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The progress made by the Global Forum was commended by G20 leaders in their Communiqué issued at their Los Cabos Summit yesterday. They urged all countries to fully comply with the international standard and directed the Global Forum to quickly start examining the effectiveness of information exchange practices.
The recently adopted peer review reports on Cook Islands, Liberia, Lebanon, Grenada, Montserrat, Saint Lucia, and United Arab Emirates describe each jurisdictions rules for ensuring that information is available to the tax authorities, how such information can be accessed by the authorities and the mechanisms in place to exchange information with foreign tax authorities. The reviews of the People’s Republic of China and Greece consider in addition whether the jurisdictions exchange information effectively in practice. The reviews also identify deficiencies and make recommendations on how to address them.
The three supplementary reports – for Antigua and Barbuda, Estonia, and the Seychelles – assess the changes to legislation that these jurisdictions have made to address recommendations made by the Global Forum in their Phase 1 reviews.
Deficiencies identified in the reports include the lack of available ownership information as regards foreign trusts and bearer shares; incomplete accounting information for some forms of companies, trusts and partnerships, including foreign or international entities; and some limitations to access information, including bank information or information protected by professional secrecy.
In the case of Lebanon, Liberia and United Arab Emirates, the Global Forum considered that the deficiencies in their legal framework are sufficiently significant so as to prevent them from moving to the next stage of the review process, until these deficiencies are addressed.
The supplementary reviews show that the legal and regulatory framework for transparency and exchange of information of all the three jurisdictions has improved. As a result of their supplementary report, Antigua and Barbuda, and Seychelles, which were previously prevented from moving to Phase 2 of their review process can now do so.
Competent Authorities meet to improve exchange
The Global Forum also organised the first meeting of for the authorities directly engaged in international exchange of tax information in practice, in Madrid. The meeting brought together 186 delegates from 78 Global Forum member jurisdictions and 6 international organisations.
All participants reaffirmed their strong commitment to effective information exchange and examined the best ways to improve their relationships. It was clear from the meeting that the competent authorities present are all “upping their game”, putting more resources into their EOI operations and improving management systems and staff training. This will be reflected in improved response times and better quality responses to requests from treaty partners in the future.
Delegates discussed ways to further improve communication between competent authorities, building on existing initiatives aimed at improving cooperation and developing measures to overcome practical impediments to exchange of information.
Peer review reports at a glance:
Reports on the legal framework (Phase 1 & 2)
The People’s Republic of ChinA
The combined (Phase 1 and Phase 2) review confirms that China’s exchange of information in tax matters is consistent with the standard. China has developed a comprehensive network of bilateral agreements that provides for exchange of information in tax matters and the large majority of these agreements meets international standards. China’s legal and regulatory framework ensures the availability of ownership, accounting and banking information although some impediments are noted in relation to bearer shares. Chinese authorities have the powers necessary to gather this information and further exchange it with their partners.
Greece
The combined (Phase 1 and Phase 2) review confirms that Greece has a well developed legal and regulatory framework and extensive experience in exchanging information in tax. Greece has a comprehensive network of bilateral agreements that provide for exchange of information generally to the standard and has also signed the COE/OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Greek legal and regulatory framework generally ensures the availability of ownership, accounting and banking information although some impediments are noted in relation to bearer shares, foreign trusts with Greek trustees and foreign companies effectively managed in Greece under certain circumstances. Greek authorities have the necessary powers to gather information for tax purposes and further exchange it with their partners.
Reports on the legal framework (Phase 1)
Cook Islands
The legal and regulatory framework for transparency and exchange of information for tax purposes is largely in place in the Cook Islands with regard to the availability of ownership and bank information and authorities have the power to access such information. The Cook Islands has also built up a good network of EOI agreements allowing for exchange information to the standard with 16 relevant partners. The review identifies one main deficiency concerning the unavailability of accounting information for international entities and arrangements. The Cook Islands’ response to these recommendations, as well as the application of its legal framework in practice, will be considered in detail in the Phase 2 Peer Review, scheduled to commence in 2014.
