The Group of 20 industrialized nations' recent pledge to clamp down on tax havens and the Organization for Economic Cooperation and Development's list of jurisdictions that have not fully implemented international tax standards likely will have little effect on companies' choice of domicile for their captive, experts say.

Leaders of the G-20 nations met in London earlier this month to discuss the worldwide economic crisis and financial regulation, among other topics.

In a communique, G-20 leaders said they would "take action against noncooperative jurisdictions including tax havens," and said they would use the OECD list as a basis for any action.

The April 2 list names jurisdictions that have "substantially implemented" an internationally agreed tax standard, those that have "committed to" but "not yet substantially implemented" the standard, and those that have not committed to the standard.

The OECD, in cooperation with non-OECD countries, developed the international tax standard, which G-20 finance ministers and central bank governors endorsed in 2004. It requires the exchange of information, on request, in all tax matters to allow enforcement of domestic tax laws.

Four countries blacklisted in the most recent ranking for not committing to the standard--Costa Rica, Malaysia, Philippines and Uruguay--have told OECD they intend to commit to the standard.

On the so-called "gray list" of jurisdictions that have yet to fully implement the standard are large captive insurance domiciles that include Bermuda, British Virgin Islands, Cayman Islands and Gibraltar.

In the gray zone

But companies with captives in these domiciles or those planning to set up a captive probably will not see any ill effects from those domiciles' inclusion on the gray list, experts say.

The G-20/OECD action is unlikely to have a major effect on well-established captive domiciles, said Philip Harle, a tax partner at law firm Lovells L.L.P. in London.

The thrust of the G-20 action appears to be clamping down on tax evasion, he noted, rather than eliminating tax advantages of certain jurisdictions, and does not appear to have any direct link to captives.

The general move toward greater scrutiny of tax havens may give some pause to companies considering setting up a captive, but is unlikely to make companies operating captives reconsider that decision, Mr. Harle said.

Operations that are well-run and legitimate have nothing to fear from the G-20 stance, agreed Howard Jones, a tax partner at accountancy firm Mazars L.L.P. in London.

Sanction specifics

While it is too early to be certain of the nature the G-20's threatened sanctions for tax havens, it is unlikely to deter companies from setting up captive insurers, said Mark Cook, senior consultant and head of captives at Towers Perrin in London. He noted the OECD's previous blacklist of tax havens did little to deter companies from setting up captives.

Meanwhile, domiciles on the gray list have made progress in signing information-sharing agreements to satisfy the OECD's requirements. At the end of March, Gibraltar signed a tax information exchange agreement with the United States.

"I look forward to Gibraltar's cooperation with the United States and to this agreement serving as an example for other financial centers around the world," U.S. Treasury Secretary Timothy Geithner said in a statement.

Domiciles react

Reacting to the G-20 summit, Kurt Tibbetts, leader of government business in the Cayman Islands, said he believed the domicile was "cast in the 'lightest shade of gray' among the financial centers with which we have been listed."

Mr. Tibbetts said the domicile was one of the first to commit to the OECD tax standard in 2000 and has the highest number of tax information agreements--eight--of any jurisdiction on the gray list.

And Bermuda, which already has three tax information agreements in place, is set to sign agreements with seven Nordic countries and New Zealand later this month. This would bring the number of agreements signed by Bermuda to 11, the number needed to remove it from the gray list.

In the coming weeks, Bermuda also plans to sign an agreement with Germany, but a date has not been set.