European Union (EU) code and Organisation for Economic Cooperation and Development (OECD) report on tax harmonisation. Probes into "harmful tax regimes'' by organisations like the 29-member OECD and the EU led to Bermuda discussions with the UK and OECD for months over tax haven fears, with Government officials forced to defend the Bermuda jurisdiction from outside attacks. But this week, Gibraltar's Minister for Trade & Industry Peter Montegriffo dismissed as "fundamentally flawed and misconceived'' the whole basis of the OECD and EU initiatives. During a speech to delegates from 20 countries marking the opening of the second Gibraltar Offshore Insurance Conference, he said his country had studied the OECD's report on "harmful tax measures''. "Gibraltar's response to these initiatives has been to make clear that tax is constitutionally a matter of domestic competence, and that both the EU and OECD measures are not legally binding,'' he said, according to a report in the UK publication Insurance Day. Gibraltar is reviewing its tax system but he said, "This will be undertaken at a pace and in a manner consistent with our own economic requirements.'' Mr. Montegriffo said the OECD report's claim of "distortion'' implied that a natural state of affairs was being twisted -- an implication he emphatically denied. He complained too, that the OECD report had dismissed the difference between tax evasion and tax avoidance. He said: "This fundamental distinction is one based on implication of the rule of law to any given tax arrangement. It is extraordinary that the OECD seems prepared to jettison this principle altogether.'' He also explained to delegates that, since the granting of `passporting' rights to insurance companies domiciled in Gibraltar in June 1997, which allowed them to sell insurance services in other European Economic Area (EEA) states, the jurisdiction had attracted several companies which are now conducting business in other EEA states.

CONFERENCE CON