The Marshall Islands fall into line (but no one knows where the line is)

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The Marshall Islands has committed to "transparency and exchange of information for tax purposes" to the OECD and so will be removed from the list of uncooperative tax havens that the OECD prepared as a result of its 1998 initiative on harmful tax competition.

But, as one commentator has pointed out:

This doesn't mean that the Marshall Islands .. are not tax havens anymore; it just means they aren't evil tax havens.

Actually, the commitment is of little value. First of all that's because most countries who have made this commitment are honouring it in the breach, and not by compliance. The undertaking not to introduce new harmful tax practices has, for example, been thoroughly breached by both Jersey and the Isle of Man, the former with its new trust laws, the latter with its whole 0/10 tax system.

Second, it's not actually saying it will get rid of the harmful practices it has got, which is absurd.

Third the Marshall Islands has almost no information exchange agreements in place (bar the USA) and restricts what it will do to help other countries in the undertaking it has given. Since it refuses to assist tax recovery or provide information that may be "contrary to public policy" (and secrecy is public policy in the Marshall Islands) one wonders what on earth the benefit of this is other than to make it seems that the OECD process is making progress.

What seems the case to me, more strongly then ever, is that there is a need for a world tax authority to tackle these issues. When the FT agrees, the time for this has to be right. The OECD process has run its course; the question now is 'what's next?'


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