World financial crisis

New tax haven blacklist to be created

Article published on the 2008-10-21 Latest update 2008-10-25 12:05 TU

Nauru, a popular tax haven
(Credit: Wikimedia)

Countries refusing to work with regulators will be put on a new blacklist of tax havens in an effort to improve global finance regulations, French Budget Minister Eric Woerth announced Tuesday at a meeting organised by the Organisation for Economic Co-operation and Development (OECD). Switzerland and Liechtenstein, two non-European Union countries often criticised for their secrecy laws, decided to boycott the meeting.

There are some 40 tax havens worldwide, where undeclared revenue can be deposited in banks and where many non-regulated hedge funds are based. These hedge funds, found in places like the Cayman Islands and Macau, were considered partly to blame for the current financial crisis.

"Is it normal that a bank to which we guarantee loans or allocate our own funds continues operating in tax havens? The answer is no," French President Nicolas Sarkozy said last week.

The OECD currently lists 38 countries that are tax-free and have tight banking secrecy laws. In addition, Andorra, Liechtenstein and Monaco refuse to share any information on their finance sectors.

The new blacklist could contain about a dozen countries, and could include nations previously on the OECD list and then taken off for lack of transparency. One French official said that the list would have an important stigmatising effect.