Grenada
Grenada’s legal framework ensures the availability of ownership information for domestic and international companies but it must be improved with regard to foreign companies and trusts. Obligations to maintain reliable accounting records in compliance with the standard are not in place for all entities and arrangements. Grenada authorities have powers to collect information to respond to inbound request made under its tax information exchange agreements (TIEAs) Grenada should make sure that its authorities have the powers necessary to use its double taxation conventions as well. Grenada’s Phase 2 Peer Review is scheduled for the second half of 2013. In the meantime an intermediary report will be provided within 6 months of the adoption of the Phase 1 Peer review Report.
Lebanon
Lebanon is not a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes but was identified in 2010 as a jurisdiction that is relevant to the Global Forum’s work. Lebanon has a network of double tax conventions (DTCs) covering 33 jurisdictions; however, as a result of domestic restrictions to the access and exchange of bank information, none of these agreements meet the standard. Although Lebanese law ensures availability of ownership and accounting information in many instances, there are insufficient mechanisms to ensure the availability of information in relation to bearer shares and foreign trusts with Lebanese trustees in all circumstances. Since elements critical to effective exchange of information are not yet in place in Lebanon, the Global Forum recommends that it not move to a Phase 2 Review until it has acted on the Recommendations made. Lebanon has 12 months to provide a detailed written report to the Peer Review Group which will then review its position. It should also provide an intermediary report within 6 months of the adoption of this report.
Liberia
Liberia has signed exchange of information agreements with 16 jurisdictions, and continues to expand its treaty network. Its access powers and information exchange mechanisms are fully in place. However, ownership and identity information may not be available in relation to all entities, such as in respect of bearer shares and share warrants to bearer in relation to corporations and RBCs. Further, the availability of accounting records is not ensured for entities without a Liberian tax liability. As a number of elements which are crucial to achieving effective exchange of information are not in place, Liberia will not move to a Phase 2 Review until it has acted on the recommendations made in this review. Liberia will report back on the steps taken to address the recommendations made in this review within 6 months.
Montserrat
With respect to ownership and identity information, Montserrat’s laws generally provide for effective retention and maintenance of identity and ownership information for most companies and partnerships, in line with the terms of reference. The main deficiencies identified relate to the absence of clear obligations to maintain accounting books and records as well as underlying documents for at least 5 years for all relevant entities. Montserrat has signed 13 arrangements - 8 are in force and Montserrat has ratified 5 others. Montserrat’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority will be considered in detail in the Phase 2 Peer Review which is scheduled for the second half of 2013.
Saint Lucia
In respect of ownership and identity information, Saint Lucia’s laws generally provide for the effective retention and maintenance of identity and ownership information for most companies and partnerships, in line with the terms of reference. The main deficiencies identified relate to the absence of clear obligations to maintain reliable accounting records for all relevant entities. Saint Lucia’s exchange of information mechanisms allow for effective exchange of information but clarification is required in regards to a domestic tax interest and attorney-client privilege to ensure that all exchange of information mechanisms are in line with the international standard. To date Saint Lucia has a broad network of agreements in place covering 31 EOI partners comprising of 1 DTC and 20 TIEAs. It is also a member of the CARICOM treaty with 10 other Caribbean member states. Saint Lucia’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority will be considered in detail in the Phase 2 Peer Review of Saint Lucia, which is scheduled for the second half of 2013.
United Arab Emirate (UAE)
The United Arab Emirate (UAE) has an extensive network of bilateral agreements that provide for exchange of information in tax matters with 60 jurisdictions. The UAE’s legal and regulatory framework ensures the availability of banking information as well as ownership information for relevant entities, although improvements are needed for information on foreign companies, some types of partnerships and foreign trusts. Keeping of accounting records consistent with the international standard is ensured to a large extent; however, the peer review has identified gaps in relation to underlying documents by entities in the free zones. The UAE is yet to develop a legally sound and reliable mechanism authorizing its competent authority to obtain and provide information for the purposes of exchange of information. As such, the UAE has not been assessed as ready to move to Phase 2 evaluation. The UAE’s position will be reviewed in six months.
