Global Forum on Transparency and Exchange of Information for Tax Purposes
| Predecessor | 1996 G7 Lyon Summit: tackling harmful tax practices and tax havens |
|---|---|
| Formation | 2000 |
| Type | international economic treaty organization |
| Purpose | multilateral framework within which work in the area transparency and exchange of information has been carried out by both OECD and non-OECD economies |
Membership | 120 member jurisdictions and the European Union, with 12 observers |
Chair [1] | Kosie Louw |
Chair of PEER Review group | François d'Aubert |
Head of the Global Forum Secretariat | Monica Bhatia[2] |
Key people | Mike Rawstron (past Chair) |
Parent organization | OECD |
Budget | €3.9 million (2013) |
Revenue | fixed annual fee of €15,300 per member and a progressive fee determined by scale in accordance with jurisdictions’ Gross National Product.[1] |
Staff | 27[1] |
| Mission | "Implement the international standard through two phases of peer review process".[1] |
| Website |
www |
The Global Forum on Transparency and Exchange of Information for Tax Purposes consists of OECD countries and jurisdictions that agreed to implement tax related transparency and information exchange, founded in 2000, restructured in September 2009 including non-OECD economies.[3] It addresses tax evasion, tax havens, offshore financial centres, tax information exchange agreements, double taxation and money laundering. The forum works under the auspices of the OECD and G20. In 2000 it had published a blacklist of 35 taxhavens, but by 2009 the list had shrunk to zero. It has since focused on increasing the standard for information exchange.
Activities
The Forum promotes the implementation of two internationally agreed standards on exchange of information for tax purposes:
- Exchange of Information on Request (EOIR)[4] Members must only commit to implement information exchange on request, the lowest common denominator for information exchange, which is a weaker standard than:
- Automatic Exchange of Information (AEOI)[3]
It uses peer review to monitor that the exchange of information on request is implemented. As a prerequisite, countries have to pass relevant laws, which are then to be reviewed (Phase 1). Thereafter in Phase 2, the degree of implementation is graded into four categories from A to D.[4] Since 2009 it has divided tax havens into a "blacklist" of non-committers and a "graylist" (or "greylist") of non-implementers of the request-based "internationally agreed tax standard". The terms blacklist and graylist are not used by the Forum but by news services like Reuters,[5] the BBC[6] and the Congressional Research Service.[7]:6
Budget
The 2009 estimate of a budget was 2.9 million. It was raised by a flat fee of 15000 euros for each of the members plus a feee based on the overall GNP with an abatement of 450 USD/inhabitant.[8]
History
Precursors
In April 1998 an OECD report acknowledged that tax havens erode the tax base of other countries and undermine the fairness of tax systems, diminishing global welfare.[9] It noted that tax havens were expanding at an exponential rate. The report focused on tax havens in the Caribbean who were not OECD members, and the OECD was thus criticized for not addressing tax havens who were its members. A second report in 2000 included a blacklist of 35 secrecy jurisdictions - all outside the OECD - and a threat of defensive measures against them, with backing from the United States under the Clinton administration.
Creation (2000) and first years
In 2000, the Global Forum was created with 32 members. Efforts to move against tax evasion in tax havens were quickly "bogged down in arcane haggling", including by a working group between tax havens and the OECD set up at the suggestion of the Commonwealth. In the United States, the Heritage Foundation criticized the move as a European effort to limit competition among tax jurisdictions. The new U.S. administration of George Bush and his first treasury secretary Paul O'Neill stated in May 2001 that the OECD's efforts were "not in line with the administration's priorities". The OECD gave in and announced it had no intention to pursue "defensive measures" against tax havens.[10]:149–150, 160–162
After the September 11, 2001, attacks the United States wanted better cooperation from tax havens on terrorist financing, but was reluctant to tackle tax evasion forcefully. Since the two practices are very similar, the United States only asked the OECD to require tax havens to provide information on request under very narrow conditions, which became the OECD's model for information on tax exchange. As a result, for example Jersey, an important tax haven, provided information to the United States in only five or six cases over a period of seven years.[10]:167–168
Stepping-up of efforts after the financial crisis of 2007-08
The activities against tax havens were only expanded after the financial crisis of 2007-08. At the April 2009 G-20 London summit tax havens were divided into a "blacklist" of non-committers and a "graylist" of non-implementers, based on compliance with the request-based "internationally agreed tax standard".[11] The actual list included three categories:
- 40 countries and territories substantially implemented the standard
- 38 countries and territories committed to but had not yet substantially implemented the standard
- 4 countries had not committed to the standard.
