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OECD Claims Tax Transparency Advances

by Ulrika Lomas, Tax-News.com, Brussels

24 April 2013


The Organization for Economic Cooperation and Development (OECD) has presented a progress report to the G20 nations' Finance Ministers and Central Bank Governors, reporting back on initiatives to tackle tax evasion, tax base erosion and profit shifting.

The report covers three of the OECD's initiatives, undertaken at the behest of the G20:

  • Reviewing progress by its Global Forum on Transparency and Exchange of Information for Tax Purposes, including confirmation of the upcoming ratings of jurisdictions' compliance with international standards on the exchange of information on request;
  • Efforts by the OECD to strengthen automatic information exchange; and,
  • A review of progress on addressing tax base erosion and profit shifting, aimed at ensuring multinational corporations do not obtain an "unfair tax advantage over domestic companies and citizens."

The OECD's Global Forum, set up in the year 2000 to develop international tax transparency standards, now has 119 member countries and jurisdictions. The OECD has reported that since 2009, when the G20 called for effective implementation of the internationally agreed standard of information exchange, the Forum has published 100 peer review reports. According to the OECD, most countries have completed the first phase of the reviews which looks at legal frameworks, but fourteen have not proceeded to a phase two review due to deficiencies in their legal frameworks. After the Forum has completed a set of Phase 2 reviews, looking at effectiveness of the information exchange in practice, the Global Forum will begin rating territories’ implementation of the standards on the basis of a four-tier classification system: "compliant,” “largely compliant,” “partially compliant” and “non-compliant”. Approximately 50 jurisdictions will receive a classification by November 2013, the OECD said, in time for the Global Forum's plenary meeting that month.

Next, relaying progress towards the development of a common model for the automatic exchange of bank information, OECD Secretary-General Gurria said: “The political support for automatic exchange of information on investment income has never been greater. Luxembourg has changed its position and the US Foreign Account Tax Compliance Act legislation is triggering rapid acceptance of automatic exchange and propelling European countries to adopt this approach amongst themselves. In response to the G20 mandate to make automatic exchange or information the new standard, the OECD is developing a standardized, secure and effective system of automatic exchange.”

The OECD report identifies the Multilateral Convention on Mutual Administrative Assistance in Tax Matters as the ideal legal instrument for multilateralising automatic exchange of information. Over 50 countries have either signed or committed to sign while more are expected to sign the Convention at a ceremony to be held at OECD headquarters on May 29, 2013.

Lastly, the OECD has said that it has provided the G20 with an update on its work on Base Erosion and Profit Shifting, and intends to deliver an action plan to the Moscow meeting of the G20 in July 2013.

TAGS: compliance | Finance | tax | investment | business | offshore confidentiality | fiscal policy | FATCA | law | banking | international financial centres (IFC) | Luxembourg | offshore | legislation | banking secrecy | G20 | standards | Compliance

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