Offshore Company Formation- G20 Summit: An Update on the Move to Greater Transparency and International Cooperation in Tax Matters

The era  of bank secrecy is coming to an end

In London the G20 announced the end of bank secrecy; since then there has been unprecedented action to implement the OECD initiated and now globally endorsed standards of transparency and exchange of information in tax matters:

 Since April over 90 tax information exchange agreements have been signed and over 60 tax treaties negotiated or renegotiated to incorporate the standards; All major on and offshore centres have now endorsed the standards and those which had impediments to implementing them are in the process of removing them. I have updated the Progress Report I provided on 2nd April on an almost daily basis to reflect these ongoing developments (read the latest Progress Report) 

But the work is far from finished.  There are still some jurisdictions that committed long ago to implement the standards but have not delivered.  We must also ensure that an effective network of agreements is in place to deter, detect and pursue tax evaders. 

Moving forward on the London Summit mandates

The international community has called for a strengthening of the Global Forum, the development of a robust peer review process, the speeding up of the negotiation process and an engagement with developing countries.  When the Global Forum met in Mexico on 1-2 September it responded to this call for action by:

  -Expanding its membership and putting in place a transparent governance and financing structure with 10 of the 15 members of the Steering Group from G20 countries;

-Establishing a two-phase peer review process which will be universal and transparent;

-Endorsing a proposal for a multilateral Tax Information Exchange Agreement and  encouraging  the OECD to advance quickly in updating and opening up the joint OECD/Council of Europe Multilateral Convention for Administrative Assistance in Tax Matters, all of which will help speed up the negotiating process; and

-Noting that the OECD’s Development Assistance Committee and Centre for Tax Policy and Administration had initiated work to build up capacity in tax administrations in developing countries so that they can benefit from this new open environment.

-These decisions translate the G20 political support into actions which will have far reaching consequences for tax compliance around the world.

The need to move forward rapidly

The priority for the next six months is to advance quickly on the peer reviews and the monitoring of agreements. This will begin on 14 October when the Peer Review Group which was created in Mexico will have its first meeting. First results will be available early in 2010.  Work on countermeasures will continue and in January 2010 the OECD will host a high level meeting between tax and aid officials to identify the ways that developing countries can benefit from the more transparent environment, including the use of multilateral instruments.

Status reports in each of these areas will be made available to G20 Finance Ministers when they meet in St Andrews next November.

Further reading

- Moving Forward on the Global Standards of Transparency and Exchange of Information for Tax Purposes

- Latest Progress Report listing where jurisdictions stand in implementing the international standard.

- www.oecd.org/tax/evasion

- www.oecd.org/g20