The list of non-implementers initially included, among others, Austria, Belgium, Luxembourg and Switzerland. The list of non-committed included Costa Rica, Malaysia, the Philippines and Uruguay.[12] Within five days Costa Rica, Malaysia, the Philippines and Uruguay made "a full commitment to exchange information to the OECD standards" and were removed from the "blacklist" which was thus empty.[13] Panama was ‘white listed’ because it signed a tax information exchange agreement (TIEA) with France. The British Virgin Islands and the Cayman Islands were white listed by August 2009.[14] No G-20 country was on the greylist of non-implementers, prompting Luxembourg Prime Minister Jean-Claude Juncker to criticise it for failing to include various states of the USA which provide incorporation infrastructure indistinguishable from the tax havens on the G-20 blacklist.[15] Der Spiegel called the list "The World's Shortest Blacklist" and "the Fight against Tax Havens Is a Sham".[16]
At a meeting in Mexico in September 2009, the Global Forum was restructured and received its own Secretariat. The main decisions were:
- Agree on restructuring the OECD Global Forum to expand its membership and ensure its members participate on an equal footing;
- Agree on how to establish an in-depth peer review process to monitor and review progress made towards full and effective exchange of information; and
- Identify mechanisms to speed-up the negotiation and conclusion of agreements to exchange information and to enable developing countries to benefit from the new more cooperative tax environment.[8]
Expansion of exchange of information
In March 2010, international efforts were stepped up when the U.S. Congress passed the Foreign Account Tax Compliance Act (FATCA) which forces foreign financial firms to disclose their American clients. Also in 2010, the 1988 Convention on Mutual Administrative Assistance in Tax Matters was amended to include automated exchange of tax information, a key instrument in fighting tax evasion, and expanding it to developing countries.[17] In 2013, a working group was formed to promote the automated exchange of tax information.
In July 2014, the Forum published standards for Automatic Exchange of Financial Account Information.[18]
As of November 2015, more than 90 members have committed to go beyond Exchange of Information on Request and to implement automatic exchange of information. An international framework agreement, the Common Reporting Standard Multilateral Competent Authority Agreement (CRS MCAA), specifies the details of what information will be exchanged and when. As of October 2015, it has been signed by 74 jurisdictions. Since the agreement is a framework agreement, it only comes into effect for each signatory after it has confirmed that it has undertaken certain steps such as passing national legislation.[19] According to the Global Forum, "Work is currently underway to implement this Standard, with the first exchanges occurring on a very ambitious timeline of 2017 and 2018".[2]
Members and observers
Members
As of November 2015 members of the Global Forum are 128 tax jurisdictions and the European Union.[20]
Tax jurisdictions
Observers
As of November 2015 there are 15 observer intergovernmental organizations:[21]
- African Development Bank
- African Tax Administration Forum (ATAF)
- Asian Development Bank
- Caribbean Community (CARICOM)
- Centre de Rencontre des Administrations Fiscales (CREDAF)
- Commonwealth Secretariat
- European Bank for Reconstruction and Development
- European Investment Bank
- Inter-American Development Bank
- Inter-American Center of Tax Administrations (CIAT)
- International Monetary Fund
- International Finance Corporation
- United Nations
- World Bank Group
- World Customs Organisation
Compliance by country
The forum reviews compliance of its member tax jurisdictions separately for the two standards, the more limited exchange of information on request and the more comprehensive automated exchange of information.
