Taxation of Savings Income

**Memorandum of Understanding**

OECD Member States that also are EU Member States, together with Switzerland, apparently have agreed a Memorandum of Understanding, exempting Switzerland from cooperation on exchange of information according to the criteria established in the Global Forum process — in respect of both criminal and non-criminal matters. (See link below to Swiss Ministry of Finance release)

Reports are that EU Member States have further agreed that only a highly restricted form of information exchange based on Swiss dual-criminality will be required of Switzerland until an indeterminate point, some time after 2011.

**Savings Directive Undermines OECD Commitment to a Level Playing Field**

The International Trade and Investment Organisation (ITIO) has asked the Organisation for Economic Co-operation and Development (OECD) for an urgent meeting to discuss the impact of the E.U. savings tax directive on the OECD’s “harmful tax competition initiative”.

ITIO Chairman Glenroy A Forbes – who is also Financial Secretary of the British Virgin Islands – has written to OECD Secretary General Don Johnston, pointing out concerns over the EU directive. *”As matters stand, the OECD’s “harmful tax competition” project appears compromised and its future in doubt”*, he said.

According to the ITIO, the implementation of the savings tax directive may violate the OECD’s commitment to a level playing field. The EU action also represents a major challenge to the OECD’s own principles of transparency and exchange of information.

The controversial EU directive on the taxation of savings would favour four OECD member states – Austria, Belgium and Luxembourg and Switzerland – over non-OECD countries by allowing them to defer exchanging information until 2011 or later.

The International Trade and Investment Organisation groups a number of states across Europe, the Caribbean, Pacific, Latin America and Asia. It works for a level playing field in the trade in services, particularly in the development and implementation of new regulatory standards. Its members include Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Isle of Man, Labuan (Malaysia), Panama, St Kitts & Nevis, St Lucia, St Vincent & The Grenadines, Turks & Caicos and Vanuatu.