One of the officials at the OECD involved in putting a squeeze on so-called tax havens says international pressure against such jurisdictions has borne fruit, but also cast doubt on campaigners' claims of how much undeclared money exists, according to Reuters.

Pascal Saint-Amans, director of a unit at the Organisation for Economic Cooperation and Development, was skeptical on estimates from the Tax Justice Network, a left-leaning campaign group, that jurisdictions are illicitly sheltering wealth on a scale equal to several hundred times the fortune of Bill Gates, for example.

The report comes several years after the Group of 20 major industrialized nations such as the US, Germany, UK and Japan vowed to stamp down on undeclared money in such jurisdictions, although ironically territories such as Delaware in the US might qualify for the “tax haven” tag.

More recently, the use by wealthy Americans - including, allegedly, Republican presidential contender Mitt Romney - of offshore financial centers has become a contentious issue. The US enacted legislation in 2010, called the FATCA Act (taking effect from 2013), that tightens tax compliance on expat US citizens. Meanwhile, the US is in discussions with the Swiss government over a possible bilateral agreement to improve disclosure and clamp down on tax evasion. 

Defenders of international financial centers, such as the CATO Institute, a Washington DC think tank, argue that low-tax jurisdictions have forced otherwise high-spending, high-taxing governments to curb their harmful economic appetites by providing competition. Also, many such centers, it can be argued, thrive not just because of tax but due to their being convenient for large expat populations of workers traveling around the world. Historically, countries such as Switzerland have been a haven for persecuted minorities’ wealth. It is also argued that many of the world’s recent financial scandals, such as Enron, the Madoff Ponzi scam or the LIBOR rate-rigging affair, happened in onshore locations under the noses of G20 regulators.

Winds of change

The newswire’s report quoted Saint-Amans as saying that his “gut feeling” was that before the G20's initiative at its 2009 London summit, people could hide their wealth in offshore havens without any risk of legal reprisals.

"Now you are at risk and that's a major change. That's a revolution," he told the news service.

The Tax Justice Network has claimed that as much as $21 to $32 trillion of financial assets are sheltered in offshore tax havens, representing up to $280 billion in lost income tax. This would be several times greater than the fortune of Microsoft Corp co-founder and philanthropist Bill Gates. In March Forbes magazine ranked Gates second on its global rich list with total wealth of $61 billion.

Saint-Amans suggested the TJN estimates might be overstated. "I was wondering where the equivalent of 450 Bill Gates are hiding from everyone. It looks like the equivalent 20,000 unknown billionaires in the world or 200,000 people with net worth of 100 million," he said.

Scorpio Partnership, the consultancy, estimates a total of $8 to $9 trillion of wealth for people worth at least $1 million is held offshore, but this is not undeclared money and is often simply defined as what is held outside a home jurisdiction.