Exchange of information

The Convention on Mutual Administrative Assistance in Tax Matters - background


06/04/10 - The Convention on Mutual Administrative Assistance in Tax Matters (the Convention) is being amended to reflect new commitments against international tax evasion, as requested by the G20 at their 2009 London Summit.


The Convention is a multilateral agreement drawn up under the aegis of the OECD and of the Council of Europe. It provides a legal framework to facilitate international cooperation through multi-country exchanges of tax information and assistance.  Its objective is to enable each Party to the Convention to counter 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 sign it. The Convention is currently in force among the following 14 countries: Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, 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 only recently been recognized. 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 internationally agreed standard on transparency and exchange of information, which was developed by the OECD, instead provides for full exchange of information on request in all tax matters without regard to a domestic tax interest requirement or bank secrecy for tax purposes.


The recent heightened political attention on international tax evasion has led to a number of significant developments: the standard is now universally accepted. All jurisdictions surveyed by the Global Forum on Transparency and Exchange of Information for Tax Purposes are now committed to implement this standard. 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 a letter sent on 30 March 2009 to the OECD, Prime Minister Gordon Brown, as chair of the G20, indicated that “it would be helpful, in this regard, if an effective multilateral mechanism could be developed”.


In line with the requests from the G20, an amending Protocol has been drafted and will be opened for signature on 27-28 May 2010.

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/non-Council of Europe members. It inserts a provision into the Convention according to which, based on a decision by consensus of the Parties to the Convention, States which are not members of the OECD or of the Council of Europe can also adhere 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.

Entry into force of the Protocol


The Protocol will enter into force three months after the ratification by five Parties to the Convention. Equally, a Party which ratifies it after the Protocol has entered into force will be bound by it after three months from the ratification.


Once the amending Protocol enters into force, any Member State of the CoE or of the OECD, which is not yet a Party to the original Convention, will become a Party to the Convention as amended by the Protocol upon ratification, unless it explicitly expresses the will to adhere exclusively to the un-amended Convention. Non-OECD/CoE countries will only be able to adhere to the Convention as amended by the Protocol.

Impact of Amendments


The amendments to the Convention will encourage more countries to sign 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 CoE membership will help to rapidly extend the benefits of the new cooperative tax environment to other countries, in particular emerging and developing countries.