The Crown Dependent Territories are raging at being expected to sign a “blank cheque” of fiscal reforms to bring them into line with OECD criteria on harmfultax competition.
The offshore investment centres of the Channel Islands and the Isle of Man have 12 months to toe the line and co-operate with the global crackdown on tax evasion or face economic sanctions.
Luxemburg and Dublin, The territories' major competitors for UK business, were not targeted by the OECD.
The Organisation for Economic Co-operation and Development announced a preliminary list of 47 jurisdictions operating as harmful tax havens last year. Since then, the financial services centres have been putting their case for exclusion from the list.
Six have been dropped and a further six – Bermuda, Cayman Islands, Cyprus, Malta, Mauritius and San Marino – have agreed to co-operate, leaving 35 to defend their positions.
But the OECD is being accused of moving the goalposts. Despite all the centres publicly endorsing the move to impose international standards, they will be spending the next 12 months estab-lishing the ground rules of these standards and thrashing out an agreement that suitsall sides.
Isle of Man government head of international services division Michael Gates says: “To cooperate blindly at this stage would be tantamountto signing a blank cheque of reform. This is just an interim list and I have every confidence that after a year of discussion the Isle of Man will not appear on the definitive list. Twelve months is a long time and objectives can change. We will be putting our case for a deal that is acceptable to them and acceptable to us.”
The OECD has also accused 19 of its member countries of operating tax loopholes. The UK was one of only three not to fall foul of the OECD.