The Global Forum on Transparency and Exchange of Information for Tax Purposes has released reports evaluating the tax systems in Belize, Finland, Iceland, Nauru, Poland, Portugal, Sweden and Turkey. In a further 4 reports, the Global Forum identifies the deficiencies in the tax systems of Belgium, the Cayman Islands, Guernsey and Singapore and makes recommendations to correct them.

The reports assess the jurisdictions’ effective commitment to the international standard and real progress in tax information exchange.

The Global Forum has also adopted two supplementary reports, for Costa Rica and United Kingdom. The report on Costa Rica notes that it can now move to Phase 2, proving that it does effectively exchange information.

The Global Forum has reviewed 96 jurisdictions. The Phase 1 reviews of almost all its members - evaluating whether they have the laws necessary to exchange information - have been completed. The Phase 2 reviews have been completed for 30 jurisdictions, four of which were stand-alone Phase 2 reviews. More than 50 Phase 2 reviews are expected to be completed by the end of 2013. They will rate each jurisdiction on the individual elements of the international standard of information exchange, awarding an overall rating - “compliant,” “largely compliant,” “partially compliant” and “non-compliant”.

“The first-stand alone Phase 2 reviews – reviewing both tax laws and their practical implementation – are an important step in the peer review process. The Global Forum has already done tremendous work in reviewing the legal framework of almost all its members. Now, the challenge is to see whether jurisdictions are able and willing to exchange information. When we issue the first set of ratings later this year we will know whether jurisdictions are complying with the international standard”, said the Chair of the Global Forum, Kosie Louw of South Africa.

THE PEER REVIEW REPORTS AT A GLANCE

Report on the legal framework and on the application of the legal and Regulatory Framework (Phase 2)

Belgium
The Phase 2 review shows that Belgium’s exchange of information practice is in line with the international standard for transparency and exchange of information for tax purposes. Belgium’s legal framework and its practical implementation ensure that ownership, accounting and bank information is available according to the standard. Belgium also has all the requisite access powers to obtain the requested information and an extensive network of exchange mechanism . Belgium should nevertheless update and develop its EOI network to ensure it has agreements (regardless of their form) for exchange of information to the standard with all relevant partners. Inputs received from Belgium’s exchange of information partners attest to the high quality responses provided by the Belgian authorities in a swift and timely manner. http://www.eoi-tax.org/jurisdictions/BE

Cayman Islands
This Phase 2 review demonstrates that there has been a successful practical implementation of the international standard for transparency and exchange of information in the Cayman Islands. Ownership and accounting information has been available in almost all cases where it has been requested. However, the lack of monitoring of ownership and accounting obligations may affect the availability of information for all entities. In addition, it may be difficult to enforce the availability of ownership information in the Cayman Islands in respect of bearer shares where this information is held by a custodian located abroad. In respect of access to information, the Cayman Islands has broad powers to gather relevant information and these have been successfully exercised to gather information for EOI purposes. The competent authority is well organised with adequate internal processes in place for handling EOI requests. Inputs received from the Cayman Islands’ exchange of information partners attest to the high quality responses provided by the Cayman Islands in a swift and timely manner. http://www.eoi-tax.org/jurisdictions/KY

Guernsey
The Phase 2 review of Guernsey shows that although Guernsey started receiving requests for information relatively recently, the authorities have gathered and exchanged the information requested quickly and are developing cooperative relationships with all relevant partners. It was also noted that Guernsey has enhanced its regulatory framework, ensuring the retention of reliable accounting information that includes underlying documentation for all entities. http://www.eoi-tax.org/jurisdictions/GG

Singapore
The Phase 2 review shows that Singapore’s exchange of information practice is in line with the international standard for transparency and exchange of information for tax purposes. Singapore’s legal framework and its practical implementation ensure that ownership, accounting and bank information is generally available to the standard. Singapore also has all the required access powers to obtain the requested information. These access powers, nevertheless, cannot be used in respect of all its EOI agreements. Singapore should therefore update and develop its EOI network to ensure it has agreements (regardless of their form) for exchange of information to the standard with all relevant partners. Singapore has in place appropriate organisational processes and resources to ensure effective exchange of information. This has been confirmed by its partners acknowledging Singapore as an important and reliable EOI partner. http://www.eoi-tax.org/jurisdictions/SG

Report on the legal framework and on its application (Phase 1 and 2)

Finland
This combined (Phase 1 and Phase 2) review shows that Finland’s legal and regulatory framework ensures that ownership, accounting and bank information in relation to all relevant entities is available and that the competent authority has broad powers to obtain the necessary information whenever required. Finland’s EOI partners have commented that Finland is a reliable, efficient and cooperative partner and the information received from Finland are of very high standard. In particular, the response times are fast and Finland managed to reply to almost all their requests within 90 days. http://www.eoi-tax.org/jurisdictions/FI

Iceland
This combined (Phase 1 and Phase 2) review shows that Iceland fully implements the international standard for transparency and exchange of information for tax purposes. Iceland’s legal framework ensures that ownership, accounting and bank information is available according to the standard. The Icelandic competent authority has direct access to most of the information necessary for exchange of information through the databases of the Icelandic tax administration. It also has broad powers to collect further information. Inputs received from Iceland’s exchange of information partners attest that the Icelandic authorities respond to requests very quickly with responses of high quality. http://www.eoi-tax.org/jurisdictions/IS

