandrelatedpracticesareanti-competitiveandcanundercutthegainsthattax
competitiongenerates. Thiscanoccurwhengovernmentsintroducepracticesdesignedtoencourage
noncompliancewiththetaxlawsofothercountries.Manycountrieshaveputinplacemeasurestoprevent
theerosionoftheirtaxbases.Suchmeasuresoftenincreasethecomplexityoftheirtaxsystemsandput
greaterburdensandcostsontaxadministrationsaswellasoncomplianttaxpayers. Ultimately,taxpayer
confidenceintheintegrityandfairnessofthetaxsystem,andingovernmentingeneral,declinesashonest
taxpayersfeelthattheyshoulderagreatershareofthetaxburdenandthatgovernmentcannoteffectively
enforceitsowntaxlaws.Harmfultaxpracticesalsodistortfinancialand,indirectly,realinvestmentflows.
Furthermore,suchpracticesunderminetheabilityofeachcountrytodecideforitselftheallocationoftax
burdenamongmobileandlessmobiletaxbases,suchaslabor,propertyandconsumption.
ncw3.ooomrnpl-edt-OiwEtiCidBoeDn.y-tp-ThrahcoteavwniOidliEwlnoCgarDckahipfterrovogajeeemtctehthweeodroroevktesorwanielotllthiimasinienmewakstheitoocfhhdatirchcmoetufanOtutelErtiCtoeasDaxn—typorlcaafcoortusgintecteerrasy,nedwcthohsaenmtaolOmliitE,scCrtiagDcxrhorswaaettneehdksspahonotoduorl,ddperObvoeEem,loCootDrpemheatonnawtdx
itstaxsystemshouldbestructured.Itseekstoencourageanenvironmentinwhichfreeandfairtax
competitioncantakeplace.
4. Itwaswiththisobjectiveinview,thattheOECDMembercountriespublishedthereportin1998
entitled"HarmfulTaxCompetition:AnEmergingGlobalIssue"(the“1998Report”).Thatreportfocused
ongeographicallymobileactivities,suchasfinancialandotherserviceactivities,includingtheprovision
ofintangibles.Itdevelopedcriteriatoidentifytheharmfulaspectsofaparticularregimeorjurisdiction.
Inparticular,itfocusedonfactorsthatcouldcauseharmbyunderminingtheintegrityandfairnessoftax
systems.Thus,itfocusedonfourcriteriainparticular:
• Noornominaltaxesinthecaseoftaxhavensandnoorloweffectivetaxratesontherelevant
incomeinthecaseofpreferentialregimes,
• Lackofeffectiveexchangeofinformation.
1. B"HealrgmifuumlaTnadxPoCrotmupgeatlitaibosnt:ainAfnroEmmetrhigsinRegpoGrlto.balLuIxsseumeb,"ouwrhgicrhecaalllssoiatpsplaibesstetnotitohnetporetsheent19R9e8poRretpoarntd,
regretsthatthe2001progressreportisfurtherawayfromthegoalofcombatingharmfultaxcompetition
withrespecttothelocationofeconomicactivities.Inaddition,Switzerlandnotesthatits1998abstention
appliestoanyfollowupworkundertakensince1998.
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• Lackoftransparency,and
• Nosubstantialactivities,inthecaseoftaxhavens,andringfencing,inthecaseofpreferential
regimes.
Trehleevfainrsttifnacctoomre—innothoercnaosmeionfaplretfaexreesntiinatlhreecgaismeesof—taixsahagvaetneswaayndcrnioteorriolnotwoedfefteecrtimvienetatxhorasteessiotnuattihoensin
whichananalysisoftheothercriteriaisnecessary.
