The most dramatic crackdown on tax havens was unveiled by G20 leaders at their summit today, paving the way for the naming and shaming of countries that fail to comply with internationally agreed standards.
Gordon Brown hailed the agreement as he issued a blunt warning to individuals and corporations that invest in renegade tax havens that their money will be unsafe.
"People will increasingly see that it is unsafe to be in a country which still wants to declare itself as a tax haven," the prime minister said.
"There will be no guarantee about the safety of funds there. If tax information is exchanged on request, as these countries have agreed to, then the benefits from being in these countries will diminish every day."
Within hours of the agreement, which was only concluded in the final minutes of the summit after a row between France and China, the Organisation for Economic Cooperation and Development was issueing a list of countries that are failing to comply with its guidelines. The OECD – dubbed the rich countries' club – placed countries in four categories based on the actions they have taken to comply with the "internationally agreed tax standard":
• Those that have substantially implemented the standard, including most advanced countries such as Britain, the US, France, Germany and China
• Tax havens that have committed to – but not yet fully implemented – the standard. These include Andorra, Monaco, Gibraltar and Lichtenstein
• Financial centres that have committed to – but not yet fully implemented – the standard. These include Switzerland, Singapore, Chile and three EU countries – Belgium, Luxembourg and Austria
• Those that have not committed to the standard, including Costa Rica, Malaysia, the Philipines and Uruguay.
Ángel Gurría, the OECD secretary-general, said: "We now have an ambitious agenda, that I believe the OECD, working with other relevant organisations, is well placed to deliver on. I am confident that we can turn these new commitments into concrete actions which in turn would strengthen the integrity and transparency of the financial system."
The list included China but not the financial centres of Hong Kong and Macau, the former British and Portuguese colonies, that were at the heart of the most serious row at the summit.
Nicolas Sarkozy, the French president, had been pressing for every country – or in the case of the former colonies, every region – in the world to be included in the OECD list. But Hu Jintao, the Chinese president, succeeded in exempting Hong Kong and Macau from the list, though they will eventually be included.
The two presidents sat next to each other at the G20 leaders' dinner in Downing Street last night. But their more significant encounter came afterwards when they held a private bilateral meeting.
Beijing only allowed the meeting to take place after Paris issued a statement moderating its position on Tibet. A diplomatic rift opened up between Paris and Beijing last year when Sarkozy met the Dalai Lama. In a statement France agreed not to back Tibetan independence in "any form".
Hu told Sarkozy that China was deeply sceptical about a tax haven blacklist. The Chinese president also indicated his unease that it would be monitored by the Paris-based OECD.
Britain believes that progress has been made in clamping down on tax havens even in the run-up to the G20 summit. Only yesterday Revenue & Customs officials were in Liechtenstein discussing ways of drawing up a tax exchange agreement.
Gordon Brown believes that the fact of the G20 summit has persuaded many tax havens, such as Switzerland and Liechtenstein, to indicate that they will adopt a more open approach.
Stephen Timms, the financial secretary to the Treasury, said: "I very much welcome the remarkable progress we have seen in tackling the problem of tax havens, of inappropriate banking secrecy over the last few months. The era of banking secrecy is over."
But Timms warned that tax havens that fail to clean up will face sanctions.
"I am expecting there to be sanctions against countries that don't sign up … the OECD has put in place longstanding internationally agreed standards. Our view has long been that jurisdictions need to sign up to those standards."
"There is an important issue about transparency here because it is clear that the fact that some activities were hidden away in some jurisdictions where there wasn't any transparency … that opaqueness has contributed to the severity of the problems we are seeing in the world economy at the moment."
• This article was amended on Friday 3 April 2009. China is not due to join the OECD later this year, as suggested in the article above. This has been corrected.
