Government has no plans to reconsider the commitment it made to the Organisation for Economic Co-operation and Development (OECD) after the US withdrew its support of its initiative to eliminate harmful tax internationally.

But it will continue to monitor the situation in order to best protect Bermuda's interests.

Last Thursday, US Treasury Secretary Paul O'Neill said his government could not support the OECD initiative.

This has created grave uncertainty around the world about the future of the initiative and the ability of the OECD to impose threatened sanctions on what it views as erring jurisdictions.

Minister of Finance Eugene Cox said yesterday: "The question has been posed whether, based on recent statements by US Treasury Secretary Paul O'Neill regarding the OECD `Harmful Tax Initiative', Bermuda is reconsidering the commitment that it gave to the OECD in May, 2000.

"It must be noted that, while Secretary O'Neill stated that he believes that the focus of the OECD initiative is too broad, he also made it clear that the US supports other key aspects of the initiative -- notably the need for transparency and effective exchange of tax information.

"Thus it is premature to speculate what effect Secretary O'Neill's statements may have on the OECD initiative generally, and on the potential for sanctions to be applied to jurisdictions still listed as tax havens as at July 31, 2001, in particular.

"It must also be noted that the commitment given by Bermuda to the OECD essentially states that Bermuda will continue to operate in a transparent and co-operative manner as it has done in the past.

"Thus, unlike many other jurisdictions that have made commitments to the OECD, Bermuda's commitment did not need to involve making material changes to its financial services regime.

"Given these circumstances, no reconsideration of Bermuda's commitment to the OECD has occurred.

"Notwithstanding this, on behalf of the Government and people of Bermuda, I continue to monitor this situation closely in order to protect Bermuda's interests.'' In the letter of commitment sent last May to the OECD Mr. Cox said: "Bermuda hereby commits to the principles of the OECD's report `Harmful Tax Competition : an Emerging Global Issue'. In fulfilment of this commitment, the Government of Bermuda undertakes to implement such measures as are necessary to eliminate any harmful aspects of Bermuda's regimes that relate to financial and other services.'' The contents of an annex accompanying this letter were explained to the House of Assembly by Mr. Cox on July 7 last year. He said the annex spelled out the commitment in three areas: effective exchange of information; transparency in business; and substantial activity in respect of international businesses established in Bermuda.

With regard to the first issue, he said Government has committed to adopting further legal mechanisms allowing tax information to be exchanged with other jurisdictions in a more timely and effective manner. It would also adopt or enhance legislation allowing Bermuda's regulatory bodies to exchange information relevant to tax cases and continue to permit on site inspection by representatives of other tax authorities.

With regard to transparency, Mr. Cox said Government would continue to support legal mechanisms that provided access to information about beneficial owners of Bermuda entities. By 2003, legislation will be introduced or amended to require filing and auditing of international company accounts and access to accounts by appropriate Bermuda authorities.

On the third issue, which embraces the 60/40 legislation, the Minister said Government is committed to allowing international companies to participate in previously sheltered sectors of the economy, but subject to appropriate considerations for small businesses and/or considerations of strategic or national concern.

Mr. Cox committed Government to adopting recommendations relating to the finance sector by 2003 and those relating to other sectors of the economy by 2005.