Brown sets tax information deadline for British offshore jurisdictions

Gordon Brown has set a September deadline for British Crown Dependencies and overseas territories to sign up to Tax Information Exchange Agreements (TIEAs) or face sanctions.

Following the G20 pledge to crack down on tax havens, the UK Government has written to relevant authorities threatening punitive action against its own dependencies.

Brown acknowledges the progress made by overseas territories in committing to OECD standards of tax information sharing.

However, in a letter to the British Virgin Islands, he writes: "Given the developments at G20 and, in particular, the identification of a tool box of sanctions which will be applied against those who do not meet the international standard, I urge you to achieve the standard of 12 TIEAs or equivalent arrangements before the UN General Assembly in September."

BVI and six other British territories were placed on the OECD's "grey list" of 'tax havens' which have committed to, but not yet implemented OECD standards.

"Similarly, as international efforts on harmful tax practices start to refocus on the issue of tax avoidance, it will be vital to the interests of the Overseas Territories that they can readily meet the new international standards which may emerge," says Brown.

The Prime Minister has also written to the Crown Dependencies urging further speedy progress despite Jersey, Guernsey and the Isle of Man being on the OECD "white list" of jurisdictions cooperating with tax standards.

In his letter to Jersey's prime minister, Brown says: "I think it is particularly important that the Crown Dependencies continue to set the pace in this process and put clear water between themselves and those jurisdictions which only just meet the international standard."

"If genuine progress in agreeing, implementing and abiding by these agreements does not continue to be made I will encourage the G20 to look at this issue again until all abide by the highest standards."

The Crown Dependencies have already implemented multiple TIEAs to share tax information with authorities but Brown has indicated he also wants to tackle tax avoidance by companies.

Brown says: "As international efforts on harmful tax practices start to refocus on the issue of tax avoidance, it will be vital to the interests of the Crown Dependencies that they can readily meet any new international standards which emerge."

John Christensen, a development economist who directs the international secretariat at the Tax Justice Network, says tax avoidance is a larger issue than tax evasion.

"Tax avoidance has been the veil behind which a vast industry has developed with tax havens as their focus. This is a strong signal to the tax havens that avoidance will no longer be treated as a legitimate activity."