Supplementary reports
Antigua and Barbuda
Antigua and Barbuda’s supplementary report considers the legislative amendments to address the deficiencies identified in the August 2011 report. These amendments pertain to the recommendations made in respect of availability of accounting information; access to information; rights and safeguards of taxpayers and exchange of information mechanisms. The changes introduced by Antigua and Barbuda have resulted in an upgrade for (1) access to information; (2) rights and safeguards of taxpayers; and (3) exchange of information mechanism. It is encouraged to continue to review and update its legal and regulatory framework in line with the remaining recommendations. Any further developments in the legal and regulatory framework, as well as the application of the framework to the EOI practices of Antigua and Barbuda’s competent authority will be considered in the Phase 2 Peer Review which is scheduled for the second half of 2013.
Estonia
This supplementary report assesses Estonia’s legislative amendments to address the deficiencies identified in its April 2011 review. Estonia has removed the specificity requirements which restricted its competent authority’s powers to obtain and exchange banking information, as well as the requirement for its competent authority to obtain the consent of the taxpayer before transmitting information in certain cases. Estonia is encouraged to proceed with amendments to its legal and regulatory framework dealing with the remaining recommendations. Further developments and the application of Estonia’s legal and regulatory framework in practice will be considered in detail in its Phase 2 Peer Review, which is scheduled to commence in the first half of 2013.
The Seychelles
The supplementary report of the Seychelles describes the amendments it made to its legal and regulatory framework to address the recommendation made in the January 2011 Phase 1 Peer Review. Since 2010, the Seychelles has signed 9 TIEAs with European jurisdictions. All these agreements, thanks to the steps undertaken by the Seychelles in 2011 and in particular the clarifications made in relation to its authorities’ access to information powers, meet the international standard. It has also taken several steps to make sure that ownership and accounting information is available in accordance with the standard in respect of all entities. Considering the steps undertaken by the Seychelles to remedy all deficiencies highlighted in the phase 1 report, the phase 2 review of the Seychelles can now take place during the first half of 2013.
Global Forum is available at www.oecd.org/tax/transparency and www.eoi-tax.org
OECD – Paris, 20 June 2012
The recently adopted peer review reports on Cook Islands, Liberia, Lebanon, Grenada, Montserrat, Saint Lucia, and United Arab Emirates describe each jurisdictions rules for ensuring that information is available to the tax authorities, how such information can be accessed by the authorities and the mechanisms in place to exchange information with foreign tax authorities. The reviews of the People’s Republic of China and Greece consider in addition whether the jurisdictions exchange information effectively in practice. The reviews also identify deficiencies and make recommendations on how to address them.
The three supplementary reports – for Antigua and Barbuda, Estonia, and the Seychelles – assess the changes to legislation that these jurisdictions have made to address recommendations made by the Global Forum in their Phase 1 reviews.
Deficiencies identified in the reports include the lack of available ownership information as regards foreign trusts and bearer shares; incomplete accounting information for some forms of companies, trusts and partnerships, including foreign or international entities; and some limitations to access information, including bank information or information protected by professional secrecy.
In the case of Lebanon, Liberia and United Arab Emirates, the Global Forum considered that the deficiencies in their legal framework are sufficiently significant so as to prevent them from moving to the next stage of the review process, until these deficiencies are addressed.
The supplementary reviews show that the legal and regulatory framework for transparency and exchange of information of all the three jurisdictions has improved. As a result of their supplementary report, Antigua and Barbuda, and Seychelles, which were previously prevented from moving to Phase 2 of their review process can now do so.
Competent Authorities meet to improve exchange
The Global Forum also organised the first meeting of for the authorities directly engaged in international exchange of tax information in practice, in Madrid. The meeting brought together 186 delegates from 78 Global Forum member jurisdictions and 6 international organisations.
All participants reaffirmed their strong commitment to effective information exchange and examined the best ways to improve their relationships. It was clear from the meeting that the competent authorities present are all “upping their game”, putting more resources into their EOI operations and improving management systems and staff training. This will be reflected in improved response times and better quality responses to requests from treaty partners in the future.
