OECD meeting in Mexico over tax cooperation

Government representatives from nearly 100 countries are meeting in Mexico City on 1-2 September to discuss further measures to enhance the exchange of information for tax purposes.

The meeting of the Global Forum on Transparency and Exchange of Information will discuss steps in response to the increased pressure by the Group of 20 nations to adopt internationally agreed standards for the exchange of banking, ownership and other tax-related information.

Since the beginning of the financial crisis, leaders of the G20 have stepped up their efforts in combating tax evasion and identified the exchange of tax-relevant information as one of the means to this end. Following the G20 meeting in London in April 2009, the OECD Secretariat presented a report on the progress made by financial centres around the world in negotiating and signing bilateral tax information exchange agreements, originally developed by the Global Forum.

Over 40 out of a total of more than 100 such tax agreements have been signed since the beginning of the year. The government of the Cayman Islands signed its twelfth TIEA in August and Cayman was subsequently elevated to the White List of jurisdictions that have substantially implemented OECD tax information standards.

‘We have made more progress in the last three months than in the 10 years before that,’ said Angel Gurría, the OECD Secretary-General, in June.

However, some critics, such as the advocacy group Tax Justice Network, argue that TIEAs do not work because the exchange of information is not automatic and tax authorities need to know precisely what to look for when requesting information.

Although the introduction of automatic information exchange is currently not expected, the promotion of tax information exchange will not stop with efforts to encourage the signing of TIEAs.

The Global Forum’s new focus is to ensure that tax agreements have the desired effect and provide governments and tax authorities with the information they require.

One of the central points of the meeting will be a proposal to establish a robust peer review mechanism, designed to monitor and achieve full implementation of international standards.

Another issue in connection with TIEAs has been the time it takes to negotiate these bilateral agreements. The Global Forum will therefore debate options for speeding up the negotiating process, including the introduction of a multilateral tax information exchange instrument.

The meeting will also address a new governance structure for the Global Forum and discuss measures to increase the number of jurisdictions participating in it.

Both OECD and non-OECD countries collaborate in the Global Forum to improve transparency and establish effective exchange of information. The Global Forum publishes an annual evaluation of the legal and administrative frameworks for the exchange of information and transparency in tax matters in over 80 countries. The latest annual report ‘Tax Cooperation 2009: Towards a Level Playing Field – 2009 Assessment by the Global Forum on Transparency and Exchange of Information’ was released prior to the meeting on 31 August 2009.

The Forum will report the results of the meeting to the gathering of G20 finance ministers on 4-5 September in London and the summit of G20 heads of state and government on 23-24 September in Pittsburgh.