International Financial Centres and Tax Cooperation in the

New Global Economy

Monica BhatiaSecretariat of the Global Forum on Transparency and Exchange of Information for Tax Purposes

Global Forum web site: www.oecd.org/tax/transparency

What’s at stake

NO LEVEL PLAYING FIELD

tax fraud and evasion

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lack of transparency and exchange of information

lax response to requests for information

G20 Declarations

G20 Leaders, London April 2009• The era of banking secrecy is over

• We stand ready to take agreed action against those jurisdictions which do not meet international standards in relation to tax transparency

G20 L d L C b M i J 2012

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G20 Leaders, Los Cabos, Mexico June 2012• We reiterate our commitment to strengthen transparency and

comprehensive exchange of information. We commend the progress made as reported by the Global Forum

G20 Finance Ministers, Mexico City November 2012• We commend…progress made towards transparency as reported by the

Global Forum whose membership has increased

The Global Forum on Transparency and Exchange of Information

• Restructured following G20 London Summit of 2009 which called for all jurisdictions to join together in tackling offshore tax evasion

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• Has grown from 91 to 116 jurisdictions in that time and continues to grow

• Broad membership includes OECD and non-OECD countries, developing countries, offshore financial centres. 12 International Organisations Observers

Global Forum Members

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116 members= the largest tax group in the world

An inclusive framework

• All members participate on equal footing

• All members undergo peer reviews against the internationally agreed standard for

d h f i f i

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transparency and exchange of information

• Terms of Reference agreed by consensus

• Representative Peer Review Group

• Consensus minus 1 for peer review decisions

• Open and transparent process

Steering Group and Peer Review GroupComposition of the Global Forum Steering Group

Australia (Chair) Bermuda (Vice-Chair) China (Vice-Chair) Germany (Vice-Chair) Brazil Cayman Islands France India Japan Jersey Kenya Singapore South Africa Spain Switzerland United Arab Emirates United Kingdom United States

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Composition of the Global Forum Peer Review GroupFrance (Chair)

India (Vice-Chair)

Japan (Vice-Chair)

Singapore (Vice-Chair)

Jersey (Vice-Chair)

Argentina Australia Brazil British Virgin Islands Cayman Islands

China Germany Ireland Isle of Man Italy

Denmark Korea Luxembourg Malaysia Malta

Mauritius Mexico St. Kitts & Nevis Samoa South Africa

Switzerland The Bahamas The Netherlands United Kingdom United States

Transparency and Exchange of Information

• Ensures tax is paid where it is due

• International standard based on OECD and UN M d l T C ti

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Model Tax Conventions

• Requires exchange of information on request

• Covers ownership, accounting and banking information

• Taxpayer confidentiality protected

The International Standard

• Exchange of information on request with safeguards to protect taxpayers’ rights and confidentiality.

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• Availability of information particularly accounting bank and ownership information

• Access to information and powers to obtain it

exchange

availability

INFORMATION

access

• Exchange of information on request where it is “foreseeably relevant” to the administration

d f f h d i l f h

International Standard

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and enforcement of the domestic laws of the treaty partner.

• No restrictions in terms of bank secrecy or domestic tax interest requirements

• Availability of reliable information and powers to obtain it.

International Standard

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• Respect for taxpayers’ rights.

• Strict confidentiality of information exchanged.

• Bilateral and Multilateral Treaties

Peer review process

• Two-phase peer review process: Review of each jurisdiction’s legal and regulatory framework (Phase 1) and practical implementation (Phase 2) of the standards on transparency and the exchange of information for tax purposes

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g p p

• So far 88 peer review reports (66 Phase 1 and 22 Combined reviews) have been completed and published by the Global Forum

• 16 Supplementary Reports already completed

• 14 jurisdictions still unable to move to Phase 2. Most IFCs successfully completed Phase 1.

Making a Difference

• Recommendations have resulted in legislative changes after most Phase 1 reviews

• 42 jurisdictions have improved availability of

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j p yaccounting and ownership information

• 17 jurisdictions have improved access to banking information

• More tax information agreements signed – over 800 in last three years

• Fifth Plenary Meeting of the Global Forum in Cape Town 26-27 October 2012 (Statement of Outcomes on GF website)

• Welcomed 10 new members (including several

Latest developments

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developing countries): Albania, Burkina Faso, Cameroon, Gabon, Kazakhstan, Latvia, Lithuania, Pakistan, Tunisia and Uganda.

• Discussed the move to Phase 2 reviews for many jurisdictions which will be the main focus of the Global Forum’s work in the coming year.

What’s next for Global ForumPhase 2 reviews-Eventually to lead to the rating of jurisdictions as Fully Compliant, Largely Compliant, Partially Compliant or Not Compliant.

Competent authority meeting – Next 2013

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Technical assistance – Coordination Platform

Report to G20 again in 2013Level of cooperation

Level of compliance

Main deficiencies: number of recommendations…

Other developments in exchange of informationg

• The OECD has been active in facilitating automatic exchange for the past 20 years– Created legal framework, developed technical standard on

format ,

developed guidance provides training etc

OECD work on automatic exchange

– developed guidance, provides training, etc.

• OECD Report published on 24 July 2012:“Automatic Exchange of Information: What it is, How it works, Benefits, What remains to be done”http://www.oecd.org/ctp/exchangeofinformation/AEOI_FINAL_with%20cover_WEB.pdf

Multilateral Convention on Mutual Administrative Assistance in Tax Matters

• Original Convention developed by OECD and Council of Europe

• Covers all forms of administrative co-operation

• Protocol amended Convention to:

– Bring it into line with the international standard on exchange of information

– Open it up to worldwide membership

• Entered into force 1 June 2011

• Signed by 42 countries

Work on Article 26 of OECD Model Tax Convention

• Article 26 sets out the standard for EOI on request

• Amended in 2012 to allow information to be used for non tax purposes when both Statesused for non-tax purposes when both States agree

• Commentary revised to cover group requests

• Optional language on time limits for requests

Global Forum

OECDG20

Always in motion, the future is…

FATF

Oslo Dialogue

MAC*

EU

FATCA

* Convention on Mutual Administrative Assistance in Tax Matters

Thank YouSecretariat to the Global Forum

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Email: gftaxcooperation@oecd.org

Tel: +33 1 4524 9726

Visit the EOI Portal at:www.eoi-tax.org