The international professional body representing trust and estate lawyers, accountants and bankers is appealing to the OECD for the promised level playing field on tax information exchange. In a release issued today, The Society of Trust & Estate Practitioners (STEP) says that without a level playing field legitimate business – and tax cheats – will simply migrate to those jurisdictions excused from compliance with the new standards.
STEP spokesman Richard Hay of international lawyers Stikeman Elliott said *”International financial centres gave commitments to tax information exchange following OECD assurances that common standards would apply to all. The EU Savings Tax Directive now proposes that some important OECD members delay or are excused compliance with tax information exchange. Smaller states will seek to withdraw commitments information exchange unless the OECD can ensure its own members are bound by the standards it seeks to impose on others.”*
The call from STEP comes on the eve of the formal signing of the EU Savings Tax Directive (7 March 2003).
The Savings Tax Directive (first proposed at the European Council in Feira in June 2000) is intended to combat capital flight and tax evasion through the automatic exchange of information by EU tax authorities. Earlier this year, however, Austria, Belgium and Luxembourg were offered a transitional period in which they would impose a withholding tax on savings instead of providing information. The three states agreed on condition that rival “tax havens”, including Switzerland and the United States, imposed “equivalent measures”.
STEP says the EU deal means that Switzerland and the U.S. are excused from effective exchange of information on EU resident tax matters – despite the fact that OECD continues to insist their competitors, smaller jurisdictions excluded from OECD membership, should still do so.
Reports are that OECD Secretary General Donald Johnston wrote privately to the heads of European Union Governments in January to express the view that Europe had endangered a global drive to crack down on criminal tax cheats, by excusing three member states from exchange of information. In the meantime, the OECD continues to insist publicly that non-OECD governments exchange information, despite the harm this will do to their economies because their competitors are excused.
G-7 Finance Ministers and Central Bank Governors meeting in Paris on February 22 also stated that *”A level playing field is crucial to avoid tax evasion shifting from those countries that engage in exchange of information to those that do not.”* (see link below)