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15/03/2009 - Moves by major financial centres to improve transparency and exchange of information for tax purposes mark a significant step forward in international tax cooperation and a welcome result of more than 12 years of OECD work reinforced by the imminence of the G-20 summit next month, OECD Secretary-General Angel Gurría said.
In recent days, Austria, Luxembourg and Switzerland have announced that they will adopt in their tax treaties an internationally agreed standard of exchange of information developed by the OECD. Singapore and Hong Kong have stated they intend to remove domestic hurdles to information exchange, while Andorra and Liechtenstein have said they will be moving in the same direction. Belgium, which already signaled a move towards the international standard last year with a bilateral tax treaty with the U.S., said it would be adopting the same approach in other tax treaties.
“These announcements mark a fundamental change and an important moment in the history of international tax cooperation,” Mr. Gurría said. “At a time when governments around the world need to maximize tax revenues in order to address the global economic crisis, this is an extremely important breakthrough.”
“The OECD welcomes these moves and commends these economies for aligning their standards with those agreed internationally,” he said. “We also have indications that other jurisdictions, such as Monaco, may be prepared to move in the same direction, and we look forward to receiving confirmation."
The OECD will be working closely with these countries and jurisdictions to move towards implementation of the announced measures and to establish the appropriate monitoring of their performance. Some countries will, however, have to modify their legislation and renegotiate their existing tax agreements, all of which will take some time.
Commenting on this prospect, Mr. Gurría said: “The issue is too important to be dealt with in a rush. We all want to advance swiftly, but it is even more important to do it right.”
The OECD works with its 30 member countries and with others to develop sound policy frameworks for the governance of the world economy. It plays a leading role in such areas as tax policy, competition policy, cross-border investment, corporate governance and the fight against corruption. OECD work on the issues of transparency and exchange of information in tax matters began in 1996, and was recognized by G-20 leaders at their November 2008 summit meeting in Washington, D.C. In their closing statement, they emphasized that “lack of transparency and a failure to exchange tax information should be vigorously addressed.”
Since the G-20 summit gave new impetus to this process, more than 20 new Tax information Exchange Agreements have been signed or announced. “In the current crisis, it is important to assure honest taxpayers that tax burdens are being fairly shared,” Mr. Gurría said. “Improvements in exchange of information in tax matters are part of a broader agenda to improve transparency and global governance and to restore confidence in financial markets.”
As input into preparations for the forthcoming G-20 summit in London on 2 April 2009, the OECD has provided factual information on jurisdictions that are not at present making significant progress towards implementing an agreed international standard on transparency and exchange of information.
This standard, developed by the OECD in co-operation with non-OECD countries and endorsed by G-20 finance ministers in 2004 and by the United Nations committee of experts on international cooperation in tax matters in October 2008, provides for full exchange of information on request in all tax matters for the administration and enforcement of domestic tax law without regard to a domestic tax interest requirement or bank secrecy for tax purposes.
However, it also recognises the role of banking secrecy, as it provides for extensive safeguards to protect the confidentiality of the information exchanged and does not allow so-called “fishing expeditions”.
“In practice, all countries have some form of bank secrecy and all countries acknowledge the importance of protecting the privacy of tax payer information,” Mr. Gurría said. “Meeting this standard does not jeopardize the confidentiality of taxpayer information. What it will do is ensure that tax authorities in both developed and developing countries have the necessary information to enable them to apply tax rules fully and fairly.”
For more information, see OECD work on Tax and OECD work on Tax Evasion
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2009 Assessment by the Global Forum on Transparency and Exchange of Information
