This Is Guernsey

By Simon Tostevin

GUERNSEY’S efforts in signing tax information exchange agreements is impressing the Organisation for Economic Co-operation and Development.

The island currently has nine in place with more to follow and while other major financial jurisdictions such as Switzerland and Singapore appear unwilling to enter into them, Guernsey is leading the way along with the Isle of Man and Jersey.

Donal Godfrey (pictured) , head of the harmful tax practice unit at the OECD, told local financiers and professionals at a St James seminar last week, that a major report due to be published next year would reflect that.

It will also highlight those places not making satisfactory progress in terms of transparency and exchange of information in tax matters.

‘Guernsey is on the right track and is near the top of the class. It’s important to keep moving forward and my advice would be sign deals, sign deals and sign deals.’

He also insisted fears that the OECD was out to get Guernsey’s finance industry were wide of the mark.

‘All we are interested in doing is getting as many countries as possible to observe the standards of transparency and exchange of information that we have developed.

‘Information is crucial to any tax administration’s ability to enforce its own laws and in a world where there is the flow of capital across borders, if you cannot get the information on the foreign income your residents are making, you will have difficulty to enforce your own tax laws.

‘But that’s not the same as saying Guernsey is being asked to collect taxes for other countries.

‘It will just allow countries to enforce their own laws.’

He said countries and jurisdictions failing to make the progress that Guernsey had were potentially staring at defensive measures being imposed against them in the near future.

‘The political climate and tolerance of countries to others that are not prepared to adhere to the standards have changed. The Liechtenstein scandal is proof of that.

‘Countries such as Germany and France are frustrated at the slow progress others are making.’

A meeting called by those two countries in Paris last month and attended by 17 nations showed this, according to Mr Godfrey.

‘The communique issued afterwards was very strong in what it said.

‘It clearly signalled that further action would be taken should countries not administer the standards.’

The standards of information exchange are now recognised by the UN, G20 and the G8.

A total of 27 TIEAs have been signed since 2000 and around 40 more are currently under negotiation and Mr Godfrey believes around 200 need to be signed in total.

‘Many OECD countries are not happy, even at some other OECD countries.

‘Singapore does not meet the OECD standard in any of its treaties it’s signed and neither does Switzerland.’

Mr Godfrey said the focus was no longer on places like Guernsey.

‘There is a recognition we have to get everyone to move forward.

‘We don’t see the world breaking down between offshore and onshore, we see it as countries who do observe the standards and those that don’t.

‘The OECD says nothing about what level of tax a country sets. We are interested only in harmful tax practices.’

Article posted on 24th November, 2008 - 2.30pm