Tuesday, April 07, 2009

OECD takes Costa Rica and three other tax havens off blacklist

Costa Rica and three other countries will no longer be blacklisted as unco-operative tax havens after they bowed to pressure from world leaders and agreed to implement new rules on financial openness, an international organization said Tuesday.

Paris (Canadian Press) - Angel Gurria, head of the Organization for Economic Co-operation and Development, said the Philippines, Uruguay, Costa Rica and Malaysia have been moved off the blacklist after they agreed to co-operate with international authorities.

"These four jurisdictions have now made a full commitment to exchange information according to the OECD standard," he said. "This is very important progress."

G20 leaders meeting in London last week pledged to crack down on tax havens, reflecting concern that banking secrecy has helped disguise assets and cost other states tax income.

Anti-poverty activists say countries with banking secrecy provide corrupt officials with safe havens to stash illicit funds, often depriving poor nations of needed resources.

The OECD has divided countries into three categories: those that comply with rules on sharing tax information, those that say they will but have yet to act, and those which have not yet agreed to change banking secrecy practices.

The Philippines, Uruguay, Costa Rica and Malaysia will now join countries like Switzerland and Liechtenstein on the so-called grey list of countries that still have to implement commitments to information-exchange standards.

Gurria said the four countries plan this year to propose legislation that will allow them to comply with OECD standards. Admission to the "white list" depends on the tax havens making good on their promises.

The OECD monitors 84 countries and territories, only 40 of which are on the white list.

The rest, ranging from the Cayman Islands in the Caribbean to Monaco, are under increasing pressure to provide more information to prevent people from evading taxes or hiding assets.

Jeffrey Owens, director of the OECD's centre for tax policy, defended the list, saying it is "based on objective criteria."

Potential sanctions for transgressors include extra audits of those who use tax havens and curbs on tax deductions claimed by businesses using the territories.

Gurria distanced himself from the sanctions, saying they are set by governments and the OECD would not like to see one of its members impose them on another.

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