G-20 Fallout: French Banks Exit Tax Havens
An official at the French Banking Federation announced that French banks plan to close shut branches and subsidiaries in countries considered tax havens. France’s banks intend to halt business activities in countries that remain on the OECD’s so-called “gray list” at the end of March 2010.
The Organization for Economic Cooperation and Development advocates regulatory standards for global banking industry. It tracks countries that do not comply with the basic regulatory guidelines and publishes a “gray list” of countries that do not comply with international tax information exchange rules.
All French Banks will comply with this action. BNP Paribas earlier announced it will stop operating in countries considered tax havens after the bank indicated that it would close branches in Panama and the Bahamas.
Global hedge funds that operate in OECD non-compliant jurisdictions have an increased tax risk profile. Tax professionals need to assess the potential benefits derived from continued operations in these high risk domiciles with the rising compliance and tax risk factors these jurisdictions pose.
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Risk: compliance, regulatory, tax audit, reputation