5. Effectiveexchangeofinformationenablesgovernmentstoensurethattheirowntaxlawsare
beingcompliedwith,particularlywherecross-bordertransactionsareinvolved. Globalisationofthe
economyhashadthesideeffectofopeningupnewwaysinwhichcompaniesandindividualscanavoid
taxesthatarelegallydue. Astheleveloftaxpayers’activitiesoutsidenationalbordersexpands,
governmentscannotalwaysrelyondomesticsourcesofinformationtoenforcetheirtaxlaws.Exchangeof
idinsfcoorvmeartiinognnboent-wceoemnplitaanxceauitnhocrriotsises-boirsdewritdrealnysacrteicoongs.nisBeodthastheanOEefCfDectainvdeUmneiatnesdNoaftiodnetsermroidneglatnadx
cbInoentavwdeedniettniiooOnn,EsdCienDtcaliMuldeedempbareoprvriocsvoiiuosnnitsornifeotrshaeatxncpdehraomnviegtreso1tf,a5xi0n0afuottrrhmeoaarttiitieiosenswwoterorleed-xdwceihvdaeenlgoaepreeidnbfajoosriemndattloyinobn.ythetshOeeveOmroEd2Ce2lD5tatrrneeadattitiehsee.s
CouncilofEuropeintheConventiononMutualAdministrativeAssistanceinTaxMatters. TheInter-
AmericanCenterofTaxAdministrations(C1AT)hasalsodevelopedamodelexchangeofinformation
agreement.Othercountrieshavedevelopedsimilarmodels.Alloftheseagreementsrecognisethatwhere
effectiveexchangeofinformationispresent,acountry’sabilitytoenforceitsowntaxmlesisenhanced.
6. Thetransparencycriterionisconcernedwithensuringthat1)lawsareappliedonanopenand
consistentbasisamongsimilarlysituatedtaxpayers,and2)informationneededbytaxauthoritiesto
determineataxpayer'ssituationisinplace.Lackoftransparencycanmakeitdifficult,ifnotimpossible,
fortaxauthoritiestoapplytheirlawseffectivelyandfairly.“Secret”mlings,negotiatedtaxrates,orother
practicesthatfailtoapplythelawinanopenanduniformwayareexamplesoflackoftransparency.Lack
oftransparencyisalsopresentifthereisinadequateregulatorysupervisionorifthegovernmentdoesnot
havelegalaccesstofinancialrecords.Taxpayersaswellasthegovernmentsofothercountrieshavean
interestinknowinghowthelawsofaparticularcountryareappliedandthattheyarebeingappliedina
consistentandfairmanner.
7. Thenosubstantialactivitiescriterionwasincludedinthe1998Reportasacriterionfor
identifyingtaxhavensbecausethelackofsuchactivitiessuggeststhatajurisdictionmaybeattemptingto
attractinvestmentandtransactionsthatarepurelytaxdriven.Itmayalsoindicatethatajurisdictiondoes
not(orcannot)providealegalorcommercialenvironmentthatwouldattractsubstantivebusinessactivities
intheabsenceofthetaxminimisingopportunitiesitprovides.
8. Inthecaseofjurisdictionsthatofferpreferentialregimes,the1998Reportincludesasafactor
whetheracountryinsulatesitscoretaxbasefromtheeffectsofprovidingapreference.Forexample,ifa
cnootunwtirlylionfgfetroinbgeaarptrheefecroesnttsiailnrloesgtirmeevdeennuieesswtihtahtrreesgpiemcetttooirtessiodwenntttaaxxpsayysetresm.orSduocmhesrteigcimaecstivairteiessa,idittios
be"ringfenced".
9. TheReportalsoprovideseightadditionalfactorswhichcanassistinidentifyingharmful
preferentialtaxregimes.
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10. The1998ReportwasfollowedbyaprogressreportinJune2000entitled"TowardsGlobalTax
Co-Operation:ProgressinIdentifyingandEliminatingHarmfulTaxPractices(the"2000Report”).That
reportoutlinedtheprogressmadebytheForumonHarmfulTaxPracticesinitswork. Inaddition,the
Report:
• Identified47potentiallyharmfulpreferentialtaxregimesinOECDMembercountries.
