The OECD has criticized the recent blacklisting of the Cayman Islands and other offshore financial centers that are part of OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. In an email to Global Forum members, including the Cayman Islands government, the organization said, ”as the OECD and the Global Forum we would like to confirm that the only agreeable assessment of countries as regards their cooperation is made by the Global Forum and that a number of countries identified in the EU exercise are either fully or largely compliant and have committed to [automatic exchange of information], sometimes even as early adopters.”
The email, signed jointly by Pascal Saint-Amans, the director of the OECD Centre for Tax Policy and Administration (CTPA), and Monica Bhatia, the head of the Global Forum Secretariat, continued, “Without prejudice to countries’ sovereign positions, we are happy to confirm that these jurisdictions are cooperative and we would like to commend the tremendous progress made over the past years as well as the cooperation and integrity of the Global Forum process.”
On June 17 the EU Commission issued its “Comprehensive Action Plan for Fair and Efficient Corporate Taxation in the EU.” The blacklist, officially called the “announcement on non-cooperative jurisdictions,” is part of the comprehensive plan.
The blacklist includes the top 30 non-cooperative jurisdictions that are blacklisted by at least 10 European Union member states. The list has been widely criticized for a lack of transparent methodology and the omission of large EU member states.
British newspaper The Guardian noted the list takes aim at “the tiny Polynesian island of Niue, where 1,400 people live in semi-subsistence – but does not include Luxembourg, the EU’s wealthy tax avoidance hub.”
CATO Institute economist Dan Mitchell pointed out that some EU nations even used the level of taxation for blacklisting purposes.
“As has always been the case with anti-tax competition campaigns, the entire exercise reeks of hypocrisy,” he said, adding that it is “high-tax nations that should be blacklisted and shamed for their destructive policies.”
Mr. Saint-Amans and Ms. Bhatia further noted in their email that the EU Commission has incorporated the Global Forum’s terms of reference into its own principles of good governance in tax matters.
“We have already expressed our concerns (to the EU Commission) and stand ready to further clarify to the media the position of the affected jurisdictions with regard to their compliance with the Global Forum standards,” Mr. Saint-Amans and Ms. Bhatia wrote.
The OECD’s Global Forum is the largest tax body in the world, with 127 member countries. Cayman sits on its 19-member Steering Group; and 30-member Peer Review Group.