Tax-Haven Crackdown ‘Big Success’ says OECD

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Tax-Haven Crackdown ‘Big Success’ as OECD Begins Review Process - Bloomberg.com.

As Bloomberg notes:

Cracking down on tax havens has been “one of the big success stories” of the Group of 20’s efforts in the financial crisis, the OECD said, as the Group shifts from naming-and-shaming to ensuring compliance with tax standards.

The Paris-based Organization for Economic Cooperation and Development said 195 tax-information exchange agreements were signed last year as countries faced fresh scrutiny from the G- 20, up from 23 in 2008. Nineteen countries that had been branded as not sufficiently meeting international standards were removed from that category on the OECD’s so-called gray list.

Well, if big is relative and better then the nothing the OECD achieved from 2002 to 2008 then this is correct.

But it's a very, very long way from a major success.

As I've noted time and again the Tax Information Exchange Agreements the OECD promotes can only be useful if there is also automatic information exchange to provide the 'smoking gun' proof that a person is undoubtedly the beneficial ownership of a financial structure in another jurisdiction. Without that the number of requests under TIEAs will be miniscule - hundreds maybe a year - and that has not deterrent effect.

Second, saying that signing 12 such agreements is enough to establish international acceptability is ludicrous. There are more than 12 countries in the G20 for a start, 27 are in the EU, there are over 230 tax jurisdictions in the world (some say slightly more). Why 12?

The goal has to be comprehensive coverage of Tax Information Exchange Agreements which can only eventually be achieved on a multilateral basis and full automatic information exchange on the beneficial ownership (for now) of all offshore structures (where offshore simply means ownership is one jurisdiction but the transaction is recorded in another) with in the long term income and other data all exchanged as well.

Then we beat tax fraud for good.

And other fraud.

And money laundering.

And a great deal of crime.

And corporate corruption.

And bribery.

And why would anyone be opposed to that?

The OECD needs to be brave: it's horizons are too limited. Now is the time for it to break out and go for real reform.