• Listed35jurisdictionsfoundtomeetthetaxhavencriteria.
• Proposedaprocesswherebytaxhavenscouldcommittoeliminateharmfultaxpractices.
ThosejurisdictionsthatmakesuchacommitmentarereferredtointhisReportas
"committedjurisdictions."
• Madeproposalsforassociatingnon-membereconomieswiththeharmfultaxpractices
project.
• Proposedelementsofapossibleframeworkofco-ordinateddefensivemeasuresdesignedto
counteracttheerosiveeffectsofharmfultaxpractices.
11. The1998Reportenvisionedthreepartstotheharmfultaxpracticeswork:Membercountry
preferentialregimes,taxhavensandnon-membereconomies. Thisprogressreportfocusesprimarilyon
thetaxhavenworkinaccordancewiththemandateofthe2000Report2.
II. MEMBERCOUNTRYWORK
12. Atthepresenttime,theworkwithMembercountriesisfocusedondevelopingseveral
applicationnotes.TheapplicationnoteswillassistMembercountriesindeterminingwhetherpreferential
regimesare,orcouldbeappliedtobe,harmfulandindetermininghowtoremovetheharmfulfeaturesof
suchregimes. The1998Reportandthe2000Reportenvisagedanappropriatebalancebetweenthe
Membercountry,non-membereconomy,andtaxhavenwork.InthelightofthemodificationsinChapter
IV,theCommitteewilldeterminethisissueinthecontextofitsworkrelatingtopreferentialtaxregimes
takingintoaccounttheapplicationnotesincludingthoserelatingtoringfencing.Futurereportswillfocus
onprogressonthiswork.
13. TheCommitteerecognisestheimportanceofinvolvingthebusinesscommunity inthe
developmentoftheapplicationnotes.Forthisreason,theCommitteeregularlyconsultstheBusinessand
IndustryAdvisoryCommittee(BIAC).BIAChasestablishedaliaisongrouptoworkcloselywithMember
countriesintakingforwardthiswork.
2. The2000ReportwasaccompaniedbyaCouncilrecommendation.
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III. NON-MEMBERECONOMYWORK
14. Asregardstheworkwithnon-OECDcountries,the2000Reportstressedtheneedto"encourage
non-membereconomiestoassociatethemselveswiththe1998Report". TheForumisactivelypursuing
thismandateandhashaddiscussionswithseveralnon-membereconomiesinAsiaandinLatinAmerica.
Multilateralregionalmeetingswithnon-membercountriesinAfrica,AsiaandSouthAmericahavealso
beenheldinconjunctionwiththeSouthernAfricanDevelopmentCommunity,theAsianDevelopment
Bank,andtheInter-AmericanCenterofTaxAdministrations(CIAT). Aninternationalsymposiumwas
alsoheldinParisinJune2000,co-hostedbyFrance.Itwasattendedby27OECDMembercountriesand
29non-membereconomies,alongwiththeIMF,WorldBank,CommonwealthSecretariatandfourtax
organisations.Ministersandseniorofficialsdiscussedtheglobalimplicationsofharmfultaxpracticesand
supportforaglobaldrivetoaddressharmfultaxpracticescamefromawiderangeofcountries.
aa1u5n.sdpincoens-omIfnemtShbeeeprGtleeocmbobanelormFi2oe0rs0u.1m,T.htehTehmiesOetEmieCnegDticnohgnossbitrdeoedurgeadhntotththeoegerextpmheeerreiteOinnEcgeCsoDonfMOheamErbCmefDruslM,etcamoxbmempriratcattneiddcenjsuornuin-sddmieecrmtibtoehnres
countrieswithharmfultaxpractices,effectiveexchangeofinformation,certaindraftapplicationnotes,and
theprocessunderwhichnon-membereconomiescanassociatethemselveswiththeharmfultaxpractices
work.
