G7 INITIATIVE ON HARMFUL TAX COMPETITION
A major new initiative to tackle harmful tax competition was agreed by G7 Finance Ministers today at a meeting in London chaired by Chancellor of the Exchequer Gordon Brown.
The G7 agreement paves the way for more international exchange of tax information to curb international tax evasion and avoidance through tax havens and preferential tax regimes. It reinforces the recommendations of the OECD Report for curbing harmful tax competition and the complementary EU Code of Conduct on business taxation.
It also commits the G7 to leading international action on tax related crime by gathering more intelligence through money laundering systems and providing for it to be shared internationally by tax authorities.
Announcing the UK inspired initiative, Mr Brown said;
'Our agreement today represents a major breakthrough in tackling the growing problems caused by harmful tax competition, and the tax evasion and avoidance it generates. This reinforces the OECD's vital work to curb the damaging effects of tax havens and preferential tax regimes.
'We are determined to put in place strong and practical measures to tackle the growing threat of international tax crime and evasion through tax havens and preferential tax regimes. The globalisation of business and finance makes this an increasingly pressing issue.
'This initiative paves the way for co-ordinated international action to allow information to be passed to tax authorities, so that honest citizens and business do not have to pay the price of the activities of tax fraudsters. We in the G7 are committed to building practical co-operation at every level to counter these threats.'
The G7 agreement;
To advance this agenda the UK will attach an officer of the Inland Revenue's Special Compliance Office to the Economic Crimes Unit of the National Criminal Intelligence Service (NCIS), which is responsible for analysing and allocating reports of suspected money laundering. These arrangements will allow domestic and international money laundering intelligence to flow to the Inland Revenue for the first time.
NOTES TO EDITORS
1. The OECD report on harmful tax competition was published on 28 April 1998. It is available from the Stationery Office.
2. The report sets out a series of guidelines and recommendations for action to curb the damaging effect of tax havens and 'preferential tax regimes.' The UK, along with other G7 members, has been strongly supportive of the report's passage at OECD.
3. UK Financial Secretary Dawn Primarolo was yesterday appointed the first chairman of the new EU Code of Conduct Group. The Group, which will assess the business taxation regimes of member States and examine the extent to which they contain elements that represent harmful tax competition, will meet regularly and report back to Ecofin council meetings. Ms Primarolo has been appointed for a two-year term (HMT press notice 70/98).
Source: HM Treasury press release.
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