In a surprise move, the OECD has published yesterday the full details of its Standard on Automatic Information Exchange (AIE) – much earlier than announced and expected.
The Tax Justice Network’s preliminary response provides some analysis of the new system. The report entitled “Catering to tax havens at the expense of developing countries“ can be downloaded here.
In their final version of the standard before implementation, the OECD has missed a golden opportunity to make a real dent in the fight against corruption and tax evasion across the globe.
Developing countries will find it especially difficult to implement the multilateral standard as it demands reciprocity. In other words they will only be able to access information if they themselves collect information and commit to send it to other countries. The earlier commitment by the OECD to provide assistance to developing countries wishing to receive support to implement these systems have vanished from the written documents.
As TJN has pointed out on numerous occasions (for example see here and here), this is unfair. There are not many Western European dictators stashing their ill gotten gains in African economies, but many many many examples of developing world corrupt elites moving their money offshore to tax havens or developed world economies. In order to be effective in the fight against illicit financial flows AIE needs to be accessible to developing countries as they build up the systems required to share their own information.
We hope that the OECD and its membership can be convinced to remedy this shortcoming and prepare a way for a truly multilateral AIE platform, that resists placing unnecessary obstacles in the way of developing countries interested to benefit from AIE.
Markus Meinzer commented on the recent OECD move:
“Yet again, the OECD has flunked an opportunity to rid the world of the curse of tax havenry. Faced with the possibility of creating a multilateral system for exchanging tax information between all countries, they have come forward with a set of proposals that offer non-reciprocal processes to tax havens, while requiring reciprocity from developing countries. This does not reflect well on an organisation whose membership includes so many of the world-leading tax havens. Much as a leopard cannot readily change its spots, the OECD also cannot readily drop its pro tax haven agenda, albeit that its bias lies hidden in the small print.”
Andres Knobel added:
“At first glance the OECD’s standard appears to make important provisions relating to non-reciprocity on exchange, for the creation of a multilateral competent authority agreement, and on definition of beneficial ownership, and on requirements for average monthly account balances, but in practice the standard retains loopholes affecting developing countries and tax havens and their clients will be able to find plenty of means of circumventing the standard.?”
Now read on the full preliminary analysis here.