Automatic Exchange of Information

 

 

Co-operation between tax administrations is critical in the fight against tax evasion and protecting the integrity of tax systems. A key aspect of that co-operation is exchange of information. 

 

Starting in 2012, political interest has increasingly focussed on the opportunities provided by automatic exchange of information. Automatic exchange of information involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income (e.g. dividends, interest, etc.). It can provide timely information on non-compliance where tax has been evaded either on an investment return or the underlying capital sum, even where tax administrations have had no previous indications of non-compliance.

 

On 19 April 2013, the G20 Finance Ministers endorsed automatic exchange as the expected new standard. On 19 June 2013, the G8 Leaders welcomed the OECD Secretary General report “A step change in tax transparency” which set out the concrete steps that needed to be undertaken to put a global model of automatic exchange in practice. On 6 September 2013, the G20 Leaders committed to automatic exchange of information as the new global standard and fully supported the OECD work, with G20 countries, aimed at presenting such a single standard in 2014.

 

On 23 February 2014, the G20 Finance Ministers endorsed the Common Reporting Standard for automatic exchange of tax information, now contained in Part II of the full version of the Standard.  On 6 May 2014, the OECD Declaration on Automatic Exchange of Information in Tax Matters was endorsed by all 34 member countries along with several nonmember countries.  More than 65 jurisdictions have now publicly committed to implementation,* with more than 40 having committed to a specific and ambitious timetable leading to the first automatic information exchanges in 2017 (early adopters).

 

 

 

 

 The cover of the Standard for Automatic Exchange of Financial Account Information

» OECD releases full version of global standard for automatic exchange of information

In recognition of the emergence of AEOI as a new global standard that supports and enhances exchange on request, in 2013 the Global Forum established a new voluntary AEOI Group.  The AEOI Group comprises Global Forum members and observers who wish to come together to work towards a common goal of engaging in AEOI.

 

The AEOI Group will take forward the work that the G20 has mandated the Global Forum to do: to monitor and review the implementation of the OECD Standard on AEOI; and to help developing countries identify their need for technical assistance and capacity building in order to participate in and benefit from AEOI. The AEOI Group will continue to liaise with, and draw on the experience of, the OECD, the World Bank Group, the G20 and others.

 

In 2014 – 2015, the AEOI Group will propose the terms of reference and a methodology for monitoring the implementation of AEOI on a going-forward basis. The AEOI Group will also work to identify the foundations needed for jurisdictions to implement AEOI, having regard to capacity constraints, resource limitations and the need to ensure confidentiality and the proper use of information exchanged.

 

The AEOI Group will report back to the Global Forum plenary on its activities on a regular basis and decisions will continue to be made by the Global Forum.

 

On 21 July 2014, the OECD released the full version of the Standard for Automatic Exchange of Financial Account Information in Tax Matters. The Standard calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis. The Standard was approved by the OECD Council on 15 July 2014 and will be formally presented to G20 Finance Ministers at their next meeting on 20-21 September 2014.

 

The Standard provides for annual automatic exchange between governments of financial account information, including balances, interest, dividends, and sales proceeds from financial assets, reported to governments by financial institutions and covering accounts held by individuals and entities, including trusts and foundations. It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

 

The full version of the Standard includes commentaries and guidance for implementation by governments and financial institutions, detailed model agreements, as well as standards for harmonised technical and information technology modalities, notably a standard format and requirements for secure transmission of data.

 

The advantage of standardisation is process simplification, higher effectiveness and lower costs for all stakeholders concerned. A proliferation of different and inconsistent models would potentially impose significant costs on both government and business to collect the necessary information and operate the different models.

 

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* Andorra, Anguilla, Argentina, Australia, Austria, Belgium, Bermuda, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Chile, People’s Republic of China, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Montserrat, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Turks & Caicos Islands, United Kingdom, and United States, and the European Union.