IV. TAXHAVENWORK
16. Part11(b)ofthe1998Reportdescribesfourkeyfactorstodeterminewhetherajurisdictionisa
tcraixtehraivoenni.snoTthesufffiircstienist,tbhaytittsheelfj,utroisrdeiscutlitoninicmhpaorsaectserniosatoirononalsyantoamxihnaavlent.axeTs.heThOeECnoDorrecnoogmniisneasltthaaxt
everyjurisdictionhasarighttodeterminewhethertoimposedirecttaxesand,ifso,todeterminethe
appropriatetaxrate.Ananalysisoftheotherkeyfactorsisneededforajurisdictiontobeconsideredatax
haven.Thethreeotherfactorstobeconsideredare:
• Whethertherearelawsoradministrativepracticesthatpreventtheeffectiveexchangeof
informationfortaxpurposeswithothergovernmentsontaxpayersbenefitingfromthenoor
nominaltaxation.
• Whetherthereisalackoftransparency.
• Whetherthereisanabsenceofarequirementthattheactivitybesubstantial,whichwould
suggestthatajurisdictionmaybeattemptingtoattractinvestmentortransactionsthatare
purelytaxdriven.
17. Beginningin1998,theForumenteredintodiscussionswith47jurisdictions.Thesejurisdictions
wereinvitedtosubmitinformationtoassisttheForuminitsdeterminationofwhethertheymetthetax
havencriteria. Mostjurisdictionsparticipatedinthereviewprocessthroughbilateralormultilateral
contacts.TheCommitteeconcludedthatsixjurisdictionsdidnotmeetthetaxhavencriteria.Inaddition,
7
anothersixjurisdictions--Bermuda,CaymanIslands,Cyprus,Malta,MauritiusandSanMarino—were
notincludedinthe2000Reportbecause,priortoitsrelease,theycommittedtoeliminatetheirharmfultax
practices. Itshouldbenotedthatseveralofthesejurisdictionscurrentlydonotimposedirecttaxesand
neednotdosotofulfiltheircommitments.TheReportwasclearthatitsidentificationofjurisdictionsas
taxhavensreflectedthetechnicalconclusionsoftheCommitteebaseduponthecriteriasetoutinthe1998
Reportandwasnotintendedtobethebasisfortheapplicationofapossibleframeworkofco-ordinated
defensivemeasures. TheCouncilinstructedtheCommitteetotakeforwardanactivedialoguewiththe
jurisdictionslistedinthe2000Reportwithaviewtoobtainingthecommitmentofthejurisdictionsto
eliminateharmfultaxpracticesinaccordancewiththeprinciplesofthe1998Report.3
ProgressintheCommitmentDiscussions
18. TheForumhasengagedinanextensivedialoguewiththetaxhavenslistedinthe2000Report
throughbilateralandmultilateraldiscussions.Thesediscussionshaveresultedinadditionalcommitments.
Thediscussionsalsohavegreatlyimprovedtheunderstandingofthejurisdictionsregardingtheobjectives
oftheharmfultaxpracticeswork. Almostallofthejurisdictionshaveindicatedindiscussionsthatthey
agreewiththebroadprinciplesunderlyingtheharmfultaxpracticesproject.
