COOKS WILL NOT MEET DEADLINE ON TAX HAVENS

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By Moana Moeka‘a

AVARUA, Cook Islands (February 27, 2001 - Cook Islands News)---The Cook Islands -- as one of the seven Pacific tax havens threatened with international sanctions -- will not meet a deadline set down by the Organization for Economic Cooperation and Development (OECD) for July 31.

The OECD has devised a Collective Memorandum of Understanding as a method for listed countries to make the required commitments by the end of July, in order to avoid sanctions that may include a ban on the use of U.S. dollars.

At the two-day workshop on the OECD Harmful Tax Competition Initiative in Japan early this month, Justice Minister Tangata Vavia confirmed in his address that the Cook Islands would "not enter into the commitments as required by the Collective Memorandum of Understanding."

The Minister, accompanied by Commissioner for Offshore Financial Services, Mathilda Uhrle, and the Treasurer, Geoff Stoddart, also confirmed that the "Cook Islands does not accept the OECD definitions of transparency, non-discrimination and effective exchange of information, which are the substantive taxation issues raised by the OECD Harmful Tax Competition Initiative."

Seven Pacific nations, including the Cooks, have been listed in the OECD report "Towards Global Cooperation" -- countries which the OECD believes are eroding their tax bases through mobile financial activities, such as those offered by offshore financial centers.

In a release from the Office of the Commissioner for Offshore Financial Services, Uhrle says the workshop represented the first opportunity for some of the affected Pacific Island Forum countries to raise their concerns regarding the OECD Initiative in a joint forum.

"The concerns raised by Pacific Island ministers, attorneys general, financial and tax regulators, included criticism of the lack of consultation in the process of commencing the Initiative. In addition Pacific Island delegates focused their criticism of the OECD Initiative on the considerable and fundamental flaws of the Initiative."

"Jurisdictions affected by this OECD Initiative have also highlighted the continuing failure by the OECD to produce any empirical evidence of actual harm said to be brought by the offshore financial service activities of the jurisdictions listed in the OECD report ‘Towards Global Cooperation’ published in June 2000."

Minister Vavia, along with a number of other Pacific ministers and delegates, requested threats of defensive measures be removed in the true spirit of international cooperation. He also expressed disappointment that OECD ministers had not attended the workshop in order to discuss threats.

"[However] the Cook Islands is continuing the dialogue with the OECD in order to obtain a best negotiated agreement."

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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