Speech to the Global Forum on Transparency & Exchange of Information for Tax Purposes
Keynote Address by Angel Gurría, OECD Secretary-General
Berlin, 29 October 2014,
(As prepared for delivery)
Dear Ministers, Deputy Ministers, Ambassadors, Global Forum members, Ladies and Gentlemen:
I am delighted to address what is now the largest tax group in the world. The Global Forum gathers together a diverse array of 123 nations. But our strength does not lie in our numbers alone, but in our unity, in our shared commitment to better global taxation standards to ensure that due taxes are paid.
This objective is all the more relevant as our countries look for resources to support inclusive growth by investing in education, innovation, infrastructure and other public services. International collaboration on tax matters will also help governments regain public trust, which was so badly hurt during the crisis.
A New Era of Transparency and Coordination
Five years ago, in London, G20 leaders came together with a new resolve to tackle tax evasion. They declared: “The era of bank secrecy is over”. I remember the great energy with which we came together at the Global Forum that year in Mexico City, and the commitment we all expressed to a bigger, stronger, more inclusive Global Forum.
Now five years later, you can be immensely proud of what you have achieved together. In May, the G20 Finance Ministers and Central Bank Governors endorsed the Common Reporting Standard for automatic exchange of tax information.
More than 90 jurisdictions have now publicly committed to implementation. Over 50 of these have set out a specific timetable leading to the first automatic information exchanges in 2017. This is a game changer!
Even before the Standard has become operational, we have already seen the benefits. In nine member countries alone, more than half a million taxpayers have come forward through voluntary disclosure programmes to reveal hidden wealth.
29 October 2014 - Berlin Tax Conference 2014: Transparency and Fairness. Berlin, Germany. Photo: Axel Schmidt/OECD
In this year’s OECD Annual Report to the Forum, one country reported that in the 10 months up to July 2014, 12 000 taxpayers had voluntarily disclosed an estimated total of 6 billion euros in order to avoid penalties, and the authorities were expected to recover 900 million euros in one jurisdiction alone.
The work on peer reviews assessing jurisdictions’ performance in the exchange of information is also making swift progress. In less than a year, a total of 25 more peer reviews have been adopted. Your hard work will result in more than 70% of Global Forum members being rated by the end of 2015.
This vital work is sending a clear message to those profiting off the back of uncoordinated tax administrations: you can’t run offshore, you can’t hide in the shadows. Not anymore!
Inclusion is our Strength
We can be confident that we will succeed, because of the tremendous reach of the Forum. For many years, the Forum’s stumbling block was achieving a level playing field where developed and developing nations could work together for the benefit of all. Now, over 50% of members are from developing countries [v]. Around the table today there are flags from all continents, from all types of economies.
This Forum has made great progress to promote the exchange of information among more and more jurisdictions. Not only is the Forum bigger and better every year, but you and partner organisations including the Africa Tax Administration Forum (ATAF), Centre de rencontres et d’études des dirigeants des administrations fiscales (CREDAF) and the World Bank are finding new ways to implement transparency around the world. I congratulate the African leaders who met yesterday to discuss the Forum’s ‘Africa Initiative’. Your discussions will doubtless bring us much closer to the vital goal of implementing exchange of information across Africa between 2015 and 2017.
The Challenges Ahead
But with every great stride forward we also encounter hurdles, challenges we must overcome. One is of course the guile tax evaders have shown in their ability to exploit loopholes and trick authorities.
The Forum has shown great resolve to remain up to date with any new developments and threats. Yesterday you discussed changes to the Terms of Reference to incorporate the concept of “beneficial ownership”; as well as the 2012 update to Article 26 of the OECD Model Tax Convention. This shows your deep awareness of a changing global tax environment. These changes will make identifying the legal owners of wealth much easier, and it will help law and tax enforcement forces work together to pursue tax evasion.
A second and ever-present challenge to the widespread adoption of the Standard is the perceived cost of implementation. Those of you assembled here know that the benefits of tax transparency outweigh the costs. To give just one telling example, even though the Standard is not yet in force, twenty-five countries have already identified additional revenue of 37 billion euros from voluntary disclosure programmes and other initiatives to combat offshore evasion. This message must be broadcast loud and clear to policymakers, to the press, to influential voices in adhering and non-adhering countries so the benefits of transparency reach the broadest audience.
And the rewards are not just pecuniary. The ability of rich tax evaders to swindle authorities, while ordinary citizens pay their fair share has contributed to the historically low levels of trust in government and public institutions that we are seeing across the world. The 2014 results of the global Edelman Trust reveal that almost 6 in 10 citizens do not trust their governments. The work that you are doing will help to restore this trust. When citizens see tax justice working to their benefit, confidence returns and the drive for more far-reaching reform becomes even stronger.
Ladies and Gentlemen,
Benjamin Franklin once observed with great insight that, “There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government.” Fighting tax evasion has always been an uphill struggle, but we are now contending with international evasion in a globalised world. We have to transition to more transparent, multilateral mechanisms. Thanks to your hard work, taxation is finally catching up with globalisation, making it more redistributive, harnessing its potential for social progress and justice, making people’s lives better. People sometimes forget that this is what taxation, indeed what economics is all about.
I thank you all for your hard work, for your great determination, and I wish you a productive and fruitful discussion this afternoon.