Canada: Strength In Numbers - The International Tax And Investment Organization Is Here And It Means Business

Last Updated: May 17 2001
Article by Ken Hunter

Feeling shut out of the international decision-making process, a number of countries targeted by the Organization for Economic Cooperation and Development’s "harmful tax competition" initiative have formed a new multilateral body in an attempt to present a united front.

By pooling resources, exchanging information and sharing expertise between its members, the International Tax and Investment Organization aims to strengthen international cooperation between small and developing economies in tax and investment matters. The organization sprang from the ashes of a joint Commonwealth/OECD working group established at meetings in Barbados in January.

Countries on the ITIO’s organizing committee include: Antigua and Barbuda, Barbados, the British Virgin Islands, the Cook Islands, Dominica, Malaysia and Vanuatu. The Pacific Forum has formal observer status, and supportive organizations include the Commonwealth Secretariat and the Caribbean Community Secretariat.

Barbados, which hosts the ITIO’s Secretariat in its Ministry of Industry and International Business, is serving as chair of the organization. Lynette Eastmond, the ministry’s director of international business, says the ITIO will try to establish standards that meet the requirement of small and developing countries, while taking into account the concerns of the international community and countries that have double taxation arrangements with small, developing states.

"SDEs understand their obligation to the international community. They however believe it to be unfair that a regime should be put in place that specifically targets the smallest and most vulnerable jurisdictions in the world and will eventually target all developing countries that provide incentives in the area of services."

Sabaruddin Ismail, director of the Labuan Offshore Financial Services Authority, is a representative of the ITIO’s regional office for Asia. Although Ismail says each SDE has its own niche and may require different economic approaches and solutions, he agrees with Eastmond that it is unfair to target SDEs.

"As a sovereign government, Malaysia in particular, as well as other small developing economies have the legal and social responsibility to determine its own taxation regime," Ismail says. "However, it must observe the legal procedures and in accordance with the national policies, priorities and objectives.

"Accordingly, a country should not be obliged to adopt a taxation regime which is detrimental to its domestic economy. This is much needed to enhance efficiency in the country. Perhaps, the OECD must review the ‘harmful tax competition’ initiative, as it is not done in line with international laws."

Many of the SDEs involved in the joint working group feel the OECD Secretariat was not very cooperative, Eastmond says. For example, the SDEs asked the Secretariat 17 questions seeking clarification on the OECD principles of transparency, non-discrimination and exchange of information. The OECD gave some verbal answers but has not given the detailed answers in writing.

Eastmond says the OECD’s refusal to answer put a damper on the SDEs’ participation in what was hoped would be a dialogue that would create a shared perspective on the OECD principles.

"The work of the joint OECD/Commonwealth Secretariat working group on tax cooperation has not come to an end therefore," Eastmond says. "We hope that when and if the answers do come that they will be comprehensive."

The OECD’s delay in answering the questions also prompted Robert Mathavious, director of financial services with the BVI Government, to write a letter to the editor of the Financial Times in early May. The letter also clarified the British Caribbean overseas territories’ position on the "harmful tax competition" initiative.

"The territories are not preparing a joint statement but, through the International Tax and Investment Organization, a group of small and developing economies are considering the most appropriate way of responding to the OECD’s open-ended demands," the letter reads. "These SDEs are still waiting for the promised answers to 17 fundamental questions they asked the OECD on February 28. It is inequitable to expect them to make commitments without this information. In particular, the SDEs want reassurance that OECD countries will themselves observe the standards they demand of others."

In June 2000, the Paris-based OECD published a blacklist of 35 jurisdictions it said were engaged in "harmful tax competition." The OECD gave the jurisdictions until July 31, 2001 to start reforming their tax regimes or face sanctions.

Critics of the OECD have likened the "harmful tax competition" initiative to big countries pushing around small ones. An ITIO spokesperson calls the OECD a "technocratic organization" and says the ITIO will provide its members with a valuable tool with which to make themselves heard.

"It’s very important for these countries that they actually get together in this way. And there’s no doubt that the OECD has not really, despite the joint working group, done anything to encourage this sort of multilateral discussion between the small countries."

A spokesperson for the OECD would not comment.

The SDE’s cause got a major boost in May when United States Treasury Secretary

Paul O’Neill announced the US had withdrawn its support for the OECD’s "harmful tax competition" initiative. O’Neill said the initiative in its current form is too broad and not in line with the George W. Bush administration’s tax and economic priorities.

"Although the OECD has accomplished many great things over the years," O’Neill said in a statement, "I share many of the serious concerns that have been expressed recently about the direction of the OECD initiative. I am troubled by the underlying premise that low tax rates are somehow suspect and by the notion that any country, or group of countries, should interfere in any other country’s decision about how to structure its own tax system. I also am concerned about the potentially unfair treatment of some non-OECD countries."

Eastmond says the ITIO was encouraged by O’Neill’s statement.

"We believe that all countries, OECD and non-OECD alike, should play by the same rules, and that standards should be developed in a truly inclusive international forum that involves everyone," she says. "We hope and expect that the refocusing of the OECD process will lead to the involvement by right of ITIO members and other small and developing economies as equal participants in setting any new international taxation standards."

Although the ITIO was established to help its members deal with the "harmful tax competition" initiative, the organization does not want to be considered a one-trick pony. Eastmond is quick to point that the ITIO will also address other global initiatives affecting international tax and investment policies that need to be addressed from a global perspective.

For example, the OECD is already extending its work to e-commerce, in order to eliminate competition from SDEs worldwide it considers harmful. The OECD’s 1998 Report on Harmful Tax Competition says the OECD also intends to look at harmful competition in manufacturing. This will cover investment incentives, which are important for the economic development of many countries seeking foreign investment.

"One of the major initiatives which the SDEs are concerned about is the Multilateral Agreement on Investment," Eastmond explains. "In fact, the OECD in its ‘harmful tax competition’ initiative has required some countries to provide access to all aspects of their markets to foreign investors. This is something that is not required at the (World Trade Organization) level. SDEs also recognize that the electronic commerce rules may be shaped in such a way to curb the benefits which small states could experience."

"The ITIO is not just about the OECD’s harmful tax competition initiative," agrees the ITIO spokesperson. "It’s dealing with that because that’s the challenge facing everyone now. But the OECD is planning to look at controlling e-commerce laws in the small countries. They’re planning to turn their attention to investment incentives and manufacturing incentives. And that could bring in countries like India and South Africa.

"The ITIO is going to look at the impact on the development of countries of these OECD initiatives, so it’s bigger than just the tax thing."

Eastmond says the ITIO will draw the attention of all members to these and other issues, so the organization can formulate a comprehensive response and lobby like-minded organizations or groups to support the ITIO’s position.

And how will the ITIO make its position known? The organization plans to coordinate activities, disseminate information, do research, provide analysis and advice and facilitate technical assistance.

For example, the ITIO will offer members administrative support and help establish links with interested and potentially supportive international bodies. A Web site and e-mail newsletters are also in the works to provide information on tax and investment matters, the ITIO’s stance on international standards on privacy and confidentiality and e-commerce initiatives.

In addition, the organization will try to give its members technical assistance, such as training and short-term secondments between jurisdictions.

"For the members, so far, it has proved very valuable," says the ITIO spokesperson. "It has proved valuable in terms of learning about what each other is doing and it has proved valuable in terms of giving them all some support and encouragement and sharing resources which they can draw on."

"Jurisdictions are very enthusiastic because they have already seen the benefit of meeting and sharing information," agrees Eastmond. "More and more countries, we believe, will come to recognize the importance of this organization."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.