Combating Tax Evasion through Transparency and Exchange of Information

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1 Combating Tax Evasion through Transparency and Exchange of Information BSEC 23 November 2012 Simon Knott Global Forum Secretariat OECD

2 What s at stake NO LEVEL PLAYING FIELD tax fraud and evasion lack of transparency and exchange of information 2

3 An inclusive global solution New cooperative tax environment following G20 London Summit of 2009 Agreed international standard based on exchange on request Peer Reviews ensure standard is met Open and transparent process All participate on equal footing 3

4 The International Standard exchange Exchange of information on request with safeguards to protect taxpayers rights and confidentiality. Availability of information particularly accounting bank and ownership information availability INFORMATION access Access to information and powers to obtain it 4

5 Peer review process Two-phase peer review process: Review of each jurisdiction s legal and regulatory framework (Phase 1) and practical implementation (Phase 2) of the standards on transparency and the exchange of information for tax purposes In-depth ongoing monitoring of legal instruments which allow for exchange of information So far 110 peer reviews have been launched and 88 peer review reports have been completed and published by the Global Forum 5 5

6 Global Forum Members 116 members = the largest tax group in the world 6

7 Combating Tax Evasion Global Forum membership ensures that a country has exchange of information mechanisms in place with all key partners Helps ensure tax is paid where it is due and makes it more difficult to hide income offshore Promotes a climate of transparency and compliance 7

8 Capacity building Working with international organisations the Global Forum helps countries build their capacity for information exchange This strengthens their tax base crucial for developing and transition economies Regional seminars held in five regions Competent Authority meetings Coordination Platform established for technical assistance 8 8

9 Coordination Platform Matching supply and demand Global Forum is a bridge between jurisdictions, IOs and development partners. 9

10 BSEC Members of Global Forum Albania Georgia Greece Russian Federation Plus all BSEC Observers except Egypt, Belarus, Croatia 10 10

11 Observers: International Organisations African Tax Administration Forum Asian Development Bank Centre de Rencontre des Administrations Fiscales Commonwealth Secretariat European Bank for Reconstruction and Development European Investment Bank Inter-American Development Bank International Finance Corporation International Monetary Fund United Nations World Bank World Customs Organisation 11

12 The EOI Portal: Centre for Tax Policy and Administration 12 12

13 MULTILATERAL CONVENTION ON MUTUAL ADMINISTRATIVE ASSISTANCE IN TAX MATTERS

14 Multilateral Convention on Mutual Administrative Assistance in Tax Matters Original Convention developed by OECD and Council of Europe Covers all forms of administrative co-operation Protocol amended Convention to: Bring it into line with the international standard on exchange of information Open it up to worldwide membership Entered into force 1 June 2011

15 The Multilateral Convention: A flexible tool Exchange on request Spontaneous exchange Automatic exchange Simultaneous tax examinations Presence of foreign officials Recovery assistance Service of documents Reservations allowed in specific areas 15

16 Parties and Signatories 42 countries have signed the Convention: Argentina, Australia, Azerbaijan, Belgium, Brazil, Canada, Costa Rica, Colombia, Czech Republic, Denmark, Finland, France, Georgia, Germany, Ghana, Greece, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Malta, Mexico, Moldova, Netherlands, New Zealand, Norway, Poland, Portugal, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Romania, Russian Federation, Ukraine, United Kingdom, United States The Coordinating Body of the Parties oversees the operation of the Convention and invites new signatories. Protection of taxpayer information a key requirement OECD and Council of Europe Members have automatic right to sign

17 OTHER OECD WORK ON EXCHANGE OF INFORMATION Centre for Tax Policy and Administration 17

18 Work on Article 26 Update of Article 26 of Model Tax Convention Allows information to be used for non-tax purposes when both States agree Commentary revised to clarify scope of exchange of information on request Optional language on time limits for requests 18

19 Work on Automatic Exchange The international standard is exchange of information on request, but there is growing interest in automatic exchange. Automatic EOI can help detect cases of noncompliance even where tax administrations have no previous indications of noncompliance 19

20 Work on automatic exchange The challenges of automatic exchange From the perspective of the receiving country: What Defining scope of income / transactions to cover Who Defining the information to capture regarding the taxpayer / beneficial owner Quality Ensuring data quality; e.g. data validation, TIN verification, general due diligence standards When When to receive the information How to exchange The format to use, encryption and transmission system How to use Risk assessment, matching, compliance action 20

21 Work on automatic exchange The challenges of automatic exchange From the perspective of the sending country: Costs of collecting the data; and burdens on industry Confidentiality Keeping information protected both in law and in practice. Reciprocity, acknowledgement and feedback 21

22 Inter-agency co-operation The Oslo Dialogue Tax offences, commercial fraud, smuggling, money laundering and other illicit financial crimes threaten the strategic, political and economic interests of countries. The Oslo Dialogue was launched at the first Forum on Tax and Crime held in Oslo in March 2011 to encourage greater cooperation in combating all forms of financial crime. A second event was held in Rome in June Brings together representatives from: ministries of justice and finance; tax administrations; law enforcement agencies; antimoney laundering authorities; anti-corruption authorities; and financial regulators. 22

23 Effective Inter-agency Co-operation in Fighting Financial Crimes OECD launched report at second international Forum on Tax and Crime in Rome, in June Contains in-depth analysis of inter-agency co-operation in 32 countries. Analyses gateways and mechanisms for co-operation between tax administrations, law enforcement, FIUs and financial regulators. Identifies successful practices and makes recommendations for improvements.

24 Thank You Secretariat to the Global Forum Tel: Visit the EOI Portal at: 24