Tax Information Exchange Agreements-Part1

Global Forum on Transparency and Exchange of Information

The jurisdictions that have made commitments to transparency and efective exchange of information, both OECD and non‐OECD jurisdictions, have worked together in the Global Forum on Taxation to develop the international standards for transparency and efective exchange of information in tax maters. A major achievement of this collaboration is the development of the 2002 Model Agreement on Exchange of Information on Tax Maters. This model has been used as the basis for negotiations of more than 70 Tax Information Exchange Agreements (TIEAs).

To help achieve a level playing feld, jurisdictions were encouraged to fully implement the principles of transparency and exchange of information for tax purposes. Further, they were asked to review their policies in relation to specifc areas and report the outcome of their reviews at the next meeting of the Global Forum. Jurisdictions were also encouraged to negotiate agreements allowing for the exchange of information on tax maters.

Standards of Transparency and Exchange of Information

The OECD’s Global Forum on Transparency and Exchange of Information has developed standards of transparency and exchange of information that were adopted by the G20 Ministers of Finance at the meeting in Berlin in 2004 and by the UN Commitee of Experts on International Cooperation in Tax Maters in October 2008. They serve as a model for the vast majority of the 3600 bilateral tax conventions entered into by OECD and non OECD countries and may now be considered as the international norm for tax cooperation.

Standards of Transparency and Exchange of Information

• Exchange of information on request where it is “foreseeable relevant” to the administration and enforcement of the domestic laws of the treaty partner
• No restrictions on exchange caused by bank secrecy or domestic tax interest requirements
• Availability of reliable information and powers to obtain it
• Respect for taxpayers’ rights
• Strict confdentiality of information exchanged

Access to Bank Information for Tax Purposes

In parallel with the work on harmful tax practices, the OECD is examining the extent to which OECD member countries and observer countries have access to bank information for tax purposes. In 2000, Improving Access to Bank Information for Tax Purposes was published. The report set out an ideal standard of access to bank information, namely, that “all Member countries should permit access to bank information, directly or indirectly, for all tax purposes so that tax authorities can fully discharge their revenue raising responsibilities and engage in efective exchange of information with their treaty partners”. The OECD has been closely monitoring the progress made in implementing this standard and has issued two progress reports, in 2003 and 2007. With the recent announcements by Austria, Belgium, Luxembourg and Switzerland, all OECD countries now endorse this standard.

Tax Havens.....

In a report issued in 2000, the OECD identifed a number of jurisdictions which it categorised as tax havens according to criteria it had established. 6 of them (Bermuda, Cayman Islands, Cyprus, Malta, San Marino, The Bahamas) made pre‐commitments to the standard and so were not included in the list. Between 2000 and 2002 the OECD worked with these jurisdictions to secure their commitment to implement the OECD’s standards of transparency and exchange of information. In all, 38 jurisdictions made formal commitments to implement these principles, including a number of jurisdictions that had already commited to these standards prior to the issuance of the report.