The Australian Financial Markets Association has welcomed the Government's decision to defer the start date for reforms to the offshore banking unit regime, saying the deferral will give industry and the Government a chance to address the "considerable uncertainty" about the changes.On Sunday, the Assistant Treasurer, Arthur Sinodinos, said the changes to the OBU regime would not proceed on the planned start date, October 1. Sinodinos said consultation had indicated that the reforms could affect commercial transactions that should still be eligible for OBU treatment.Changes to the OBU regime were announced in the Australian Government Budget in May. Dealings with related parties, including transactions between an OBU and a related domestic bank, were to be ineligible for OBU treatment. Transactions between OBUs, including between unrelated OBUs, were also to be made ineligible.OBUs have been around since 1986, when a licensing system was instituted. Concessional income tax rates have applied to them since 1992. Funds management and insurance companies were included in 1999.OBUs' concessional tax rate includes an effective 10 per cent income tax on eligible activities and an exemption from interest withholding tax.The purpose of the OBU regime is to encourage offshore financial transactions between non-residents to be conducted through an Australian institution.The operation of the scheme has been hampered by government concerns, on the one hand, because financial institutions have been exploiting loopholes in the rules. And, on the other hand, there is industry concerned that there is too much uncertainty about the application of the rules.In a paper issued in July, Treasury said the regime was being used to transfer domestic banking activities into OBUs through the "re-characterisation of ineligible income".In a media release issued yesterday, the AFMA said: "The industry is concerned that bona fide OBU transactions would be adversely affected by the measures originally proposed."