In contrast to the hostile stance it took in 1998 – when it published a report branding Jersey a harmful tax haven – the Organisation for Economic Co-operation and Development is now offering its expertise to the Island as it restructures its tax regime.
nd the offer has been welcomed by Policy and Resources Committee president Senator Frank Walker, who said: ‘We are pleased to now see the positive side of the work of the OECD and I am sure that we can learn from their vast international experience.
Admitting that it was ‘naive and impatient’ when writing its 1998 report on harmful tax practices, the Paris-based non-governmental forum has now adopted a more conciliatory approach.
t says it is not against tax competition and raises no objections to Jersey’s move to a zero rate of tax – indeed, the OECD wants to help the Island achieve it.
effrey Owens, the head of the centre for tax policy and administration at the OECD, addressed a conference in Jersey this week.
‘All we would ask is that there is transparency and co-operation between jurisdictions,’ he said.
‘The Island is leading the move away from competition based on secrecy towards competition based on skills and services in a well-regulated environment.
‘We support this and are happy to offer our knowledge and experience as Jersey changes its tax regime to remain competitive.
In outlining the OECD’s aims and objectives, Mr Owens said that the organisation was against tax harmonisation.
We see increased competition as an inevitable effect of globalisation so we would rather embrace it but make sure it is fair, transparent and open,’ he said.
We also seek effective exchange of information – although our model differs from the European Union in that it is request-based as opposed to automatic, it covers both individuals and corporates, and our focus is obviously far wider than Europe.
The EU Savings Directive has not helped our efforts to promote global standards of tax co-operation and, by its decision to allow some countries to establish a withholding tax, it has also raised the level playing field issue.
‘But we see this as an interim solution only and it will not stop our efforts to establish exchange of information on request.
Mr Owens said that the OECD’s view of Jersey had changed significantly since its ‘blacklist’ was published in 1998 – which thrust the relatively unknown organisation into the Island’s consciousness.
We did not appreciate at first that jurisdictions like Jersey were prepared to enter into constructive dialogue and I am pleased to say that the relationship is far better than it was.
Our definitions have also evolved.
We began with tax havens, then moved to co-operative jurisdictions, before the concept of participating partners was devised, with significant input from Jersey.
‘There are now only six offshore jurisdictions we deem to be unco-operative.
They are Andorra, Liechtenstein, Liberia, Monaco, the Marshall Islands and Nauru.
Jersey, on the other hand, has embraced the new era of co-operation and I have no doubt that it will continue to prosper.