OECD Releases New Exchange Of Tax Information Guidelines

by Ulrika Lomas, Tax-News.com, Brussels

27 July 2004

The OECD’s Committee on Fiscal Affairs has agreed on new guidelines for the exchange of information between national tax authorities as part of a drive for improved co-operation to assist in the administration of domestic tax laws and international tax treaties.

The new arrangements are set out in a revised version of Article 26 of the OECD’s Model Tax Convention, which covers the exchange of information on tax matters. The provisions of Article 26 are widely accepted as providing the international standard for exchange of information between tax authorities.

Welcoming the first comprehensive revision of the convention’s provisions since 1977, Bill McCloskey, Chair of the OECD’s Committee on Fiscal Affairs, noted that it has become increasingly important for countries to maintain sovereignty over the application and enforcement of their tax laws, and to ensure the correct application of tax conventions in an increasingly globalised economy.

“Article 26 now reflects the new international standard of information exchange in tax matters,” Mr. McCloskey observed.

“The vast majority of OECD member countries already meet the new standard and I am looking forward to other countries, both inside and outside the OECD, moving towards the standard of information exchange now found in Article 26,” he added.

The key changes in Article 26 are as follows:

• A new paragraph has been added to prevent “domestic tax interest” requirements from hindering exchange of information. A domestic tax interest requirement refers to laws or practices that would prohibit one treaty partner from obtaining or exchanging information requested by another treaty partner unless the requested treaty partner had an interest in such information for its own tax purposes.
• A new paragraph has been added to ensure that ownership information and information held by banks, financial institutions, nominees, agents and fiduciaries can be exchanged. New paragraph 5 prevents bank secrecy from being used as a basis for refusing to exchange information.
• The confidentiality rules in Article 26 have been changed so as to permit disclosure of information to oversight authorities. This change reflects a growing trend in OECD countries. Oversight authorities are authorities that supervise tax administration and enforcement authorities as part of the general administration of the government of a Contracting State.

liabilities, secondly they will contact them by telephone, and if neither of the initial approaches is successful, they will send inspectors to collect the tax debts in person.

The changes to the OECD's Model Tax Convention can be found in the Tax-News Resources section.

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