A new OECD report, A Step Change in Tax Transparency, prepared at the request of the G8 for the Lough Erne Summit, outlines four concrete steps needed to put in place a global, secure and cost effective model of automatic exchange of information. The report follows the G20 Finance Minister’s endorsement in April 2013 of automatic exchange of information for tax purposes as the expected new standard. It says because tax evasion is a global issue, the model needs to have worldwide reach to avoid merely relocating the problem elsewhere. The process also needs to be standardised to minimise costs for businesses and governments and to improve effectiveness.
The four steps are: (i) enacting broad framework legislation to facilitate the expansion of a country’s network of partner jurisdictions; (ii) selecting the legal basis for the exchange of information; (iii) adapting the scope of reporting and due diligence requirements and coordinating guidance, and (iv) developing common or compatible IT standards. The report also provides potential timeframes for each step and notes that much of this work is already underway at the OECD. It also stresses that more and more jurisdictions are joining the Convention on Mutual Administrative Assistance in Tax Matters, which provides a legal basis for automatic exchange of information and underlines the role of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, which has been mandated by the G20 to monitor implementation of the new standard.
Speaking ahead of the G8 Summit in Lough Erne, Northern Ireland, OECD Secretary-General Angel Gurría said: “I congratulate the G8 for putting its full force behind international efforts to bolster sustainable growth through global solutions to tax evasion and avoidance.”
“Tax systems must be fair and be seen to be fair. The OECD is helping countries work together to put an end to offshore tax evasion by delivering a secure and cost effective system of a single global standard for automatic exchange of information.”