Tax Transparency and BEPS

 

Remarks by Angel Gurría, OECD Secretary-General, delivered to G20 Finance Ministers and Central Bank Governors


Washington D.C., Saturday 19th April 2013

(As prepared for delivery)


Minister Siluanov,
Ministers and Governors,
Ladies and gentlemen,

Due to recent events, tax evasion has received unprecedented attention by media worldwide, and citizens are voicing their concerns and expectations for governments to act. This is an essential issue which the G20 must tackle, now more than ever. Today, in this meeting you can make the difference and help the world move towards greater transparency. The OECD is actively working in this area, and happy to help:

 

1. The Global Forum is working efficiently, but more cooperation is needed.

The Global Forum’s work is key to curbing tax evasion. Thanks to G20’s support, more jurisdictions – currently 120 – are committed to the Forum’s standard, and information-exchange agreements are spreading.

Thus, countries can now use the tools in place to effectively combat tax evasion. Five years ago it was impossible to ask the British Virgin Islands for information about their companies. Now they have 22 exchange of information agreements in place and treaty partners have the means to go after tax evaders.

The Forum has delivered excellent results, and very quickly. The review of the effective implementation of the international standards is ongoing, and the first jurisdictions’ ratings will be announced later this year.

Meanwhile, we shouldn’t forget those countries that have not even put in place the basic framework for cooperation. Some of these, such as Panama, were reviewed in 2010 and have not yet made adequate progress. Lebanon has so far refused to commit to the standard and join the Global Forum.

We also need your support to make sure we keep going on without complacency. The G20 should send a clear message to those who do not cooperate.

 

2. A common model for automatic exchange of banking information.
Much like 2009, 2013 can be a watershed for international cooperation on tax transparency. Recent developments suggest that there is wider consensus at the political level on the need for automatic exchange of banking information today than two months ago. And public opinions in many countries, both advanced and emerging, are also calling for even greater transparency in this domain. 

US FATCA legislation has triggered the conclusion of agreements providing for automatic exchange of information. In the EU, governments are decided to move quickly forward in this direction including Luxembourg. This is a major game changer.

Working with you, we stand ready to develop a common operational model for automatic exchange of bank information. With one standard in place, instead of many different ones, we will maximise compliance benefits for residence countries, reduce costs for financial institutions, and provide necessary safeguards.

We have the legal platform too: the Multilateral Convention on Mutual Administrative Assistance in Tax Matters which the G20 has been very effective at promoting. We now need to set a deadline for all offshore jurisdictions to join this instrument and make sure they actually use it for automatic exchange of tax information by the Saint Petersburg Summit.

 

3. The action plan on BEPS needs further political support.

In Moscow you discussed the OECD report on BEPS and expressed your willingness to act. Tax officials are working in the Committee on Fiscal Affairs of the OECD to deliver the action plan by June 2013, as requested.

All countries agree with the diagnosis in the report, but different views are emerging on possible solutions. Let me be blunt about this: A meaningful action plan cannot be delivered by June unless you express strong political support. We need to reach consensus, be pragmatic and ready to compromise on technicalities. This message must go down the chain to the technical experts.

Right now, income goes untaxed anywhere because it is reported in jurisdictions different from those where activities take place. Our efforts aim to stop this. If we bear this objective in mind, I am confident that we can deliver a global action plan in June, and live up to our commitments.

Thank you.