OECD threat

Francoise Hendy
Francoise Hendy

Barbados, which is heavily dependent on foreign exchange earnings from international business and financial services, might not have seen the last of negative publicity emanating from the influential Organisation for Economic Cooperation and Development.

Former Director of International Business, Francoise Hendy, believes that based on recent events involving that organisation’s Global Forum and discussions involving the world’s leading economies, a new OECD blacklist could be issued by year end.

Writing on her personal blog this week, the experienced international treaty negotiator and attorney-at-law said “the clear mandate from the G20 finance ministers and central bank governors to the OECD is to create a ranking — a list — of jurisdictions based on their Phase 2 Assessment on the effectiveness of their legal regime for exchange of information ‘on request’, which is the standard that OECD Global Forum endorsed at its 2009 meeting in Los Cabos, Mexico”.

“In addition to that assessment, jurisdictions who had unresolved issues from their Phase 1 Assessment, though given a ‘pass’ to Phase 2, committed to providing updates about their progress in changing certain determinations made about their legal regime supporting information exchange from ‘not in place’ or ‘in place but needs work’ to ‘in place’,” she noted.

Barbados is currently engaged in its Phase 2 assessment with the OECD, and while not mentioning the island by name, Hendy said the implications for jurisdictions involved in these OECD assessments within the Global Forum initiative was that the threat of being blacklisted remained.

“As happened in 2009, by year-end the OECD may well produce a list of jurisdictions in ‘substantial compliance’ with the prevailing ‘on request’ standard. Given though that the 2012 ‘whitelist’ excludes only one member of the Global Forum — Nauru — any adjustment to the ranking will likely be based on new information available since that table was published,” she noted.

“I suspect that the reason why the OECD, in its report to the G8, reiterated the recommendation by the G20 finance ministers and central bank governors that all jurisdictions should sign up to the new ‘automatic’ standard, or at least express a willingness to do so, is to avoid GF members being ‘blacklisted as a tax haven’ or an ‘uncooperative jurisdiction’.

“The implication may be that even if a jurisdiction’s assessments are insufficient to justify a ‘pass’ under the old dispensation, this can be remedied by its early acceptance of the new ‘automatic’ standard, evidenced by signing or expressing an interest in signing the OECD Multilateral Convention on Mutual Assistance in Tax Matters,” she added.

Her prediction based on these developments was that “the next OECD ranking of countries will include a category of jurisdictions who have indicated no interest in the new automatic exchange of information standard and have yet to receive a passing grade in either one or both of their assessments”.

“What (we) do not know is whether a jurisdiction who is fully compliant with the elements in both assessments, if such a jurisdiction exists, will still be blacklisted by the OECD, if they too, express no interest in ‘automaticity’,” she said. (SC)

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