Tax havens

1. The OECD uses four main factors in establishing whether or not a given country qualifies as a tax haven. These four factors are not cumulative, nor do they constitute a universal definition of a tax haven, namely :
  • Where jurisdiction imposes no or only nominal taxes, whilst nonetheless recognizing that every jurisdiction has the right to determine its own tax rate,
  • Where there is a lack of transparency in the application of the law under similar circumstances,
  • Where there is a lack of any local, substantial activity,
  • Where there are laws that prevent the effective exchange of information for tax purposes with other governments.
Over the past fifteen years, the international community has sought to develop increasingly sophisticated means in the fight against what are referred to as "opaque" legal and fiscal administrations.
Its aim is to improve transparency and the exchange of information needed by tax authorities to determine a taxpayer's correct tax liability, in order to prevent countries from hiding behind their national legislation or banking secrecy laws in refusing to respond to tax inquiries.
Stricter measures in the prevention of fraud and tax evasion include the List of Unco-operative Countries published by the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes.The organisation has published three lists: lien Forum de l’OCDE :
  • A "black list" of countries whose cooperation when it comes to the exchange of tax information is deemed to be insufficient,
  • As all states have now undertaken to sign tax information exchange agreements (TIEAs), there are currently no countries on the "black list",
  • A "grey list" of states that have undertaken to sign the required 12 tax information exchange agreements,
  • A "white list" of states that have already signed these agreements.
These categories are used as a reference benchmark by the G20 which has called on countries to adopt the OECD standards (lien) and sign at least 12 agreements governing the exchange of information between tax authorities.
In April 2009, the OECD published a progress report which is regularly updated and, since then, several dozen countries and territories have taken measures to comply with these standards. Double taxation agreements have been amended (approximately 60 since April 2009), a large number of new tax information exchange agreements have been signed or are currently being negotiated, and a substantial number of states have been upgraded to the "white list".
The process is, however, still in its early stages and will be reviewed by an OECD working group in spring 2010. The group will carry out a peer review of practices between states after which a definitive list will be published.
2. Following in the footsteps of the G20 and inspired by the work of the OECD, France is the first state to have adopted its own legislation (Article 238 O-A of the amended Finance Act 2009) in order to further protect against fraud by those countries that refuse to adopt the international standards governing the exchange of tax information.
The new texts introduce the notion of non-cooperative countries or territories (NCCTs) in France's General Tax Code, as well as various measures aimed at improving transparency in the activities of international groups.
As a result, France now has its own list of tax havens by ministerial decree which is less restrictive than the OECD's grey list and will be updated every year. Uruguay, for example, is not classed as a NCCT for 2010.
The list of countries and territories published on February 12, 2010 (section one, paragraph two of Article 238-0 A of the French General Tax Code) includes:
Anguilla, Guatemala, Niue, Belize, Cook Islands, Panama, Brunei, Marshall Islands, Philippines, Costa Rica, Liberia, Saint-Kitts and Nevis, Dominica, Montserrat, Saint-Lucia, Grenada, Nauru, Saint-Vincent and the Grenadines.