In early February 2014, the OECD Fiscal Council published the first two documents in support of the automatic exchange of information approved by G20 Finance Ministers and Central Bank Governors: the Model Competent Authority Agreement (CAA) and the Common Reporting Standard (CRS). The Global Forum published the AEOI Implementation Report 2019 to provide comprehensive and up-to-date information on the status of implementation of the AEOI standard. To ensure that financial institutions retain and disclose complete and accurate information, the standard specifies the due diligence procedures to be followed by financial institutions, based on existing anti-money laundering standards. Where due diligence is part of the standard, it is ensured that reporting financial institutions, regardless of where they are located, follow the same procedure to ensure consistency and reliability of the information collected and do not miss any reportable accounts or information on those accounts. The global implementation of the AEOI standard is essential to effectively combat tax evasion and ensure that jurisdictions are on an equal footing and do not provide specific benefits to taxpayers due to their non-participation. The task of building international consensus and creating solutions for tax transparency and exchange of information can only be considered complete when it is implemented by the international community and used to its advantage. The content of this website is intended for financial institutions, professional investors and their professional advisors. This is for information purposes only. Please read our terms and conditions and privacy policy before using the website.
All material is subject to strictly enforced copyright laws. THE TIEA aims to create an efficient exchange of information and improve the transparency of taxpayers` financial regulations/transactions for tax purposes. TieAs also provide an important impetus to achieving the objectives of the OECD Harmful Tax Practices Initiative. In this article, the author briefly traces the commendable work done by the OECD, the Global Forum, jurisdictional governments, financial institutions and other stakeholders over the past 11 years. The cross-border exchange of information under two international standards has proved revolutionary, but the author concludes with a proposal to ensure tangible benefits for all participating jurisdictions. Tax Information Exchange Agreements (TIEAs) are signed by two countries that agree to cooperate in tax matters through the exchange of information. Jersey has been exchanging information with other countries through TIEAs since 2007. TIEAs offer many benefits for the international financial community as well as specific benefits for the respective offshore financial jurisdiction and Australia. The CRS and the due diligence for financial account information shall specify the data to be exchanged, the financial institutions required to report, the different types of taxpayers and registered accounts, as well as the common due diligence obligations of financial institutions in identifying accounts.
Each TIEA describes the obligation between Australia and the non-OECD partner to assist each other by exchanging accurate tax information relevant to the management and enforcement of their respective national tax laws (civil and criminal). Information can only be provided upon request, i.e. one jurisdiction is not required to provide information that it has not requested from the other jurisdiction. The Robust Peer Review Process of the Global Forum enabled the rapid implementation of the EOIR standard. The Global Forum 10th Anniversary Report indicates that in 10 years, Global Forum members have received more than 250,000 requests for information and their annual number is increasing almost everywhere. EOIR alone has recovered nearly €7.5 billion in additional tax revenue. Countries and territories may also choose to use the wording of the articles of the Model Protocol if they wish to include the provisions on automatic and spontaneous exchange of information in a new TIEA. Offshore tax evasion undermines the fairness and integrity of australia`s tax system. Moreover, in the era of globalization, the willingness of other governments to share information is an important element in the enforcement of national tax laws. Tax Information Exchange Agreements (TIEAs) provide for the exchange of information upon request concerning a specific criminal or civil tax investigation or civil tax matters under investigation. [1] A TIEA model has been developed by the OECD Global Forum Working Group on Effective Exchange of Information. The agreement was born out of the OECD`s work to combat harmful tax practices.
The lack of an effective exchange of information is one of the key criteria for determining harmful tax practices. The agreement is the standard for an effective exchange of information in line with the OECD`s harmful tax practices initiative. The press release states that the Automatic Exchange of Information (AEOI) provides countries, including many developing countries, with a wealth of new information and allows their tax administrations to ensure that offshore accounts are properly reported. Countries will generate much-needed income as they move to a world where there is no longer a place to hide undisclosed wealth. A positive outcome of the 2008 financial crisis was the political consensus to end banking secrecy and list non-cooperative countries. The OECD has started publishing the black, grey and white lists of jurisdictions based on an assessment by the Global Forum against the international standard for the exchange of tax information. In 2009 and 2010, real work on tax transparency and exchange of information took shape. The exchange of information as a tool in the hands of tax administrations will be successful if all relevant jurisdictions provide the necessary information to ensure a level playing field and leave no place where undisclosed assets may be hidden.
Under the TIEA, Contracting Parties must have a legal and administrative framework to support their obligation to exchange information. For example, the ability to exchange information cannot be hindered by restrictions such as bank secrecy laws or a restriction on the ability to acquire and thus exchange information necessary for their national tax administration. This exchange of information on request was supplemented by an automatic procedure on 29 October 2014. [2] The automatic process should be based on a common reporting standard. The Organisation for Economic Co-operation and Development (OECD) has developed a procedure that allows certain offshore financial centres that are not members of the OECD to commit to eliminating harmful practices of tax avoidance and avoidance. These countries and territories can do this by signing Tax Information Exchange Agreements (TIEAs) with OECD Member States and related jurisdictions, collectively referred to as “participating partners”. Jurisdictions participating in the AEOI received information on 84 million accounts in 2019. However, how much information has been effectively analysed and used by beneficiary countries to identify undisclosed accounts? Is the use of information equally consistent between developed and developing countries? Courts will then be able to establish a bilateral competent authority agreement to establish the automatic exchange of information in accordance with the common reporting standard or the automatic exchange of country-by-country reports on a TIEA, in particular in cases where it is not (yet) possible to automatically exchange information under a relevant multilateral competent authority agreement.
The Global Forum will shortly start examining the effectiveness of the implementation of the AEOI in practice on the basis of the AEOI mandate. It will undoubtedly assess the quality of the information exchanged. However, it is not certain that the scope of the review will cover the use of the information received and the tangible benefits obtained by each country. In such a scenario, it will be a waste of taxpayers` money and all the efforts that have been made to collect and send intelligence to other countries without taking advantage of the information obtained. Download the information exchange agreement between Australia and Jersey (size 577kb) In addition, the FACTA and CRS models need to be better coordinated. The United States has not yet committed to the AEOI standard and has instead based its data-sharing relationships on FATCA. CRS and FATCA requirements differ in some respects, creating an additional compliance burden for governments and financial institutions. Because the United States cannot disclose information about accounts held by residents of all jurisdictions, these accounts cannot be disclosed for tax purposes in the country of residence. Convergence and reciprocity in both models are necessary.
As of May 2020, there were more than 4,000 active bilateral exchanges affecting more than 100 jurisdictions engaged in the CRS. Three annual automatic exchanges (2017, 2018 and 2019) have already taken place, and the next exchange between these jurisdictions is expected to take place at the end of September 2020. Jersey may also exchange tax information with other countries under double taxation treaties, the multilateral convention and with EU Member States under the EU Savings Tax Directive. .