The 120 members of the OECD Global Forum on Tax and Exchange of Information for Tax Purposes (‘Global Forum’), should not make the mistake of assuming that because the OECD’s Progress Report to the G20 Finance Ministers and Central Bank Governors (‘G20’) was not as widely publicised as the group’s endorsement of the OECD’s Action Plan on Base Erosion and Profits Shifting (BEPS),important pronouncements on the future of the Global Forum’s work did not feature in the G20’s final communiqué.
Here’s what they said:
1. “We fully endorse the OECD proposal for a truly global model for multilateral and bilateral automatic exchange of information. We are committed to automatic exchange of information as the new, global standard and we fully support the OECD work with G20 countries aimed at setting such a new single global standard for automatic exchange of information.”
COMMENT: No surprise here; except perhaps to the Global Forum who for almost five years have been working on implementing the ‘on request’ standard through the conclusion of almost 800 bilateral tax information exchange agreements (TIEAs); as well as a number of tax treaties. This after a similar declaration made by the G20 at the end of their London Summit of the group’s endorsement of the OECD proposal that this should be the new ‘global’ standard.
To be fair members of the Global Forum should not be surprised by the modus operandi of the OECD in these matters. Of course one might have thought that with the existence of a re-constituted Global Forum , of which the OECD serves as Secretariat the OECD would have at least canvassed the views of the Global Forum on this new direction so that their report to the G20 would reflect their shared intent (or otherwise) on the move this new standard.
This lack of consultation by the OECD suggests that the role of the Global Forum is merely that of standard taker regardless of the characterisation of relationship between the two bodies. More importantly, it reinforces the widely held view that the OECD remains uninterested in the views of the non-G20 members of the Global Forum; and is content to rely on the G20 as the ‘enforcer’ of its global tax policy-making.
2. “We ask the OECD to prepare a progress report by our next meeting, including a timeline for completing this work in 2014. We call on all jurisdictions to commit to implement this standard. We are committed to making automatic exchange of information attainable by all countries, including low-income countries, and will seek to provide capacity building support for them.”
COMMENT: The aggressive time-frame for the OECD to complete work on automatic exchange of information (AIE) suggests that the plan is already at an advanced stage; and should confirm that the ‘on request’ standard was but an ‘interim’ one until the OECD could gain G20 endorsement of their ultimate ambition -universal adoption of the AIE standard using their Multilateral Convention on Mutual Assistance in Tax Matters. No doubt the success of the OECD/G20 partnership in compelling acceptance of the OECD’s model TIEA by the Global Forum has provided impetus for the move to the OECD’s ‘end game’.
3. “We call on all countries to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters without further delay. We look forward to the practical and full implementation of the new standard on a global scale.”
COMMENT: Except for the more insistent tone, this should not be a surprise to the Global Forum. The OECD’s Report to the G8 meeting last month referenced a similar exhortation by the G20 made at the end of the April meeting of its Finance Ministers and Central Bank Governors:
“In view of the next G20 Summit, we also strongly encourage all jurisdictions to sign or express interest in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and call on the OECD to report on progress.
Signatories to the OECD Multilateral Convention are: Albania, Argentina, Australia, Austria, Belgium, Belize, Brazil, Canada, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Ghana, Greece, Guatemala, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, New Zealand, Nigeria, Norway, Poland, Portugal, Romania, Russian Federation, Saudia Arabia, Singapore, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, United Kingdom, and United States.
For the status of the Convention as of June 13, 2013 click here
4. “We are looking forward to the Global Forum establishing a mechanism to monitor and review the implementation of the global standard on automatic exchange of information.”
COMMENT : The G20 reinforces the view that the Global Forum has no say on the content or adoption of standards in the area transparency and tax information exchange; suggesting that by mere membership jurisdictions commit to the adoption and implementation of international tax rules crafted by the OECD and ratified by the G20. The clear mandate to the Global Forum is to ensure that its members are compliant. That the G20 members of the Global Forum are in the minority has little bearing on the matter.
(Prime Minister of Australia Kevin Rudd. Image: Zimbio)
5. “The Global Forum is to achieve the allocation of overall ratings regarding the effective implementation of information exchange upon request at its November meeting and report to us at our first meeting in 2014.”
COMMENT: This reinforces my view that by year end the OECD will have crafted a new blacklist of Global Forum members based on the Phase 2 Assessments which measures the ‘effectiveness’ of the practical implementation of the ‘on request’ standard.
In its April communigue the G20 had this to say:
“Moreover, we are looking forward to overall ratings to be allocated by year end to jurisdictions reviewed on their effective practice of information exchange and monitoring to be made on a continuous basis. In view of the next G20 Summit, we also strongly encourage all jurisdictions to sign or express interest in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and call on the OECD to report on progress.
Australia takes over as chair of the G20 in 2014 and Heads of Government Summit is to be held between November 15-16.
Full Communique of G20 Meeting released Saturday July 20,2013 here: Final_Communique_FM_July_ENG