Remarks by Angel Gurría, OECD Secretary-General, delivered at the Global Forum on Transparency and Exchange of Information
1-2 September 2009, Mexico City
Ladies and Gentlemen, distinguished Ministers:
I want to thank all you for coming to Mexico City and to thank Mexico for hosting the Global Forum.
What has happened in the tax area over the past 10 months is nothing less than a revolution! The last one was when VAT spread from France and Brazil to the rest of the world. Your courageous decisions, coupled with the political leadership of the G20 and more than a decade of work led by the OECD, has allowed for significant progress towards better transparency and exchange of information, which has changed the tax world. It has also demonstrated that the combination of bold international co-operation and strong political will can produce far-reaching results.
For decades, it has been possible for a taxpayer to hide income and assets from the taxman, by abusing bank secrecy or other impediments to information exchange. This will no longer be the case. Co-operation between tax administrations is now becoming the rule. The threshold of tolerance for tax evasion has dropped to zero. And in the context of the crisis, governments need tax revenue and citizens need to be reassured that the tax burden is being fairly shared.
We have delivered more in 10 months than we achieved in more than 10 years. All of you have now endorsed and committed to implement the Standards initially developed by the OECD. Many jurisdictions are concluding agreements to exchange information according to the now globally endorsed standards. Interestingly enough, those which have committed recently are making quick progress whereas some which committed long ago still need to deliver in full.
This achievement is yours. Now that we all agree on the principles, we need to examine the best way to further the work of the Global Forum.
The OECD has been leading this work for more than a decade. It created the Global Forum to make sure that both OECD and interested non OECD countries had a seat at the table. This approach has proved right, as shown by the growing number of jurisdictions involved in our work. 87 jurisdictions were assessed by the Global Forum in 2009 as reflected in the Annual assessment which will be released tomorrow. The new standards on transparency and exchange of information are now clearly defined and almost universally accepted. All jurisdictions involved in the Global Forum now accept these standards.
At the time of the G20 Summit in London on 2nd April, I issued a Progress Report based on the Global Forum’s on-going assessment. Since then, this Report is being updated daily to reflect the progress made. The results are available on the web. An increasing number of jurisdictions are already considered to have substantially implemented our standards. This must extend to all jurisdictions and now the challenge will be effective implementation.
Over the past ten years, the Global Forum has achieved major progress: it offered an open, international platform to promote exchange of information. It built up standards which are now internationally agreed. It collected data on the implementation of such standards in more than 80 jurisdictions and published this information in annual reports since 2006. It is this decade of technical work which provided the basis for the unprecedented progress towards more transparency that we have seen over the last 10 months:
All 87 countries surveyed by the Global Forum have now endorsed the standards and agreed to implement them.
All OECD countries now accept the standard as reflected in the OECD and UN Model Tax Conventions. Belgium and Luxembourg have signed. Austria agreed today to a change in its constitution which will enable it to move forward quickly on the signing of the 10 agreements already initialed (tax agreements have already been signed). Switzerland has initialled, more than 12 agreements which meet the standards. In fact Switzerland is now coming up to its 6 signed agreement.
There are no countries left on the OECD list of un-co-operative jurisdictions.
Significant financial centres, such as Singapore and Hong Kong, China, have put forward legislation to implement the internationally agreed tax standard and have begun the process of updating their treaty network. Macau, China, has passed such legislation only two weeks ago.
Here in the Latin American region, we have also seen considerable progress with Chile, Costa Rica, Guatemala and Uruguay, all taking actions which will enable them to implement the standards. There are, however, some countries in the region where progress is too slow.
Over 100 tax information exchange agreements (TIEA
s) have now been signed and dozens more are under negotiation, with Caribbean, European and Pacific Island countries. We appreciate the resource constraints that small countries face in negotiating these agreements. We are developing new ways of overcoming these constraints, such as multilateral negotiations.
Tomorrow we will be issuing yet another update of the OECD Progress list which will report on the progress expected over next 24 hours (attached to this speech).
These are great achievements. But the work of the Global Forum is not finished. The almost universal acceptance of the standards must be followed by their effective implementation and operation. I mentioned before, there are still some countries that committed long ago, and have not delivered. Time is running out.
What you are being asked in the next two days is to give the Global Forum the tools and mandate it needs to undertake the next phase of its work. We need to take full advantage of the new context to strengthen the work of the Global Forum and introduce the necessary changes to reflect today’s new environment. This will mean that membership, oversight and operation of the Global Forum will have to be revised and adapted. New voices will have to be heard and new work methods developed. Over the next two days, we need to lay the foundations for a stronger Global Forum including:
establishing a robust peer review mechanism;
expanding the number of participating countries, including developing countries;
new governance structures; and
new work methods.
The mere fact that these issues are on the table demonstrates a clear commitment to advance a difficult, but necessary agenda for change.
I can assure you that this strengthened Global Forum will continue to be able to rely on the OECD’s policy and practical experience of more than 50 years, developed at the Committee on Fiscal Affairs and in the partnership programmes with many developing countries around the world.
We should aim to set the direction for our work over the next three years and to establish a framework in which this work can be carried out successfully. We have a big task ahead of us, but I am confident we can meet the challenges. We have done it before. The work of the Sub-group on Level Playing Field Issues, the Joint Ad-Hoc Group on Accounts, and the Working Group on Exchange of Information have established a legacy of confidence and teamwork.
I want to thank the countries that participated in these groups and particularly Governor Scanlan from Samoa, and Mr. Tanaka from Japan, who have led the work of the Sub-Group on Level Playing Field Issues since the last meeting in Melbourne.
The future of the Global Forum is up to us. I am confident that we will be able to address these new challenges in the same spirit of vision, ambition, trust and co-operation that has characterised our efforts to combat this face of international corruption and to create a more transparent and just world.
OECD assessment shows bank secrecy as a shield for tax evaders coming to an end