More than 300 tax information sharing agreements were signed in 2009 by countries previously reluctant to open their affairs to international financial scrutiny, more than in any other year in the previous decade, according to the OECD.
The organisation said the statistic was just one of many that meant more progress was made last year in achieving “full effective exchange of information” than any other in its history.
Yesterday, at a press conference in Paris unveiling a progress report the OECD’s tax transparency initiative, Jeffrey Owens, tax policy director, reeled off a list of achievements from 2009.
These included:
• 19 countries moving from the OECD’s so-called ‘grey list’ to its ‘white list’.
• Several others enacting legislation – including Singapore, Hong Kong and Macau – that would allow them to meet tax information sharing commitments.
• And seven formerly non-cooperative tax havens and countries (Austria, Belgium, Luxembourg, Switzerland, Andorra, Liechtenstein and Monaco), endorsing OECD principles of information sharing after years of opposition.
However, Owens highlighted there was still much work to be done. He noted eight countries that have agreed to meet OECD standards had still not signed a single tax information sharing agreement (TIEA), a group that includes Belize and Vanuatu.
New initiative
It was announced at yesterday’s conference that the OECD is to embark on a phased review process of countries’ tax exchange systems as part of the next stage of its drive to stamp out tax evasion.
This “peer review process” will see jurisdictions assessed on their implementation of tax exchange systems.
The second phase will review the actual practice of these systems to ensure countries that have agreed to share information are doing so. It is planned that the first phase will be completed by June 2012 and the second by June 2014.
Bank secrecy declining
In his opening address, Owens noted that formerly secretive banks such as UBS – which last year agreed a settlement with the US tax authorities over allegations it helped wealthy US clients evade tax – were now publicly declaring their commitment to openness.
In the case of UBS, it has published a new code of ethics for employees and directors, which includes the lines: “UBS complies with all applicable laws and regulations regarding tax records and tax reporting and does not provide assistance to clients in acts aimed at breaching their fiscal obligations.”
Of the UBS move, Owens said: “If that’s not a sea change, then nothing is. What we are doing is having a genuine impact on the way banks do business.”
In a comment that may cause concern for the trust and estate planning industry, Owens singled out trusts and partnerships as structures that may be assisting in what the OECD calls “harmful tax practices” and promised more work would be done in tackling such practices.
And he said the bar would be raised on the current minimum level of activity that grants white list status as countries that have "substantially implemented" OECD standards.
Currently, jurisdictions must sign at least 12 of tax information sharing agreements to reach this. Owens said this requirements would be made more onerous and would involve more than simply signing further agreements.
