OECD Phase 2 Assessments To Start.

Next month the OECD Global Forum (OECD GF) will shift its attention to the Phase 2 Assessments of its members.

In this follow-up to the Phase 1 Assessments, the OECD GF will evaluate the effectiveness of its members practical implementation of the legal and regulatory systems supporting the globally endorsed standards on transparency and information exchange.

The first batch of Phase 2 Assessments will be conducted on the following countries by the end of this year:

British Virgin Islands, Bermuda, Austria, Cayman Islands, Hong Kong,  Guernsey, Liechtenstein, Cyrus, Malta, Luxembourg, India, Qatar, Monaco, San Marino, Switzerland Singapore, and the Bahamas.

While by the middle of next year these jurisdictions are due to be assessed:

Bahrain, Malaysia, Estonia, Samoa, Jamaica, Slovak republic, Philippines, Slovenia, Turks and Caicos, U.S Virgin Islands, United Arab Emirates, Vanuatu, Barbados, Indonesia, Brunei and Macao.

Phase 2 evaluations will use the same criteria employed in Phase 1, and will be based on the following 3 broad elements:

  • The availability of information, in particular accounting, banking and ownership information;
  • The access to information and powers to obtain it by the competent authorities in particular without a domestic tax interest requirement, and without hurdles which would unduly delay information exchange; and
  • Whether exchange of information mechanisms (which are generally bilateral agreements, such as tax treaties, tax information exchange agreements, multilateral conventions or unilateral domestic legislation) provide for effective exchange of information.

Unlike the case with Phase 1 however which only made judgements based on whether the criteria were ‘in place’, Phase 2 testing will apply four ratings of:

  • Compliant
  • Largely compliant
  • Partially compliant
  • Non-compliant

This is the real test of a country’s transparency and information exchange credentials. Failure to pass muster first time around will no doubt trigger another wave of G-20-led recrimination which OFCs can ill afford.

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3 thoughts on “OECD Phase 2 Assessments To Start.

  1. Dear Fran:Take note that some coutries have received Phase 2 combined with Phase 1, most of them members of the OECD

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    1. Yes Professor Alba you are right out of one hundred and seven OECD GF members about fifteen combined Phase 1 & 2 Assessments have been undertaken as of the end of last year with OECD countries including Australia, Canada, Denmark, France, Germany, Ireland, New Zealand, Norway, the United States, the United Kingdom, Italy, the Netherlands and Spain.
      Even more interesting is that the Isle of Man and Jersey underwent successful Phase 1&2 Assessments even though the number of actual requests dealt with by Jersey for example was but one. Certainly not enough to demonstrate effective practice. This is one of the issues with the process as certainly one would not expect to have credible Phase 2 assessments undertaken by countries whose acceptance of transparency was so recent that a body of ‘requests’ could not have possibly been accumulated to establish a pattern of compliance.
      Just another anomalous application of the OECD methodology.
      Now that the OECD GF will be almost exclusively focussed on Phase 2 Assessment for the next two years we will have to see how they resolve the inconsistencies.

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      1. Argentina will also undergo combined Phase II, with no convincing explanation (other than being menber of G.20)

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