OECD calls for more action to advance tax transparency

The Organization for Economic Cooperation (OECD) has published a report disclosing that a number of countries have yet to implement international tax transparency standards, such as the Exchange of Tax Information on Request, first agreed in 2009.

Angel Gurria secretary general of the OECD said that its standards on tax are robust and “need to be effectively implemented worldwide, by everyone, with no exceptions, so there’s nowhere left to hide.”

In the report, which was presented at the G20 finance ministers meeting in Washington DC on Thursday this week, Gurria proposes that the G20 should take additional steps to ensure that all countries and jurisdictions immediately endorse and implement all global standards devised by the OECD in time for the G20 Leaders Summit in 2017.

Currently, eight jurisdictions have been blocked from phase one of the peer review process under the Exchange of Information on Request for not having sufficient legal and regulatory frameworks in place, a further six are only now being accessed and 12 additional jurisdictions are rated as being partially compliant, according to the report.

Under the standard, the peer review process, which is conducted by the members of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, evaluates jurisdictions’ compliance with the international standard of transparency and exchange of information on request. After completion of both phases of the review process, each jurisdiction receives an overall rating.

The report also highlights a number of other jurisdictions that have refused to commit to the Common Reporting Standard (CRS) on automatic exchange of information (AEOI) scheduled to go into effect in 2017-18.

The CRS calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.

So far, 98 jurisdictions have signed up to the CRS, including the UK, which was an early adopter, and most recently the tiny islands of Nauru and Vanuatu. However, both Panama and Bahrain have not.

Gurria urges the G20 to demand that all jurisdictions commit to AEOI and honour existing commitments to implement AEOI by the agreed timelines. He also suggests that G20 members consider introducing “defensive measures against non-complaint jurisdictions.”