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Global Forum publishes new peer review reports and reveals compliance ratings for eight jurisdictions

 

06/04/2020 - The Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) published today eight new peer review reports assessing compliance with the international standard on transparency and exchange of information on request (EOIR).

These reports evaluate jurisdictions against the updated standard which requires beneficial ownership information of all relevant legal entities and arrangements, in line with the definition used by the Financial Action Task Force Recommendations.

A peer review assessment of a jurisdiction’s legal and regulatory framework and its implementation in practice results in one of four distinct overall ratings (a rating is allocated to a jurisdiction once it has undergone a full peer review):

  • Compliant: The EOIR practice is effective. This rating can be granted even if recommendations were issued, but there should be no material deficiencies identified.

  • Largely Compliant: The standard is implemented to a large extent but improvements are needed. Deficiencies are material but have limited impact on EOIR.

  • Partially Compliant: The standard is only partly implemented. At least one material deficiency which has had, or is likely to have, a significant effect on EOIR in practice has been identified.

  • Non-Compliant: Fundamental deficiencies in the implementation of the standard have been revealed.

The eight new reports relate to jurisdictions with very diverse EOIR practice, from Liberia, which received only two requests, to Switzerland that received thousands from multiple partners during the three years of practice under review. The results are equally contrasted, with some jurisdictions struggling to implement their legislation on transparency.

Three jurisdictions – Brunei Darussalam, Macau (China) and Switzerland – received an overall rating of “Largely Compliant” for this second round of peer reviews. These ratings confirmed those issued after the first round of assessment (2010-16). Specific achievements and recommendations include:

  • Brunei Darussalam has taken significant steps to align with the international standard by abolishing the International Business Company (offshore) regime as well as expanding its network of EOIR relationships extensively by becoming a party to Multilateral Convention on Mutual Administrative Assistance on Tax Matters. Further improvements are required to ensure the availability of beneficial ownership and reliable accounting information in all cases.

  • Macau (China) has made a number of improvements since the previous review in 2013, including by abolishing bearer shares. The Multilateral Convention now applies in Macau, which greatly expands its number of EOI partners. The main deficiencies identified in the 2020 peer review concern the availability of ownership and accounting information.

  • Switzerland managed to address a number deficiencies identified in its last review in 2016, including improving its exchange of information process and doubling its staff working in the Exchange of Information Unit. Switzerland should now ensure that notification and appeal procedures do not unduly prevent or delay an effective exchange of information. The preservation of confidentiality of the information received when processing requests should also be further scrutinised. A total of 3 252 individual requests, 8 group requests and 16 bulk requests were dealt with during the assessment period.

The overall rating of Barbados and the Seychelles was downgraded from “Largely Compliant” to “Partially Compliant” since their last reviews, highlighting some significant deficiencies:

  • Barbados’ legal and regulatory framework is overall in line with the standard, including concerning the availability of beneficial ownership information. The practical implementation of the relevant rules remains however a challenge.

  • The main concerns identified for the Seychelles refer to the overall effectiveness of supervision and enforcement activities to ensure the availability and access to information in practice, especially in its offshore sector. Some 88% of the requests for accounting information and 62% of the requests for beneficial ownership information could not be answered in the three years reviewed. The report contains a number of recommendation to improve the legal framework and its practical implementation.

Three jurisdictions – Liberia, Peru and Tunisia – were undergoing their first full peer reviews as only their legal framework had been reviewed so far. The resulting reports rated Liberia as “Partially Compliant” while Peru and Tunisia both obtained a "Largely Compliant" rating:

  • Liberia’s progress in complying with the international standard despite an extremely challenging economic environment was duly noted. Important deficiencies in the supervision and enforcement of the newly introduced legal requirements of maintaining ownership and accounting information in line with the international standard were nevertheless highlighted. Liberia has had limited experience in handling requests so far, having received only two requests during the review period and sought information in three cases. The procedural handling of requests was not fully in line with the international standard on confidentiality. Despite recent rectifications to the procedure, a close monitoring will be necessary.

  • Peru’s review showed important progress in establishing the obligation for all relevant entities and arrangements to report beneficial ownership information to the country’s tax administration. It expanded considerably the number of jurisdictions with which it can exchange information by becoming party to the Multilateral Convention. The practical exchange of information on request is nevertheless still hindered by some delays.

  • Tunisia enhanced the availability of the information since the first review of its legal framework in 2016, in particular by establishing a National Register of Enterprises which includes a beneficial owner’s register, and by strengthening its Anti-Money Laundering law. These improvements are recent and should thus be monitored to ensure an effective implementation. Tunisia must also ensure the effectiveness of the new practical procedure for obtaining banking information. A total of 194 requests were answered during the three years period under review. Although progresses were made after the assessment period, recurrent issues with delays in answering were noted.

The Global Forum is the leading multilateral body mandated to ensure that jurisdictions around the world adhere to and effectively implement both the standard of transparency and exchange of information on request and the standard of automatic exchange of information. These objectives are achieved through a robust monitoring and peer review process. The Global Forum also runs an extensive technical assistance programme to support its members in implementing the standards and help tax authorities make the best use of cross-border information sharing channels.

» Access an overview table of the ratings for all jurisdictions.

» Access all Global Forum reports published to date.

» For more information on the Financial Action Task Force Recommendations, please visit the FATF website.


For further information, journalists should contact Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, (+33 1 45 24 91 08) or Zayda Manatta, Head of the Global Forum Secretariat (+33 1 45 24 82 29).

 

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