Delegates discussed ways to further improve communication between competent authorities, building on existing initiatives aimed at improving cooperation and developing measures to overcome practical impediments to exchange of information.
Peer review reports at a glance:
Reports on the legal framework (Phase 1 & 2)
The People’s Republic of ChinA
The combined (Phase 1 and Phase 2) review confirms that China’s exchange of information in tax matters is consistent with the standard. China has developed a comprehensive network of bilateral agreements that provides for exchange of information in tax matters and the large majority of these agreements meets international standards. China’s legal and regulatory framework ensures the availability of ownership, accounting and banking information although some impediments are noted in relation to bearer shares. Chinese authorities have the powers necessary to gather this information and further exchange it with their partners.
Greece
The combined (Phase 1 and Phase 2) review confirms that Greece has a well developed legal and regulatory framework and extensive experience in exchanging information in tax. Greece has a comprehensive network of bilateral agreements that provide for exchange of information generally to the standard and has also signed the COE/OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Greek legal and regulatory framework generally ensures the availability of ownership, accounting and banking information although some impediments are noted in relation to bearer shares, foreign trusts with Greek trustees and foreign companies effectively managed in Greece under certain circumstances. Greek authorities have the necessary powers to gather information for tax purposes and further exchange it with their partners.
Reports on the legal framework (Phase 1)
Cook Islands
The legal and regulatory framework for transparency and exchange of information for tax purposes is largely in place in the Cook Islands with regard to the availability of ownership and bank information and authorities have the power to access such information. The Cook Islands has also built up a good network of EOI agreements allowing for exchange information to the standard with 16 relevant partners. The review identifies one main deficiency concerning the unavailability of accounting information for international entities and arrangements. The Cook Islands’ response to these recommendations, as well as the application of its legal framework in practice, will be considered in detail in the Phase 2 Peer Review, scheduled to commence in 2014.
Grenada
Grenada’s legal framework ensures the availability of ownership information for domestic and international companies but it must be improved with regard to foreign companies and trusts. Obligations to maintain reliable accounting records in compliance with the standard are not in place for all entities and arrangements. Grenada authorities have powers to collect information to respond to inbound request made under its tax information exchange agreements (TIEAs) Grenada should make sure that its authorities have the powers necessary to use its double taxation conventions as well. Grenada’s Phase 2 Peer Review is scheduled for the second half of 2013. In the meantime an intermediary report will be provided within 6 months of the adoption of the Phase 1 Peer review Report.
Lebanon
Lebanon is not a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes but was identified in 2010 as a jurisdiction that is relevant to the Global Forum’s work. Lebanon has a network of double tax conventions (DTCs) covering 33 jurisdictions; however, as a result of domestic restrictions to the access and exchange of bank information, none of these agreements meet the standard. Although Lebanese law ensures availability of ownership and accounting information in many instances, there are insufficient mechanisms to ensure the availability of information in relation to bearer shares and foreign trusts with Lebanese trustees in all circumstances. Since elements critical to effective exchange of information are not yet in place in Lebanon, the Global Forum recommends that it not move to a Phase 2 Review until it has acted on the Recommendations made. Lebanon has 12 months to provide a detailed written report to the Peer Review Group which will then review its position. It should also provide an intermediary report within 6 months of the adoption of this report.
Liberia
Liberia has signed exchange of information agreements with 16 jurisdictions, and continues to expand its treaty network. Its access powers and information exchange mechanisms are fully in place. However, ownership and identity information may not be available in relation to all entities, such as in respect of bearer shares and share warrants to bearer in relation to corporations and RBCs. Further, the availability of accounting records is not ensured for entities without a Liberian tax liability. As a number of elements which are crucial to achieving effective exchange of information are not in place, Liberia will not move to a Phase 2 Review until it has acted on the recommendations made in this review. Liberia will report back on the steps taken to address the recommendations made in this review within 6 months.
