At the London Summit in April 2009 the G20 announced the end of bank secrecy. While it may have been a little early to announce victory, there has been an unprecedented movement towards removing bank secrecy as a barrier to the exchange of information in tax matters:
Over 170 representatives from 70 jurisdictions and international organisations met on 1-2 September 2009 in Mexico and agreed on a new structure and mandate for the Global Forum:
But the work is far from finished. Eleven jurisdictions that were classified as tax havens in 2000 have one or zero international agreements which implemented the exchange of information standard (Belize, Liberia, Montserrat, Nauru, Panama, St. Lucia, Vanuatu have zero agreements to the standards). Some jurisdictions are negotiating TIEAs with parties with whom they have little or no economic ties. These issues will be addressed in the context of the Global Forum’s peer review and monitoring process.
Over the next six months the focus of this work will be on:
As this initiative proceeds, particular attention will be paid to engaging with developing countries since effective taxation systems:
The economic crisis has put significant pressure on aid budgets and reduced revenues in developing countries at a time when expenditure on social programmes and economic stimulus is most acute. It is vital that developing countries protect their revenue flows by countering offshore non-compliance and strengthening their administrative capacity.
Developing countries face a number of interconnected challenges in mobilising their domestic tax resources: the process of liberalising trade has reduced revenues from tariffs (tariffs typically account for 40 per cent plus of tax revenues in Africa); illicit flows, including tax evasion, to tax havens and other non-cooperative jurisdictions are undermining the revenue base; weak tax administrations fail to collect the revenues due.
The OECD’s Development Assistance Committee and Committee on Fiscal Affairs is exploring how OECD countries and the donor community can support and reinforce the work of Global Forum on Transparency and Exchange of Information by assisting developing countries:
For the latest progress report on the jurisdictions surveyed by the OECD Global Forum in implementing the internationally agreed tax standard, please visit http://www.oecd.org/tax/progressreport.
The views expressed in this article are those of the author and do not necessarily reflect those of the OECD or its Member countries.
Jeffrey Owens, Director of the OECD’s Centre for Tax Policy Administration