Bolkestein attacks US policy U-turn over tax havens

Date: 17/05/01

By Simon Taylor

Tax Commissioner Frits Bolkestein has criticised the US's decision to pull out of international efforts to crack down on tax havens.

During a visit to Washington last week, Bolkestein said: "We very much regret the announcement of the US Treasury Secretary, particularly because the OECD work on targeting harmful tax practices has been developing very well up to now."

The Commissioner was reacting to comments by US Treasury Secretary Paul O'Neill, criticising efforts by the 29-nation Organisation for Economic Development (OECD) to eliminate predatory tax regimes.

O'Neill said he was "troubled by the underlying premise that low tax rates are somehow suspect".

OECD members have been working for years to eliminate harmful tax competition where countries tailor their tax systems to attract capital from elsewhere.

The US recently indicated it no longer supported efforts to stamp out tax regimes which discriminated in favour of non-resident companies and individuals.

The shift in the US position is seen as a blow to EU efforts to convince other countries to agree to greater transparency over taxation of savings accounts. Without international cooperation, Luxembourg and Austria will not scrap their banking secrecy laws, effectively destroying a deal struck by EU leaders last year.

Bolkestein said that the OECD's work had been misprepresented. "It's not about tax harmonisation but about tackling harmful tax competition."

Tax Commissioner Frits Bolkestein has criticised the US's decision to pull out of international efforts to crack down on tax havens.