19. Anumberofmultilateraldiscussionshavealsooccurredsincetheissuanceofthe2000Report.A
jtohientPrOiEmCeDM-iCnoismtmeornowfeBaalrtbahdomse.etTihnagtwcaosnfheorsetnecdebhyadBaorvbeardo1s60inpaJratniucairpyant2s00f1roumnd1e3rOthEeCCDhaicroumnatnrsiehsi,p1o3f
CommonwealthCaribbeanjurisdictions,5PacificCommonwealthIslands,8otherCommonwealthnon-
DO(eCEvACeRlDIoCpcOmoMeun)ntt,riBteahsne4k,,CaatsrhiewbeIbnletlearn-asADmetevhreeilcIoanpntmeeCrnneantttieBornaanolfkMTaoannxdeAtdtahmreiyniPasFctuirnfadit,ciotInhssela(nWCdlosArTlF)od,ruBtmah.enkC,AartichboebnefIaennrteeCrn-ocAemmmefuronriicttahyne
PIDaseclviaefnildcsoprmeFegoinrotunmBwaan(skP,IhFot)shteeaWdnodirnlwJdaasBpaannakti,tnetnFhdeeebdIrnutaberyryna2t1i03o0n1Pa.lIFMTohmnaeettmcaborenyrfseFruenandncdeawn8dastOhceEo-CCsoDpmomnMosenomrwebedearlwsitt5hh,SttehhcereePtaAacrsiiifaatin.c
AAprjiolinotfO2E0C0D1.-PaTchaitficconIfselraenndcseFwoarsuamttmeenedteidnbgywPaIsFhMeelmdbweirtshaSnodutOhEPCacDifMicemIsblearndcjouurnitsrdiiecstiaosnsweilnlFaisjithien
3. TaDenhpyeeiUnnndtieetnrencaditeiKsoinnwailgtdfhioismncatlchotenreffairtraiemmsse,wtahogarrtkeietomfweitnlhltesrOeomrEacCionDmrmHeiastrpmomenfsnuitlbslTewahfxoircPrhaanacyftfiiecncettseiritnnsaittOiivaoetniravslee,oabislnicTgleaurtrdiiitonongrsiaaenrsyiostrihnaCgtrfmorawoynm
benecessarytofulfilcommitmentsenteredintobythoseOverseasTerritoriesorCrownDependencies.
4. MTehxeic1o3,OENeCthDercloaunndtsr,iesSwweedree:n,AutshteralUinai,tCeadnaKdian,gCdzoemchanRdeputbhleicU,niFtreadnceS,taGteesr.manTyh,eIr1e3lanCdo,mImtoalny,weJaaplatnh,
Caribbeanjurisdictionswere:Anguilla,AntiguaandBarbuda,TheBahamas,Barbados,Belize,British
VGirregniandiInselsanadsn,dCTauyrkmsan&ICsalaincdoss,IDsolmaindnsi.caT,hGere5naPdacai,fiSct.CoKimtmtsonawnedaNletvhis,IslSta.ndLsucwiear,e:StT.hVeinCcoeonktaIsnldantdhse,
Niue,Seychelles,TongaandVanuatu.TheeightotherCommonwealthnon-OECDcountrieswere:Brunei
Darussalam,Cyprus,Jamaica,Malaysia,Malta,Mauritius,Namibia,andSingapore.
5. NTOKahiEuenrCguPDd,IoFmMN.imeuemeAmb,ubesetrPrrasalslawiuwae,erraPeena:dpAuCuNsaoetorwNakleZiIaews,allaGCnauadnisndn,aeadFarai,ej,i,aSFlRasreomapnoPucaIbe,Fl,iMScJeoampolafbonemM,roasrnK.sohrIasellaal,ndINss,leawnTdosnZ,geaaFl,eadneTdru,avtaNelduo,rSwtaaantydesaVonafdnuMtaihcteruo.UnneisTtiheae,d
1 1
PIFandOECDSecretariats. AmeetingamongjurisdictionsfromEurope,theMiddleEast,andOECD
MembercountrieswasheldinParisinFebruary2006.
2B0a.rbadosAwsasaersetsaublltisohfedt.heTmheeetOinEgChDelMdeimnbBearrsbaodfost,heagJrooiunptiWnocrlkuidengAuGstrroaulipa,coF-rcahnacier,edIrbeylanAdu,stJraaplaina,atnhde
NetherlandsandtheUnitedKingdom.Thenon-OECDjurisdictionsincludeAntiguaandBarbuda,
Barbados,theBritishVirginIslands,theCookIslands,Malaysia,Malta,andVanuatu.TheJointWorking
Groupwasgivenaremittofindamutuallyacceptablepoliticalprocessbywhichcommitmentscouldbe
madeandtoexaminehowtocontinuethedialoguebeguninBarbados.MeetingsoftheJointWorking
GrouptookplaceinLondoninJanuary2001andinParisinMarch2001.