Sweden
The combined (Phase 1 and Phase 2) review shows that Sweden’s legal framework and exchange of information practice is fully in line with the international standard for transparency and exchange of information for tax purposes. Sweden’s legal framework and its practical implementation ensure that ownership, accounting and bank information is in all circumstances available according to the standard. Sweden also has appropriate access powers to obtain the requested information which are effectively used for EOI purposes. Sweden’s EOI network is extensive and covers all relevant partners . Sweden has in place appropriate organisational processes and resources to ensure effective exchange of information as has been confirmed by its partners praising Sweden as an excellent EOI partner. http://www.eoi-tax.org/jurisdictions/SE

Turkey
This combined (Phase 1 and Phase 2) review shows that Turkey has an extensive network of information exchange agreements covering about 90 jurisdictions and exchanges a large volume of information every year. It has also signed the amended Convention on Mutual Administrative Assistance in Tax Matters. Turkey has a good legal and regulatory framework to ensure availability of ownership, accounting and banking information, though mechanisms to identify owners of bearer shares are not sufficient. Turkish authorities have comprehensive powers to obtain information for tax purposes, however, legal basis under which they gather information for exchange of information purposes needs clarification. Further, the report recommends improvements to ensure more timely responses to information requests from treaty partners. http://www.eoi-tax.org/jurisdictions/TR

Reports on the legal framework (Phase 1)

Belize
The Phase 1 report of Belize found that the legal and regulatory framework of this jurisdiction is generally in place concerning the availability of ownership information and bank information. However, serious deficiencies were identified concerning information related to accounting information and underlying documentation, which is not available in respect of all entities. The Belizean competent authority has recently ensured that its competent authority has sufficient powers to access and exchange information that is requested by a treaty partner and Belize’s network of EOI agreements now covers a growing range of jurisdictions. Belize advances to its Phase 2 review, which is scheduled for the first half of 2014. http://www.eoi-tax.org/jurisdictions/BZ

Nauru
The Phase 1 review found that ownership, accounting and bank information is available in a number of instances in Nauru; however, some serious gaps were identified. Bearer shares /share warrants to bearer may be issued in Nauru and there are currently insufficient mechanisms in place to identify the owners of such shares/warrants in all cases. Identity and ownership information may not consistently be available in respect of all domestic trusts and foreign trusts with Nauruan trustees. Accounting requirements in Nauru do not meet the international standard. Nauru has no powers to obtain ownership, identity, accounting or bank information for tax purposes. Nauru has not yet entered into any instruments providing for exchange of information to the standard. The Global Forum recommends that Nauru not move to a Phase 2 Review until it has acted on the recommendations made in the report. Nauru will report back on the steps taken to address the recommendations made in this review within 6 months. http://www.eoi-tax.org/jurisdictions/NR

Poland
The legal and regulatory framework in Poland generally ensures that ownership, accounting and banking information is available for all relevant entities and arrangements. However, where an entity has issued bearer shares, the owners of these shares may not be identified in all cases. Uncertainties also exist regarding the availability of ownership information of foreign trusts managed by Polish residents. Poland has a large network for exchange of information comprising DTCs, TIEAs, the Multilateral Assistance Convention, and EU mechanisms, and its competent authority has broad powers to obtain the information necessary to comply with a request from any of the partner jurisdictions. Poland’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 Poland which is scheduled for the first half of 2014. http://www.eoi-tax.org/jurisdictions/PL

Portugal
Portugal’s legal framework generally ensures that ownership, accounting and bank information is available. A general concern pertaining to whether the mechanisms put in place by Portugal to identify holders of bearer shares may in practice ensure that identity information is timely available in all circumstances. Portugal also has sufficient access powers to obtain all information upon request by any of its EOI partners whenever required by its exchange of information partners. There is, however, a lack of exception to the prior notification requirement in Portuguese law when the competent authority seeks to obtain banking information of a family member or a person(s) otherwise related to a taxpayer under investigation. Portugal’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 Portugal which is scheduled for the first half of 2014. http://www.eoi-tax.org/jurisdictions/PT

Supplementary reports

Costa Rica
The supplementary report recognises that Costa Rica has taken a number of significant steps to respond to the recommendations of the Phase 1 report. Costa Rica has introduced legal amendments that now ensure that all relevant entities maintain accounting information. The restrictions connected with domestic tax interest and access to bank information have now been lifted. However, ownership and identity information is still not available in all cases and this element is still determined to be not in place. Costa Rica can now effectively exchange information with all its partner jurisdictions. Costa Rica’s treaty network has substantially expanded following its signature and ratification of the Multilateral Convention on Mutual Administrative Assistance. As a result of the progress made by Costa Rica, it will advance to its Phase 2 review which is scheduled for the second half of 2014.
http://www.eoi-tax.org/jurisdictions/CR

United Kingdom
The supplementary report assesses the improvements made by the United Kingdom in its legal framework and practical mechanisms since the adoption of its Combined report in September 2011. The United Kingdom has introduced new legal provisions and procedures empowering the HMRC to obtain information in all cases, even where the name of the taxpayer is not provided by the requesting jurisdiction. The report has recommended that the United Kingdom monitor the newly established procedures, so that exchange of information takes place in a timely manner in line with the international standard. http://www.eoi-tax.org/jurisdictions/GB

More information about the Global Forum:
Website of the Global Forum: www.oecd.org/tax/transparency;
Exchange of Information Portal: www.eoi-tax.org – Follow the latest news on exchange of information networks and peer reviews for all jurisdictions.

About the OECD: The OECD is the global economic policy forum. It provides analysis and advice to its 34 member governments and other countries worldwide, promoting better policies for better lives.
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