Recent Developments in the Implementation of Transparency and Exchange of Information 1 Grace PEREZ-NAVARRO, Deputy Director, Centre for Tax Policy and Administration OECD

EXCHANGE OF INFORMATION: OLD TOPIC, NEW MOMENTUM PART I 2

International standard:  Exchange of information on request where it is “foreseeably relevant” to the administration and enforcement of the domestic laws of the requesting party.  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 confidentiality of information exchanged. 3

 From committments to actual implementation: a three step process  All 87 jurisdictions surveyed by the Global forum have now committed to the standards  More than 110 TIEAs signed, 70 in the past 6 months and 50 DTC revised or concluded including updated Article 26  Restructured Global Forum to establish robust peer review mechanism 4 Unprecedented progress

 1996 G7 Lyon Summit: tackling harmful tax practices and tax havens  1998: OECD report, which includes a definition of tax havens  2000: OECD List of tax havens  2002: Committments to implement the standards allow jurisdictions in a newly created Global Forum  Since 2006: Global Forum annual assessment 5 Background: History of the project

 « Liechtenstein » scandal in February 2008 raises the political profile  Franco-German initiative: two ministerial meetings (October 2008/June 2009)  G7 Communiqué (Hokkaido in July 2008 – Finance ministers in Lecce June 2009)  G20 statements in Washington (15 November 2008), London (2 April 2009) and Pittsburgh (24-25 September 2009) 6 Background: New political impetus

 On 2 April the G20 agreed: “to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information” 7 Background: New political impetus

 In conjunction with G20 summit OECD Secretariat issued a Progress Report identifying:  Jurisdictions currently considered to have substantially implemented the OECD standard by having concluded at least 12 agreements to the standard;  Jurisdictions which committed but have not yet substantially implemented the OECD standard; and  Jurisdictions which have not yet committed to the OECD standard  Progress Report is updated continuously 8 OECD progress report

9 The progress report

 All 87 jurisdictions surveyed by Global Forum have committed to the standards  More than 110 TIEAs signed, 70 in the past 6 months and 50 DTC revised or concluded including updated Article 26  12 jurisdictions have substantially implemented the standards since 2 April: Aruba, Austria, Belgium, Bermuda, British Virgin Islands, Bahrain, Cayman Islands, Luxembourg, Monaco, Netherland Antilles, San Marino, Switzerland  Others are progessing. 10 Progress reported

 Mexico 1-2 September, more than 70 delegations agree to:  Restructure the OECD Global Forum to expand its membership and ensure its members participate on an equal footing  Establish an in-depth peer review process to monitor and review progress made towards full and effective exchange of information  Identify mechanisms to speed-up the negotiation and conclusion of agreements to exchange information and to enable developing countries to benefit from the new, more cooperative tax environment. 11 Looking forward: Restructuring the Global Forum

 Global Forum: Part II program entirely financed by its members  All members on equal footing  Initial 3 year mandate – to be reviewed after 2 years  Work guided by:  Steering Group – Australia, Bermuda, Brazil, Cayman Islands, China, Germany, South Africa, Switzerland, UK, US  Peer Review Group – 30 members, chaired by France (India, Japan, Jersey, Singapore are Vice-Chairs) 12 Restructuring

 All OECD, G20 and other jurisdictions covered by 2009 Assessment invited as members  Other jurisdictions will be invited to participate with possibility of becoming members following peer review if:  They commit to the standard  They accept to be reviewed  They pay the fee  Relevant international organisations invited as observers 13 Membership

 Moving from negotiation of agreements to actual implementation  Taking into account quality of agreements and economic significance of partners (not a numbers game)  Identify practical impediments to effective exchange of information through robust, transparent and fair peer review mechanism 14 Monitoring and peer review

 2 Phases:  Phase 1 will focus on legal framework  Phase 2 will focus on practical implementation  All jurisdictions covered by the 2009 assessment will be subject to peer review, as well as other relevant jurisdictions  Phase 1 & 2 reviews will begin early in PEER REVIEW

Multilateral TIEA negotiations  Multilateral negotiations but bilateral agreements  OECD has conducted 3 pilot projects – 2 in the Caribbean and 1 in the Pacific  Very successful so far  13 TIEAs signed in the Caribbean  16 TIEAs initialled so far in Pacific  Many more under negotiation 16 MULTILATERAL INITIATIVES

 COE/OECD Convention on Mutual Administrative Assistance in Tax Matters  Co-ordinating body met in September  Agreed to update text and open convention up for signature by non-OECD, non-COE states  OECD Multilateral TIEA  Developed by Global Forum in 2002  Differs from traditional multilateral instrument in that each party can identify which counter-parties it wishes to exchange with 17 MULTILATERAL INITIATIVES

 Peer Review Group met in October and will meet again in December to agree terms of reference and methodology for peer reviews  Regular meetings will then be held four times a year  Next Global Forum meeting to take place before June 2010  Report to G20 in November on multilateral agreement  Report in 2010 on how to benefit developing countries 18 Next steps

COLLECTION ASSISTANCE PART II 19

Collection Assistance  Article 27 OECD Model Tax Convention  Also adopted by UN  Included in OECD-COE Multilateral Convention  Slowly being incorporated into conventions  Concern over administrative burden  Concern over liability re: taxpayer’s rights 20