Montserrat
With respect to ownership and identity information, Montserrat’s laws generally provide for effective retention and maintenance of identity and ownership information for most companies and partnerships, in line with the terms of reference. The main deficiencies identified relate to the absence of clear obligations to maintain accounting books and records as well as underlying documents for at least 5 years for all relevant entities. Montserrat has signed 13 arrangements - 8 are in force and Montserrat has ratified 5 others. Montserrat’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority will be considered in detail in the Phase 2 Peer Review which is scheduled for the second half of 2013.
Saint Lucia
In respect of ownership and identity information, Saint Lucia’s laws generally provide for the effective retention and maintenance of identity and ownership information for most companies and partnerships, in line with the terms of reference. The main deficiencies identified relate to the absence of clear obligations to maintain reliable accounting records for all relevant entities. Saint Lucia’s exchange of information mechanisms allow for effective exchange of information but clarification is required in regards to a domestic tax interest and attorney-client privilege to ensure that all exchange of information mechanisms are in line with the international standard. To date Saint Lucia has a broad network of agreements in place covering 31 EOI partners comprising of 1 DTC and 20 TIEAs. It is also a member of the CARICOM treaty with 10 other Caribbean member states. Saint Lucia’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority will be considered in detail in the Phase 2 Peer Review of Saint Lucia, which is scheduled for the second half of 2013.
United Arab Emirate (UAE)
The United Arab Emirate (UAE) has an extensive network of bilateral agreements that provide for exchange of information in tax matters with 60 jurisdictions. The UAE’s legal and regulatory framework ensures the availability of banking information as well as ownership information for relevant entities, although improvements are needed for information on foreign companies, some types of partnerships and foreign trusts. Keeping of accounting records consistent with the international standard is ensured to a large extent; however, the peer review has identified gaps in relation to underlying documents by entities in the free zones. The UAE is yet to develop a legally sound and reliable mechanism authorizing its competent authority to obtain and provide information for the purposes of exchange of information. As such, the UAE has not been assessed as ready to move to Phase 2 evaluation. The UAE’s position will be reviewed in six months.
Supplementary reports
Antigua and Barbuda
Antigua and Barbuda’s supplementary report considers the legislative amendments to address the deficiencies identified in the August 2011 report. These amendments pertain to the recommendations made in respect of availability of accounting information; access to information; rights and safeguards of taxpayers and exchange of information mechanisms. The changes introduced by Antigua and Barbuda have resulted in an upgrade for (1) access to information; (2) rights and safeguards of taxpayers; and (3) exchange of information mechanism. It is encouraged to continue to review and update its legal and regulatory framework in line with the remaining recommendations. Any further developments in the legal and regulatory framework, as well as the application of the framework to the EOI practices of Antigua and Barbuda’s competent authority will be considered in the Phase 2 Peer Review which is scheduled for the second half of 2013.
Estonia
This supplementary report assesses Estonia’s legislative amendments to address the deficiencies identified in its April 2011 review. Estonia has removed the specificity requirements which restricted its competent authority’s powers to obtain and exchange banking information, as well as the requirement for its competent authority to obtain the consent of the taxpayer before transmitting information in certain cases. Estonia is encouraged to proceed with amendments to its legal and regulatory framework dealing with the remaining recommendations. Further developments and the application of Estonia’s legal and regulatory framework in practice will be considered in detail in its Phase 2 Peer Review, which is scheduled to commence in the first half of 2013.
The Seychelles
The supplementary report of the Seychelles describes the amendments it made to its legal and regulatory framework to address the recommendation made in the January 2011 Phase 1 Peer Review. Since 2010, the Seychelles has signed 9 TIEAs with European jurisdictions. All these agreements, thanks to the steps undertaken by the Seychelles in 2011 and in particular the clarifications made in relation to its authorities’ access to information powers, meet the international standard. It has also taken several steps to make sure that ownership and accounting information is available in accordance with the standard in respect of all entities. Considering the steps undertaken by the Seychelles to remedy all deficiencies highlighted in the phase 1 report, the phase 2 review of the Seychelles can now take place during the first half of 2013.
Global Forum is available at www.oecd.org/tax/transparency and www.eoi-tax.org
OECD – Paris, 20 June 2012
