The European Union has no issues with Bermuda in respect to the European Union Code of Conduct on harmful tax practices, according to Finance Minister Eugene Cox.

Speaking in the House of Assembly yesterday, Mr. Cox said that he and financial secretary Donald Scott met with Her Majesty's Treasury and the Foreign and Commonwealth Office to discuss the European Union's Directive on Taxation of Savings Income in London last month.

By way of background, Mr. Cox told members of the House of Assembly: "You may recall that there has been debate within the European Union on how to resolve the matter of cross border tax evasion by citizens of EU member states.

"In June 2000 at the European Council meeting in Feira, Portugal, it was agreed in principle that exchange of information on the savings income of citizens of EU countries should be the way forward. This approach was adopted in favour of a withholding tax on interest income."

Mr. Cox continued: "In November 2000, the EU Council of Finance Ministers (ECOFIN) agreed that if the directive was to be effective then the exchange of information would been to be applied on as wide an international basis as possible.

"The EU Presidency and Commission were authorised to enter into discussions with the United States and other key third countries, Switzerland, Lichtenstein, Monaco, Andorra and San Marino, to promote the adoption of equivalent measures in those countries. At the same time, EU member states committed themselves to promote the adoption of the same measures in their dependent or associated territories. As a result, the United Kingdom Government has been involved in discussions with its Overseas Territories on this matter."

Reporting on assurances given by the UK Government at his meeting, Mr. Cox said: "The European Union has no issues with Bermuda in respect of the EU Code of Conduct on harmful tax practices. Together with the Directive on the Taxation of Savings Income, the Code of Conduct is one of the core components of the EU's tax package."

Mr. Cox also said that European Union Finance Ministers are due to meet on June 4 and one of the key topics of discussion will deal with progress of negotiations with third countries and progress of discussions with overseas territories.

"The directive will be voted on by the 15 EU member sates in December 2002 and it must be unanimously approved in order to take effect. If approved, it will be implemented from January 1, 2004 with a seven year transition period," said Mr. Cox.

Mr. Cox also said that there were a number of technical issues yet to be resolved and that the UK does not expect its overseas territories to go further or faster than EU member states in implementing the directive.

"The UK accepts that full sign up to the directive by third countries is a condition for implementation of the directive by Overseas Territories," said Mr. Cox. Mr. Cox concluded: "The savings directive is aimed at interest income and related income streams that is typically administered through banks, paying agents and similar entities. The Ministry of Finance has already broached the matter at a high level with representatives of banks and deposit companies in Bermuda. Consultation with the United Kingdom and indeed with the financial services sector in Bermuda will continue."