Exchange of information

Background brief: The Convention on Mutual Administrative Assistance in Tax Matters and New Protocol


The Convention on Mutual Administrative Assistance in Tax Matters

The Convention on Mutual Administrative Assistance in Tax Matters (the Convention) is a multilateral agreement drawn up under the aegis of the OECD and the Council of Europe.  Its objective is to enable each Party to the Convention to combat international tax evasion and better enforce its national tax laws, while at the same time respecting the rights of taxpayers.


The Convention was opened for signature in 1988. The 54 countries that are members of either the Council of Europe or of the OECD or both may accede to it. The Convention is currently binding for the following 14 countries: Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, The Netherlands, Norway, Poland, Sweden, United Kingdom, United States and Ukraine. Canada, Germany and Spain have signed the Convention but not yet ratified it.


The scope of the Convention is broad as it covers a wide range of taxes and goes beyond exchange of information on request. It also provides for other forms of assistance such as: spontaneous exchanges of information, simultaneous examinations, performance of tax examinations abroad, service of documents, assistance in recovery of tax claims and measures of conservancy. The Convention also provides for automatic exchanges of information, but this form of assistance requires a preliminary agreement between the competent authorities of the Parties willing to provide each other information automatically.


The need to amend the Convention

The Convention was in many ways ahead of its time when it was drafted, and its value to effective tax administration has been recognised recently. However, as the Convention was drafted before the adoption of the internationally agreed standard on transparency and exchange of information, the assistance covered by the Convention is subject to limitations existing in domestic laws. In particular, the Convention does not require the exchange of bank information on request nor does it override any domestic tax interest requirement. 


The recent increased political attention on international tax evasion has led to a universal acceptance of the standard, and all jurisdictions surveyed by the Global Forum on Transparency and Exchange of Information for Tax Purposes are now committed to implement it. The G20, at its 2009 London Summit, stressed the importance of quickly implementing these commitments. It also requested proposals to make it easier for developing countries to secure the benefits of the new cooperative tax environment, including a multilateral approach for the exchange of information.


In line with the requests from the G20, an amending Protocol has been drafted and opened for signature.


Major features of the amending Protocol

The amending Protocol aligns the Convention to the internationally agreed standard on exchange of information for tax purposes in that it provides that bank secrecy and a domestic tax interest requirement should not prevent a country from exchanging information for tax purposes. In addition, the Convention contains several provisions which restrict the use of information exchanged under the Convention. These restrictions have been lifted and the Convention is now fully in line with the internationally agreed standard.


The amending Protocol also provides for the opening of the Convention to non-OECD and non-Council of Europe member States. Based on a decision of the Parties to the Convention, such States can also accede to the Convention. Other changes included in the Protocol deal with the relationship between the Convention and EU law instruments, and the level of detail which needs to be provided in a request for information.

Impact of amendments

The amendments to the Convention will hopefully encourage more countries to accede to it and transform the Convention into a very powerful instrument in the fight against offshore tax evasion. The opening of the Convention beyond OECD and Council of Europe membership may prove helpful in rapidly extending the benefits of the new cooperative tax environment to other countries, in particular emerging and developing ones.