2aa1rd.evacnocnetdinDtuioiswncagursdossniomneaiskthhieanrvgeaabbecieloanmtmehrieatlldmoewrnittmhualantlidll3att5heejruaOlriEsbCdaisDcitsi.loonosMkslainfstoyerdwoiafnrdtthhteeo2jr0uer0ci0esidRvieicpntogirottnhs.eihTrahcveoesmemsudibitssmtceaunnsttsiisaolnlisny
thenearfuture.
22. Sincetheissuanceofthe2000Report,5jurisdictionshavemadecommitmentstoeliminate
harmfultaxpractices.TheyareAruba,Bahrain,theIsleofMan,theNetherlandsAntilles,andthe
Seychelles.Thesejurisdictionsarenowconsideredcommittedjurisdictions.Thus,therearenow1
cacotmimointstteodajdudrriessdsicttihoonsse.arIenasadtdhiattiolne,dTtoonitgsaidheanstirfeicceanttiloynmbaydtehelOegEisClaDtiviencJhuanneg2e0s0a0nadstaakteanxahdamviennisatnrdative
thereforewillnotbeconsideredforinclusioninanylistofuncooperativejurisdictions.
ModificationstotheTaxHavenWork
2O3E.CDhaTvhiengdiaalboegtuteerbeuntdweeresntatnhdeinOgEoCfDthMeemcboencresrnasndofthtehetajxurhiasvdeicntijounrsisdriecgtairodnisnghastherescuolmtemditinmetnhte
processandparticipationintheharmfultaxpracticeswork. Sincetheinceptionoftheharmfultax
practicesproject,theCommitteehassoughttooperatethroughaco-operativeprocess.
24. Severaljurisdictionsinterestedinmakingcommitmentsraisedconcernsaboutthecommitment
process,includingconcernsregardingthetransparencyoftheprocessandtheneedforgreaterdetail
regardingtheharmfulfeaturestobeeliminated.
25. TheOECDMembersrespondedtotheseconcernsbyestablishinganalternativeprocessthatset
outingreaterdetailthetermsofthecommitmentssought,aproposedtimetableforimplementationandby
providingforthepublicationofthedetailsofanyfuturecommitments.
26. SomeMembercountries,aswellassometaxhavens,haveexpressedconcernsregardingthe
applicationofthenosubstantialactivitiescriterion,theapplicationofaframeworkofco-ordinated
defensivemeasurestotaxhavensasof31July2001andthetimeframefordevelopingimplementation
plans.
6. TOvheerspaeratsicTieprarnittsorwyeroef1t2henoUnni-tOeEdCKDijnugrdiosdmi,ctiGounesrn(Asnedyo-rDreap,eBnadhernacien,oCfatyhmeaBnriItsilsahndCsr,oCwynp,ruIss,leGiobfraMlatanr--
DanedpeSnadneMnacryinofo)thaendBri1t4isOhECCroDwnM,emJebresreyc-oDuentpreinedsen(Acuystorfaltihae,BBreiltigsihumC,roCwann,adLai,ecFhrtaenncset,eiGn,erMmaaltnay,,MGoreneacceo,
aIdrdeilatnido,n,Itthaely,OEJaCpDan,SecNreetthaerrialta,ndtsh,eENuorrowpaeya,nPCoolmamnids,sithoenUannidtetdheKIintnegrdnaotmionaanldMotnheetUanriyteFdunSdtawteesr)e.alsIno
present.
9
27. The1998Reportindicatesthatthelackofsubstantialactivitiesisoneofthecriteriatobeapplied
inidentifyingajurisdictionasataxhaven. However,thedeterminationofwhetherlocalactivitiesare
sufficientlysubstantialisdifficult,aswasanticipatedinparagraph55ofthe1998Report.Consequently,
ininterpretingthenosubstantialactivitiescriterion,theForumsoughttodeterminewhethertherewere
factorsthatdiscouragedsubstantialdomesticactivities. Inthelightofthediscussionswiththe
jurisdictions,theCommitteeconcludedthatitshouldnotusethismethodtodeterminewhetherornotatax
havenisuncooperative.
