Last month, the Organization for Economic Cooperation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) issued its 10th Anniversary Report. The Report contains a number of metrics that show the state of multinational progress over the past decade in implementing the international tax transparency and exchange of information standards:
- The Global Forum has increased from 89 to 158 member jurisdictions, including all OECD and G20 countries, all international financial centers (IFCs), and an increasing number of developing countries.
- Information critical for the administration and enforcement of taxes is available in three key domains:
- Banking Secrecy: Through the Global Forum’s exchange of information on request (EOIR) process, the Global Forum has reviewed 125 jurisdictions. “[P]ractically all of them have removed bank secrecy for the purpose of exchanging information.” Since 2009, the number of those jurisdictions with bank secrecy restrictions on the access to and exchange of banking information has decreased sharply from 70 to 3. In addition, “with 100 jurisdictions having committed to exchange information by 2018, the landscape of global tax transparency has changed dramatically, putting an end to the long-lasting era of banking secrecy for tax purposes.”
- Ownership and Bearer Shares: Approximately 90 percent of Global Forum members “do not permit the issuance of bearer shares, or have in place arrangements for identifying the owners.” More than 40 jurisdictions “40 jurisdictions have either abolished bearer shares, or introduced adequate custodial or non-custodial arrangements for identifying their owners since 2009.”
- Accounting Records: “[A] a majority of Global Forum members had deficiencies in the availability of accounting records, including 30 jurisdictions having received unsatisfactory assessments between 2010 and 2016.” Practically all of those members, however, have addressed those gaps, “and the focus has now shifted to ensuring that these provisions are effectively enforced and supervised.”
- The Convention on Mutual Administrative Assistance in Tax Matters – “the most advanced and comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance” – has 130 participants, consisting of all G20 and OECD countries, all major IFCs, and a growing number of developing countries. 120 of those participants have now put the Convention into force, which equates to nearly 8,000 bilateral agreements.
- The number of requests between jurisdictions for information has more than doubled between 2009 and 2018. In 2018, for example, there were 22,7217 such requests. In addition, the response times for such requests have improved overall. While percentages vary from one jurisdiction to another, approximately 90 percent of requests are answered within one year and only about 10 percent take more than one year.
- A critical development with regard to combating banking secrecy and detecting tax evasion has been the commencement of the Global Forum’s standard for automatic exchange of information (AEOI) on financial accounts of non-residents. With the AEOI process, In 2017, information exchanges on such accounts increased from more than 11 million financial accounts in 2017 to 47 million financial accounts in 2018. The latter figure reflected a total value of €9 trillion in the financial accounts. Moreover, the number of AEOI exchanges increased by 36 percent between 2018 and 2019.
The Report also states the Global Forum’s plans for future action, including:
- “[C]ontinue ensuring that all jurisdictions effectively participate in EOIR, do not fall back and continue advancing the transparency and exchange of information agenda as a matter of high priority”;
- “Delivering the effective implementation of the AEOI standard and the level playing field [as] a key objective;” and
- Continuing to expand its programs of technical assistance to developing nations.
N.B.: The Global Forum’s report reflects considerable progress since 2009 in improving tax transparency and increasing international cooperation on banking secrecy and tax evasion. What the Report does not state is that while the number of jurisdictions that provide banking secrecy and facilitate tax evasion has been decreasing, the remaining jurisdictions offering such services will undoubtedly require even greater efforts by the Global Forum and its members, over the next decade and beyond, to make tax transparency a truly global phenomenon.