OECD applauds “game changer” forum on tax evasion

A massive jump in the number of countries trading information has pumped an extra €100bn into global tax revenues over the last decade – although some nations are still failing to join the fight against tax evasion.

According to the Organisation for Economic Cooperation and Development
(OECD), the group has achieved “unprecedented success” in diminishing offshore
tax evasion over the last 10 years thanks to new transparency rules designed to
bolster the exchange of information.

These rules include the exchange of information on request (EOIR) standards, which outlawed bank secrecy for the purpose of trading information, and the automatic exchange of information (AEOI) on offshore financial accounts introduced in 2013.

The Global Forum, which saw more 500 delegates gather in Paris last week to celebrate its 10^th anniversary, revealed the use of bilateral tax information exchange agreements had enabled more than 250,000 information requests during the past decade.

In 2018 alone, nearly 100 of its 158 member jurisdictions automatically
exchanged information on 47 million financial accounts, covering total assets
of $4.9trn.

There’s also been a 24%, or $410bn, reduction in foreign-owned bank
deposits in international financial centres between 2008 and 2019, totalling
$410bn, contributing to a fall in tax avoidance cases.

“The Global Forum has been a game-changer,” OECD Secretary-General Angel
Gurría said. “Thanks to international co‑operation, tax authorities now have
access to a huge trove of information that was previously beyond reach.

“Tax authorities are talking to each other and taxpayers are starting to
understand that there’s nowhere left to hide. The benefits to the tax system’s
fairness are enormous,” Gurría added.

In its 10^th anniversary report, the Global Forum revealed
nearly all of its members jurisdictions (125) have eliminated bank secrecy for
tax purposes, with nearly 70 jurisdictions changing their laws since 2009.

However, three countries still have some type of bank secrecy limitations in place, including Guatemala, Kazakhstan, and Trinidad and Tobago.

A number of countries are also lagging behind in properly implementing
the exchange of information standards to address tax evasion.

While 111 jurisdictions were rated as “compliant”, “largely compliant”
or “provisionally largely compliant” in effectively implementing the EOIR standard
as of November 2019, a total of 10 jurisdictions were only “partially compliant”.

These include Turkey, Vanuatu, Kazakhstan, Panama, Ghana, Anguilla, and
Botswana.

Two members, Guatemala and Trinidad and Tobago, were rated the poorest and
labelled as “non -compliant”.

A majority of Global Forum members also had deficiencies in the
availability of accounting records, with 30 jurisdictions receiving
unsatisfactory assessments between 2010 and 2016.

However, the gaps in the regulatory framework have been addressed by
practically all of them, the OECD stated.

On a more positive note, almost all members now either forbid bearer shares– previously a longstanding impediment to tax compliance efforts – or ensure the owners can be identified. Since 2017, members must also ensure transparency of the beneficial owners of legal entities, so these cannot be used to conceal ownership and evade tax.

There is still a lot of work ahead of us,” Zayda Manatta, head of the
Global Forum Secretariat, commented. “Members must continue efforts to ensure
full implementation of existing standards and address the tax transparency
challenges of an increasingly integrated and digitalised global economy.”