28. Thus,theCommitteehasdecidedthatcommitmentswillbesoughtonlywithrespecttothe
transparencyandeffectiveexchangeofinformationcriteriatodeterminewhichjurisdictionsareconsidered
asuncooperativetaxhavens. Inapplyingthetransparencyandexchangeofinformationcriteriamany
factorsarerelevant,includingarelaxedregulatoryframework,whichreducestransparencyandmakesit
lesslikelythattheinformationneededforeffectiveexchangeofinformationwillbeavailable.TheForum
willcontinuetoexamineallfactorsaffectingtheabilityofajurisdictiontoengageineffectiveexchangeof
information.
29. Thejurisdictionsthathavemadecommitmentspriortotheissuanceofthisreportwillbe
informedthattheycanchoosetoreviewtheircommitmentsinrespectofthenosubstantialactivity
criterion.
30. Membercountrieswouldwelcometheremovalbytaxhavensofpracticesimplicatedbytheno
substantialactivitiescriterioninsofarastheyinhibitfaircompetition.
31. SomeMembercountries,aswellassometaxhavens,haveexpressedconcernoverthelackof
symmetryinthetimingofthepotentialapplicationofaframeworkofco-ordinateddefensivemeasuresto
Membercountriesandtaxhavens.Whilethe1998Reportanticipatedthepotentialneedforsuchmeasures,
itdidnotsetatimefortheirapplication.The2000Reportprovidedthattheco-ordinationofthedefensive
measureswouldnotbeimplementedpriorto31July2001.
d32e.fensiveTmheeasCuroemsmittotetaexrheacvoegnnsispersiorthtaottthheeirppootteennttiiaallaapppplliiccaattiioonntoofOaECfDraMmeewmobrekrocfounctor-ioersdirnaaitseeds
concernsregardingalevelplayingfieldbetweenMembercountriesandtaxhavens. Therefore,the
Cuprnoecmfomeoripetenttrieaatelivaregergtieamexeds.htahavEteanacshpaoOtneEynCteiDaarllMifeerrmatbmheeawrnorcitokuwnootfruylcodr-eotarapdipinlsnyattheteodsdOoevEfeeCrneDsiigvMneermmigebhaetsrutorecaospupnwltoyriuoelrsdnwoniottthapahppalprylmyafnutlyo
defensivemeasuresasappropriate,eitherwithinoroutsideaframeworkofco-ordinateddefensive
measures.
33. Inthelightoftheabovedevelopmentsandgiventhenumberofongoingdiscussionswith
jurisdictionsontheconclusionofcommitments,theCommitteehasdecidedthatthetimeformaking
commitmentswillbeextendedto28February2002.Suchanapproachisinaccordwiththeaimofthe
2000Reportto“establishaco-operativeprocesstopromotetheeliminationofharmfultaxpracticesin
jurisdictionsidentifiedinthe2000Report...”. Theobjectiveofthetaxhavenworkremainstoobtain
commitmentsfromasmanyofthejurisdictionsaspossible.Themodificationstotheworkcontainedinthis
Reportarelikelytofacilitatethisprocessbypromotinganinclusiveandconstructiveapproachwhich
easmspihsatsainsceeswhtihechbeOneEfCitDsoMfemthbeeirnictoiautnitvrei,esinccolumdmiintgtthheemospeplovretsuntiotipersovfiodretteochjnuirciasldicatnidoncsapwahcoitycobmumiildtintgo
theprocess.Ifalljurisdictionsmakeacommitmentpriorto28February2002,itwillnotbenecessaryto
issuealistdifferentiatingbetweenthosejurisdictionsthathavemadeacommitmentandthosethathave
not.
10