Gibraltar committed to OECD 'tax haven' delisting and tax sharing agreements

Yesterday, I commented on a post over at Tilting at Windmills, defending Gibraltar's inclusion in the OECD (Organisation for Economic Co-operation and Development) list of 'jurisdictions that have committed to the internationally agreed tax standards' but that have not yet substantially implemented these agreements.

I was therefore very interested to read a story in the Gibraltar Chronicle today quoting a report published in the Financial Times last Friday, which I missed, saying that British Prime Minister Gordon Brown has written to the UK’s offshore tax havens, including Gibraltar, "warning them to meet international transparency standards within six months or face sanctions".

These reports say Mr Brown has told these jurisdictions to sign at least 12 bilateral tax information sharing agreements by November.

The Chronicle say that in his letter to Chief Minister Peter Caruana, Mr Brown also welcomed recent steps taken by the Gibraltar Government in this context.

He referred to a statement issued by the Gibraltar Government ahead of the G20 summit in London, in which Mr Caruana reiterated Gibraltar’s commitment to OECD standards. A Chief Minister's Office spokesman at the Convent told the Chronicle:

"The Prime Minister highlighted the fact that that statement was well received."

Mr Brown also stressed the importance of the tax information sharing deal reached between Gibraltar and the US, and acknowledged that Gibraltar was in well-advanced negotiations with other countries.

Last week, even before he had received Mr Brown’s letter, Mr Caruana said he was confident that Gibraltar "would sign at least 12 agreements by November".

In early April, following the G20 Summit, the Gibraltar Government issued a statement welcoming the global raising of standards of financial services regulation, transparency and exchange of information, saying "Gibraltar is already very well positioned and well placed to prosper from" these agreements and added that the Gibraltar Government "is very comfortable with the outcome of G20, as it affects Gibraltar".

In the aftermath of the G20 Summit, the Gibraltar Government said the OECD "appears to have adopted, as a test of 'substantial implementation' of agreed tax information exchange standards, the entry into of around 12 Tax Information Exchange Agreements".

The OECD has published a Progress Report as at 2 April 2009 in this respect.

In their statement after the G20, the Gibraltar Government added:

Since Gibraltar has not yet signed 12 agreements, Gibraltar is categorized among 'Jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented'. This categorisation is accurate and fair.

The countries listed as committed but not yet substantially implemented, (like Gibraltar), include reputable EU Member States like Austria, Belgium, Luxembourg and others such as Switzerland, Singapore and Bermuda.

Gibraltar is well advanced in the process of signing up tax information exchange agreements and fully expects to be in the category of countries that have fully implemented the internationally agreed standard, by the time that the OECD issues its next progress report in November 2009.

The Gibraltar Government considers that it is right and fair that no 'black list' emerged at G20, especially not one based on a new, sudden criteria of which
committed, active countries had had no prior notice."

Concluding their statement in the aftermath of the G20 Summit, the Gibraltar Government publicly repeated their offer to all OECD countries, which was made through the OECD in November 2008 and subsequently directly to these countries, "to enter into Exchange of Information Agreements, at their request".

The reports of Mr Brown’s letter today in the Chronicle, comes just days ahead of publication of an initial report on the UK’s offshore havens. Michael Foot, a former Bank of England director who was commissioned to write the report, will publish his interim findings on April 22.

I'm sure this report will be read with great interest in Gibraltar.

These reports, in the Chronicle today and in the FT last week, gave me the opportunity to refresh my memory on the Gibraltar Government's statements on their inclusion in this OECD 'tax havens' list... and I'm pleased to say these rather underline my comment yesterday in the post over at Tilting at Windmills, when I said that Gibraltar was not "wishing to act illegally and cock a financial tax snook at the rest of the world"!

The Gibraltar Government's position is clearly one of willing co-operation and are clearly committed to meet Prime Minister Brown's deadline on bilateral tax information sharing agreements by November.

In meeting these internatonal standards and deadlines however, the Gibraltar Government must still ensure they maintain their position in safeguarding Gibraltar's independent economy, as a beneficial tax jurisdiction for high net worth individuals (HNWI's) and offshore corporations.

As I said yesterday, I'm no lawyer or international finance expert, but I imagine this is a tricky balancing act for Gibraltar... and I do hope these agreements do not put at risk, Gibraltar's ability to make it's own way economically... in difficult and changing global financial markets and tax jurisdictions.

One final point on this is that I believe the Government and Gibraltar authorities should be given credit for the commitment and effort they are showing in meeting these international standards... rather than be castigated... as they often are by the uninformed or, especially by mischievous opportunistic politicians from our neighbours to the north! As the Gibraltar Government themselves highlighted in their statement, there are many other countries listed as "committed but not yet substantially implemented", (like Gibraltar), including reputable EU Member States such as Austria, Belgium, Luxembourg, Switzerland, Singapore and Bermuda!

In conclusion, it is worth reiterating the Government's stated position that "Gibraltar is well advanced in the process of signing up to tax information exchange agreements and fully expects to be in the category of countries that have fully implemented the internationally agreed standard, by the time that the OECD issues its next progress report in November 2009".