Cover Story
OECD Deadline Extended After American Pressure
The July 31 deadline by which the OECD wants tax havens to bow to its regulatory demands, or else, has been extended by "several months".
After mid-June talks in Paris between the United States and OECD, it was agreed to drop immediate efforts to drive tax havens out of business with unspecified sanctions if they refused to reveal tax information about companies suspected of operating in tax havens to evade tax in the home countries of the real owners.
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Reports from Paris said the OECD bowed to United States pressure. This was influenced by conservative United States politicians who interpreted the OECD move as an attempt to raise taxation, and from black United States congressmen who complained that the crackdown would unfairly hurt small dependent countries which have high dependence on foreign investment.
United States Treasury under secretary for international affairs John Taylor said the issue was whether countries were able to independently set tax rates, or no tax rates, as they saw fit. Cook Islands Prime Minister Dr Terepai Maoate urged the Forum Economic Ministers Meeting (FEMM) in Rarotonga last month to show a solid united front to the OECD attack on Pacific tax havens.
Niue, Nauru, Samoa, the Marshall Islands, and Vanuatu should press for multilateral rather than bilateral dialogue so as to be more effective as a combined force against the OECD, he said.
The Cook Islands could not possibly close its offshore financial services centre because it was a huge income earner for the country, he said.
