MercoPress. South Atlantic News Agency

Gibraltar converting from off-shore haven to regulated on shore finance centre

Chief Minister Peter Caruana

The Gibraltar Government hopes to sign at least 12 tax agreements with countries belonging to the Organisation for Economic Cooperation and Development [OECD] by November this year. Completing that number of information exchange agreements would allow Gibraltar to enter the top category of countries regarded by the OECD as those which substantially meet international tax standards, reports the Gibraltar Chronicle.

Chief Minister Peter Caruana revealed the Government’s strategy as the OECD published a progress report in which Gibraltar was listed among countries which say they will meet those standards but have yet to do so. All of the countries in Gibraltar’s section have yet to sign 12 agreements.

The OECD report “is a fair and accurate assessment of where we are”, Mr Caruana said in an interview with GBC. He added: “Gibraltar is supportive of any measure that increases global standards to where Gibraltar really already is, by virtue of its EU membership.”

“We are therefore very well positioned to get into the first category of countries that have issued 12 [agreements] by November, which is when the next progress report that will be issued by the OECD.”

This week Gibraltar signed an agreement with the US, the OECD’s largest member, to share information on tax matters. It is the first such agreement of this nature signed by the Gibraltar Government, which first expressed its commitment to meet international tax standards in 2002.

The agreement was signed on the eve of a G20 summit in which global leaders announced measures to tackle tax heavens.

In the OECD progress report, Gibraltar is listed as a ‘tax haven’ in a section that includes 30 other jurisdictions. Of those, seven have – like Gibraltar - signed one agreement, while 16 countries have yet to sign any at all. However some jurisdictions in the category are well advanced in signing agreements with other OECD members.

The Cayman Islands, for example, has eight such agreements in place; Antigua and Barbuda and the Netherlands Antilles each have seven; Bahrain has six; Aruba has four; Bermuda and the British Virgin Islands have three apiece.

A subsection within the same category also lists eight ‘financial centres’ – as opposed to tax havens – that have yet to implement 12 agreements or more. It includes European countries such as Austria, Luxembourg and Switzerland, all of which have yet to conclude a single agreement, and Belgium, which has one agreement in place.

The Gibraltar Government is already in advanced talks with Germany and UK over tax information exchange agreements, and has opened discussions with other countries in north and central Europe.

Gibraltar said it had repeated its offer to all OECD countries to enter into information exchange agreements at their request. That offer was first made in November last year through the OECD, and subsequently directly to each country. The Government’s efforts come against a background of an international clampdown on tax evasion.

The OECD definition of tax haven applies to Gibraltar because different tax regimes exist here for onshore and offshore companies. However once the tax-exempt regime is phased out next year, this disparaging tag will no longer apply to Gibraltar.

It is, Mr Carauana said, a “hard-worked-at transformation” of the Rock’s financial sector from an offshore haven into a well-regulated, EU onshore finance centre”.