The last tax havens to resist the global crackdown on evasion have bowed to intensifying political pressure over the leaked Panama Papers, experts said on Wednesday.
The Paris-based Organisation for Economic Co-operation and Development said: “massive progress” had been made over the past year as it revealed there would be no significant offshore centers on the blacklist of “uncooperative tax havens” it had prepared for the G20 group of leading countries.
It reported that only one country — Trinidad & Tobago — had failed to comply with international transparency standards. The OECD said it did not have a big financial sector and was not deemed a significant risk.
It also said that streamlined tax amnesties over the past eight years had raked in close to €85bn of extra tax, as more than 500,000 taxpayers had disclosed offshore assets. In Indonesia, for example, $336bn in hidden assets has been declared.
The move towards greater transparency resulted from the intensifying pressure on tax havens that began during the global financial crisis but was given fresh impetus last year with the release of the Panama Papers. These leaked documents from a Panamanian law firm showed anonymous offshore shell companies and caused an international outcry.
The latest commitments have reduced the risk that havens such as Panama, the UAE, and the Bahamas attract money from other centers that had adopted more stringent rules. In the wake of the Panama Papers revelations, the G20 asked the OECD to draw up a list of recalcitrant tax havens ahead of the July 2017 G20 leaders’ summit.
The blacklist included countries that failed to meet at least two out of three criteria: being at least “largely compliant” on exchanging tax information on request, a commitment to automatic information exchange, and a commitment to exchange information on a sufficiently broad or “multilateral” basis.
The OECD said all relevant countries and financial centers had agreed to automatic information exchange and had signed, or asked to sign, the multilateral treaty to implement it.
Four out of five countries had already put in place the laws needed to deliver on their commitments, which will result in details of bank balances, interest, dividends, and income from insurance products being handed to foreign tax authorities from September.
Alex Cobham, chief executive of Tax Justice Network, a campaign group, said the criteria did not go far enough. Some countries such as Switzerland and many OECD countries were planning to extend transparency further than necessary, excluding many lower-income countries.
He said: “Over the last few years, the OECD has indeed made great progress in some areas of tax transparency . . . It’s disheartening than to see the OECD fall back into the old pattern of creating ‘tax haven’ blacklists based on criteria that are so weak as to be near enough meaningless, and then declaring success when the list is empty.”
He added that the US was “the elephant in the room.” “If you were going to produce a tax haven blacklist with only one member, it wouldn’t be a small Caribbean island — it would be tax haven USA.”
The OECD said the US had not agreed to join the “common reporting standard,” as the automatic exchange initiative is called. But it said the US was automatically exchanging certain information under its own automatic exchange rules, known as the Foreign Account Tax Compliance Act.