Tuesday, April 14, 2009

Results of G-20 Summit: Further Implementation of Tax Standards Recommended to BVI

On April 2, 2009, during the economic summit of G-20 leaders, which took place in London, the G-20 and the OECD adopted its strategy of tax havens blacklisting. Other areas which experienced tougher regulations were hedge funds and banking industry. As regards offshore industry, the report published by the OECD includes the assessment of 82 financial centres concerning their progress towards the “internationally agreed tax standard.”

The G-20 summit did not single out any specific plans for further regulatory implementation, and leaders at the summit agreed to recognise OECD guidelines. One of the main criteria how the jurisdictions are classified is exchange of information on request in all tax matters for the purposes of administering and enforcing domestic tax law. So, it is important how many Tax Information Exchange Agreements are signed by the countries.

OECD recognized the strong position of the Cayman, the British Virgin islands, and Jersey, as countries committed to the internationally agreed tax standards. However, the BVI and the Cayman Islands, among other jurisdictions, were included in the “grey list”, as those which have not yet substantially implemented them. The most familiar and most popular offshore financial centres have been put on the “grey list”, among them Luxembourg, Switzerland, Singapore, Bermuda, Gibraltar, the Turks and Caicos, Monaco, Andorra, and others.

Later on, the seven British crown ependencies, including BVI, were set by the Prime Minister a September deadline to sign up the missing number of TIEA's (which should be twelve). Gordon Brown has written to all of them that he expects them to move beyond meeting the OECD's minimum standards on co-operation, and come to the maximum transparency.

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