As the Organization for Economic Cooperation and Development (OECD) continues its increasingly relentless crackdown on tax evasion through the holding of bank accounts in foreign countries Grenada and Belize could be in imminent danger of attracting tough sanctions from North America and Europe.
The global hunt for tax evaders which, in the face of the current financial crisis is high on the G20 agenda appears to have fingered the Caricom states as two countries in the region that offer insufficient tax transparency and, as a consequence could face sanctions.
Just how determined the G20 countries are to go after the tax evaders is reflected in the announcement that the OECD would not object to governments using stolen bank data to track down tax evaders in offshore centres.
Last April the OECD commenced a rigorous survey of offshore jurisdictions designed to determine the extent of tax transparency in those countries and while countries like Switzerland, Liechtenstein and Luxembourg have had their names removed from the so-called “grey list” of offenders Belize and Grenada along with fifteen other countries including Malaysia and the Philippines now appear in danger of facing sanctions.
Last week, Head of the OECD’s tax division Jeffrey Owens refused to rule out the use of stolen bank data as a means of netting tax dodgers. “What we don’t condone is taxpayers who do not comply with their obligations. If you have to get information from informants or other means, that is just the way of making sure that those citizens are not able to shift the tax burden ………onto honest taxpayers,” Owens was quoted in a Caribbean Net News bulletin as saying.
While the nature of the sanctions that countries deemed to have less than adequate tax transparency are likely to face is unclear, developing countries including those in the Caribbean regarded as havens for tax dodgers are likely to suffer much more if those sanctions include measures that reduce or cut off the flow of bilateral and multilateral aid.
Ironically, and despite its role on the crackdown on tax dodgers, the US state of Delaware has been rated by the non governmental organization, Tax Justice Network as the world’s most secretive jurisdiction. “There is a discussion going on within the US. There are number of bills that have been put forward to address the issue, so I am sure that it is an issue that will eventually be addressed,” Owens is quoted as saying. Still developing countries that appear to be caught in the tax transparency net might feel justified in accusing the US administration of pursuing a double standard given what appears to be a lack of any real sense of urgency in Owens’ comment about the Delaware situation.
The OECD’s implicit endorsement of the use of stolen data to tax offshore tax evaders has come in the face of a vigorous lobby by private banks in Switzerland that manage billions of dollars of offshore wealth for government to attach clauses that outlaw the use of such data to a number of tax cooperation treaties which it is now negotiating.
