The Organisation for Economic Co-operation and Development (OECD) reported Tuesday that Costa Rica has undergone sufficient tax reform to be taken off a tax-haven blacklist of countries that do not meet international tax standards.
In 2009, the OECD cited Costa Rica along with Malaysia, the Philippines and Uruguay on its list of blacklisted countries “that have not committed to internationally agreed tax standards.”
According to Clemens Fuest, research director of the Oxford University Centre for Business Taxation, tax havens are generally small, politically stable countries that offer low taxes to foreign investors and businesses. Fuest wrote in a July 2011 article for The World Today that tax havens have recently come under increased international scrutiny because they are seen as helping firms and wealthy individuals evade taxes and regulations of their home countries.
Costa Rica was not included on the OECD’s July 2011 list of tax havens because the country now practices international standards of fiscal transparency, according to the OECD report.
The country has reached a total of 12 tax-information-exchange agreements that allow foreign governments to monitor the monetary activity of their citizens in Costa Rica. The country has signed information-exchange agreements with Australia and northern European nations Finland, Denmark, Greenland, Iceland, Norway and Sweden.
In a statement released Tuesday, Costa Rican Finance Minister Fernando Herrero said this is a major step for the country, not only in addressing commitment to transparency but also in putting Costa Rica in a more favorable position to attract international investment.
Costa Rica’s neighbor Panama also was removed from the blacklist.