As the financial system has become increasingly globalised and it has become easier for taxpayers to move their financial affairs across borders, it has become an increasing priority for jurisdictions to ensure that the evolution of the financial system does not undermine the correct payment of tax. This is to ensure that the public finances are not eroded and that the public’s trust in the tax system is preserved. International cooperation to provide tax authorities with transparency across borders has therefore become increasingly the norm, providing jurisdictions with the necessary tools to ensure that taxpayers with offshore financial activities meet their domestic tax obligations.
One key tool is the automatic exchange of information amongst tax authorities on financial assets held offshore, under the Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI Standard), which was developed by the OECD, working with G20 countries, and adopted by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). The AEOI Standard provides for the annual automatic exchange of information on Financial Accounts held by taxpayers outside their jurisdiction of tax residence, with the tax authority in the jurisdiction in which they are tax resident. In certain cases, this includes where Financial Accounts are held through Entities that the taxpayers control. This helps ensure that tax evaders are at greater risk than ever of being caught and deters potential tax evaders from failing to properly declare their financial activities.
Information exchange commenced under the AEOI Standard in 2017. By 2024, tax authorities from 111 jurisdictions have automatically exchanged information on financial accounts. Information on over 134 million financial accounts was exchanged automatically in 2023, covering total assets of almost EUR 12 trillion. More jurisdictions are also expected to implement the AEOI Standard in the coming years. This move to AEOI has had a dramatic impact on taxpayer behaviour and the ability of tax authorities to ensure tax compliance. So far, over EUR 130 billion in tax, interest and penalties have been raised by jurisdictions through voluntary disclosure programmes and other offshore tax compliance initiatives with the vast majority linked to the commitments made to implement the AEOI Standard. Furthermore, research has shown that financial investments held in international financial centres have decreased by 20% over the same time, which is linked to the implementation of the AEOI Standard.1
This change is the result of significant investments by governments across the world, all of which introduced legislation to require Reporting Financial Institutions to conduct the detailed due diligence and reporting rules to ensure the Financial Account information is reported, put in place international exchange agreements to exchange the information and implemented technical and operational solutions to deliver the exchanges in practice. In addition, legal, operational and technical frameworks have been needed to keep the information confidential and secure. Investments have also been needed by the financial sector to ensure compliance.
To realise the full benefits of the AEOI Standard, including maximising the deterrent effect and the usability of the information exchanged, it must be ensured that the AEOI Standard is implemented effectively and on a widespread basis. This is why the G20 called on the Global Forum to monitor and review its global implementation. This started by seeking to ensure all relevant jurisdictions commit to implement the AEOI Standard (i.e. all Global Forum members, except developing countries that do not host a financial centre) and moved to peer reviews of the legal frameworks in place and the effectiveness of implementation in practice, including the frameworks in place to ensure compliance by Reporting Financial Institutions.
Having commenced the publication of annual monitoring reports in 2017, in 2020 the Global Forum began publishing the results of its peer reviews of the legal frameworks implementing the AEOI Standard starting with the first 99 jurisdictions to commit to commence exchanging under the AEOI Standard and to commence exchanges in 2017 or 2018. The results have been updated each year thereafter, to include later jurisdictions to commit to implement the AEOI Standard and the results of reassessments, where changes have been made to the legal frameworks implementing the AEOI Standard, including to address recommendations made. In 2022, the Global Forum published the results of its initial peer reviews of the effectiveness in practice of the implementation of the AEOI Standard, including ratings, for the first 99 jurisdictions.2 An update was subsequently published in 2023, again to reflect the results for jurisdictions that subsequently committed to implement the AEOI Standard and the results of reassessments of the AEOI legal frameworks. This 2024 report provides a further such update.
This update contains the latest situation on the assessments of the legal frameworks implementing the AEOI Standard, reflecting the results for a total of 114 jurisdictions, including an additional five jurisdictions since 2023 and reassessments in relation to 46 jurisdictions. These include reassessments carried out as the result of specific targeted checks made in the context of the ongoing second round of AEOI effectiveness reviews that the Global Forum is conducting, which are focused on the completeness of the compliance and enforcement frameworks jurisdictions have in place in their domestic legal frameworks. This update shows that, amongst the 114 jurisdictions assessed, 108 or 95% have in place domestic and international legal frameworks that are fully or substantially complete and that have been determined to be “In Place” or “In Place But Needs Improvement.” Notwithstanding that, three jurisdictions still have fundamental deficiencies in their legal frameworks, and three jurisdictions have no legal frameworks in place at all, leading to six jurisdictions being issued an overall determination of “Not In Place.” These jurisdictions should therefore urgently address the issues identified to deliver an effective AEOI Standard based on a level playing field for governments and business.
This update also sets out the latest results of the initial peer reviews of the effectiveness of the implementation of the AEOI Standard in practice, for a total of 104 jurisdictions, which includes an additional three jurisdictions since 2023. The update shows that, amongst the 104 jurisdictions assessed, 67 of jurisdictions are rated as “On Track” with their implementation. This includes implementing administrative compliance frameworks that appear to be on track to effectively ensure compliance by Reporting Financial Institutions and ensuring the smooth operation of the exchanges in practice. Notwithstanding that, there is also clearly more to do to ensure the effectiveness of the AEOI Standard in practice, including to ensure the completeness and effectiveness of the administrative compliance frameworks in place to ensure compliance with the AEOI Standard.
To retain this focus, the Global Forum put in place a framework for a second round of peer reviews in relation to the effective implementation of the AEOI Standard. These commenced in 2023 and are designed to obtain a deeper level of comfort that jurisdictions are implementing the AEOI Standard effectively, including onsite visits by Assessment Teams where key stakeholders from the public and private sectors are met.
In this regard the Global Forum has extended the period within which it will conduct the second round of AEOI effectiveness reviews. While it was intended that the review of the effectiveness of the implementation of the AEOI Standard would be fully completed in relation to the first 99 jurisdictions to implement the AEOI Standard within three years of the conclusion of the initial effectiveness reviews, the Global Forum has allowed for an additional year for the relevant processes. This is to support the effective and sustainable implementation of the AEOI Standard, including by continuing to disseminate the best practices observed and to ensure that the peer review process can best assess the implementation of the AEOI Standard.
This report is structured as follows:
Chapter 1 provides the latest results of the Global Forum’s monitoring and peer review processes in relation to the AEOI Standard.
Chapter 2 sets out the methodologies for the Global Forum’s peer reviews, including of the AEOI legal frameworks and the initial reviews of the effectiveness of the implementation of the AEOI Standard in practice. It also provides details of the in-depth effectiveness reviews being conducted under the second round of AEOI effectiveness reviews.
Chapter 3 contains the jurisdiction-specific peer review reports completed and updated since the publication of the 2023 AEOI Review Report, including the analysis, findings and recommendations.
Annex A provides information on the exchange agreements the jurisdictions that have been newly assessed on their legal frameworks implementing the AEOI Standard have in place to exchange information under the AEOI Standard.
Annex B contains the AEOI Terms of Reference, which provides the basis for the AEOI reviews.
The information in this report is up to date as of 25 November 2024. Updates are available on the Global Forum website (https://www.oecd.org/tax/transparency) and the relevant communication channels that each jurisdiction has in place domestically.