Leaders at last week's G-20 summit agreed to publish the names of tax havens that refuse to comply with the Organization of Economic Cooperation and Development's (OECD) rules on tax information sharing, a move that very quickly caused the four nations named on the "black list" of uncooperative nations to agree to OECD rules. By Monday, April 7, Uruguay, Costa Rica, the Philippines, and Malaysia pledged to share fiscal information, an OECD spokesman said. As a result, they have been moved to the category of "jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented."
The jurisdictions that have committed to, but have not implemented internationally agreed tax standards, comprise the so-called "grey list." This group includes Switzerland, Luxembourg, Austria, and Belgium, the Cayman Islands, Barbados, and the U.S. Virgin Islands and British territories among others. Macao and Hong Kong are listed separately as financial centers that have not implemented tax standards.
On Monday, April 7, the U.S. Treasury announced that the United States and Switzerland, the most prominent nation on the grey list, will begin negotiations to amend their bilateral income tax treaty to provide for improved transparency.
Tax havens will have until the end of the year to improve their standards before possible sanctions are imposed.
G-20 nations also pledged to strengthen financial supervision and regulation. Regulation and oversight will be extended "to all systemically important financial institutions, instruments and markets," the G-20 communiquÃ© says. "This will include, for the first time, systemically important hedge funds."
The G-20 leaders urged accounting standard setters to "work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards" and endorsed new principles on pay and compensation, which aim to ensure compensation structures are consistent with "long-term goals and prudent risk-taking."
Strains in global cooperation appeared over the weekend following the G-20, however, as European financial ministers meeting in Prague expressed concern about the recent change in the U.S. mark-to-market accounting.
They called on the London-based International Accounting Standards Board to work with the Financial Accounting Standards Board in the U.S. "with the aim of achieving equivalent treatment" for European banks.
The ministers said that bringing the international accounting standards in force in Europe in line with the U.S. rules was necessary to "avoid risks of competitive distortions emerging," Agence France-Presse reports.