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The following is a memorandum sent by the Organization for Economic Development and Cooperation, an alliance of the world's most powerful industrialized countries, that was sent to Panama and some three dozen other countries on the OECD's tax haven blacklist. In a cover letter, the OECD says that countries may accede to the agreement by way of a press release, regardless of the provisions in their constitutions or laws.

FRAMEWORK FOR A COLLECTIVE MEMORANDUM OF UNDERSTANDING ON ELIMINATING HARMFUL TAX PRACTICES Terms & Timetable: (A) By 31 December 2001: Plan to achieve international standards: Each Party will adopt a detailed plan indicating how, by 31 December 2005, it will achieve transparency and effective exchange of information for all tax matters, and eliminate any regimes that attract business without substantial business activity. (B) By 31 December 2002: Beneficial Ownership information available: Each Party will ensure that its regulatory or tax authorities have access to information regarding beneficial owners of companies, partnerships and other entities organized in its jurisdiction, including collective investment funds, and to information on the identity of the principal (as opposed to agent or nominee) of those establishing trusts (settlors) and foundations under their laws and those benefiting from trusts and foundations. Financial Books & Records: Each Party will require that financial accounts be drawn up in accordance with generally accepted accounting standards, and will ensure that such accounts be either audited or filed for all entities (banks, insurance companies, collective investment funds and managers, trusts, foundations, etc.) organized or operating in the jurisdiction (subject to possible de minimis exceptions or exceptions for entities that are not involved in offshore activities and do not have foreign ownership, beneficiaries, management or other involvement). Each Party must ensure that there is access by its regulatory or tax authorities to such accounts. (C) By 31 December 2003: Effective Exchange of Information (Criminal tax matters): Each Party will have in place a legal mechanism that allows information to be provided to the tax authorities of OECD countries upon request for the investigation and prosecution of criminal tax matters. This mechanism will include a means to ensure that information could be given to tax authorities of OECD countries in response to a request if the information may be relevant to the investigation of a criminal tax matter. Various approaches are possible, including: (1) the tax authorities of the Party would be able to obtain the information from relevant regulatory authorities or directly from financial institutions or other persons, and provide the information to the tax authorities of OECD countries; or (2) the regulatory authorities of the Party would be authorized to obtain such information and provide it directly to the tax authorities of OECD countries. The information eligible for exchange will have to include bank information and financial information as well as information on beneficial ownership. In the case of information required for the investigation and prosecution of a criminal tax matter, the information must be provided without the requirement that the conduct being investigated would constitute a crime under the laws of the Party, if it occurred within its jurisdiction. Each Party will ensure that there is no impediment to the disclosure of any exchanged information to persons or authorities (including courts and administrative bodies) concerned with the enforcement or prosecution in respect of, or the determination of appeals in relation to, criminal tax matters. Administrative practices must be in place so that the legal mechanism for exchange of information will function effectively and can be monitored. This will require, e.g., having personnel responsible to make sure that the requests for information are answered promptly and efficiently, and that there be personnel trained or experienced in obtaining information. Parties will be invited to participate in the OECD's Global Forum on Taxation, which is developing a framework for al legal mechanism for exchange of information. Access to Bank Information: Each Party will ensure that its regulatory or tax authorities have access to bank information that may be relevant for the investigation or prosecution of criminal tax matters. Transparency of tax system: Each Party will ensure that there are no non-transparent features of its tax system, such as rules that depart from accepted laws and practices, secret rulings, or the ability of investors to "elect" or "negotiate" the rate of tax to be applied. To the extent rulings are given with respect to transfer pricing issues, such rulings should not deviate materially from the result under the OECD Transfer Pricing Guidelines. Not attracting business without substantial domestic activity: Each Party will remove any restrictions on the ability of entities qualifying for preferential tax treatment to do business in the domestic market (although a preferential tax rate need not be extended to domestic businesses until 2005). (D) By 31 December 2005 Effective Exchange of Inform-ation (All tax matters): Each Party will have in place a legal mechanism that allows information to be provided to the tax authorities of OECD countries upon request for the investigation and prosecution of criminal tax matters and for the determination, assessment, and enforcement of all other tax matters (hereafter referred to as "civil tax matters"). This mechanism will include a means to ensure that information could be given to tax authorities of OECD countries in response to a request if the information may be relevant to a civil or criminal tax matter. Various approaches are possible, including: (1) the tax authorities of the Party would be able to obtain the information from relevant regulatory authorities or directly from financial institutions or other persons, and provide the information to tax authorities of OECD countries; or (2) the regulatory authorities of the Party would be authorized to obtain such information and provide it directly to the tax authorities of OECD countries. The information eligible for such exchange will have to include bank information, financial information, as well as information on beneficial ownership. In the case of information requested for the investigation and prosecution of a criminal tax matter, the information must be provided without the requirement that the conduct being investigated would constitute a crime under the laws of the Party, if it occurred in its jurisdiction. In the case of information requested in the context of a civil tax matter, the Party will provide the information without regard to whether or not the Party has an interest in obtaining the information for its own domestic tax purposes. Each Party will ensure that there is no impediment to the disclosure of any exchanged information to persons or authorities (including courts and administrative bodies) concerned with civil and criminal tax matters. Further, the information will have to be provided without regard to whether or not the Party has an interest in the information for its own tax purposes. Administrative practices must be in place so that the legal mechanism for exchange of information will function effectively and can be monitored. This will require, e.g., having personnel responsible to make sure that the requests for information are answered promptly and efficiently, and that there be personnel trained or experienced in obtaining information. Parties will be invited to participate in the OECD's Global Forum on Taxation, which is developing a framework for a legal mechanism for exchange of information. Access to Bank Information: Each Party will ensure that its regulatory or tax authorities have access to bank information that may be relevant for civil and criminal tax matters. Not attracting business without substantial domestic activity: For any preferential tax treatment accorded to financial and other services activities, each Party will remove any restrictions that deny the benefits of that preferential tax treatment to resident taxpayers, to entities owned by resident taxpayers, or to income derived from doing the same type of business in the domestic market. (E) Stand-Still   Each party will refrain from   (i) introducing any new regime that would constitute a harmful tax practice under the OECD 1998 Report on Harmful Tax Competition; (ii) with respect to any existing regime related to financial and other services that currently does not constitute a harmful tax practice under the OECD Report, modifying the regime in such a way that, after the modifications, it would constitute a harmful tax practice under the OECD Report; and (iii) strengthening or extending the scope of any existing measure that currently constitutes a harmful tax practice under the OECD Report. (F) Collateral Issues List of Uncooperative Tax Havens: The OECD will refrain from including the name of a Party on any List of Uncooperative Jurisdictions during the duration of the MOU [this Memorandum of Understanding], provided that the Party is proceeding in good faith to satisfy the terms of the MOU. Defensive Measures: The OECD will refrain from recommending that any common framework of defensive measures (within the meaning of the 1998 Report) be implemented against a Party during the duration of the MOU, provided that the Party is proceeding in good faith to satisfy the terms of the MOU. (G) Termination prior to 31 December 2005 Each Party shall have the annual option by advance written notice to the Chairman of the OECD's Committee on Fiscal Affairs to terminate its participation in this Memorandum of Understanding as of 31 December of the given year.