More than 80 countries and territories were not (yet) members of the Global Forum as of November 2015 and are thus not included in the lists below. Notable non-members include Belarus and Serbia in Europe; Colombia, Ecuador, Peru and Venezuela in Latin America; Egypt, Ethiopia, Algeria and many smaller countries in Africa; as well as Iran, Myanmar, North Korea, Thailand and Vietnam in Asia. All important tax havens, however, are members of the Global Forum - the 30 countries topping the Financial Secrecy Index in 2013 were all members as of 2015.
Exchange of Information on Request
The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The peer reviews cover only the limited exchange of information on request.
2013 Ratings
At its meeting in Jakarta in November 2013, the Global Forum assigned the ratings for the first 50 jurisdictions that had completed their Phase 1 and Phase 2 reviews. The Phase 1 review found that 14 countries and territories had gaps in their legal framework and were not allowed to move to Phase 2 unless they improved their legal framework.[22]
The ten countries and territories that were at the top of the Financial Secrecy Index 2013, an index established by the NGO Tax Justice Network and that also takes into account the size of the transactions in a tax haven, were categorized as follows: Lebanons and Switzerland had not completed Phase 1. Luxembourg was listed as Category D, Jersey as Category C, and the Cayman Islands, Germany, Hong Kong, Singapore as well as the United States were listed as Category B. Japan was the only country classified as one of the ten major tax havens by the Tax Justice Network that was listed in Category A.
The following jurisdictions are not eligible to move to Phase 2 review until they act on recommendations to improve their legal and regulatory framework:
| Country/Region |
|---|
 Botswana |
 Brunei |
 Dominica |
 Guatemala |
 Lebanon |
 Liberia |
 Marshall Islands |
 Nauru |
 Niue |
 Panama |
 Switzerland |
 Trinidad and Tobago |
 United Arab Emirates |
 Vanuatu |
Among those countries that had created an adequate legal framework and thus had moved to Phase 2, four countries - including Luxembourg - were found to be non-compliant with their own legal framework (grade D). Two countries - Austria and Turkey - were only partially compliant (grade C).[22]
| Country/Region | Overall Rating |
|---|---|
 Australia | A - Compliant |
.svg.png){kind=small} Belgium | A - Compliant |
 Canada | A - Compliant |
 China | A - Compliant |
 Denmark | A - Compliant |
 Finland | A - Compliant |
 France | A - Compliant |
 Iceland | A - Compliant |
 India | A - Compliant |
 Ireland | A - Compliant |
 Isle of Man | A - Compliant |
 Japan | A - Compliant |
.svg.png){kind=small} Korea | A - Compliant |
 New Zealand | A - Compliant |
 Norway | A - Compliant |
 South Africa | A - Compliant |
 Spain | A - Compliant |
 Sweden | A - Compliant |
 Argentina | B - Largely Compliant |
 Bahamas | B - Largely Compliant |
 Bahrain | B - Largely Compliant |
 Bermuda | B - Largely Compliant |
 Brazil | B - Largely Compliant |
 Cayman Islands | B - Largely Compliant |
 Estonia | B - Largely Compliant |
 Germany | B - Largely Compliant |
 Greece | B - Largely Compliant |
 Guernsey | B - Largely Compliant |
 Hong Kong | B - Largely Compliant |
 Italy | B - Largely Compliant |
 Jamaica | B - Largely Compliant |
 Jersey | B - Largely Compliant |
 Macau | B - Largely Compliant |
 Malta | B - Largely Compliant |
 Mauritius | B - Largely Compliant |
 Monaco | B - Largely Compliant |
 Netherlands | B - Largely Compliant |
 Philippines | B - Largely Compliant |
 Qatar | B - Largely Compliant |
 San Marino | B - Largely Compliant |
 Singapore | B - Largely Compliant |
 Turks and Caicos Islands | B - Largely Compliant |
 United Kingdom | B - Largely Compliant |
 United States | B - Largely Compliant |
 Austria | C - Partially Compliant |
 Turkey | C - Partially Compliant |
 Cyprus | D - Non Compliant |
 Luxembourg | D - Non Compliant |
 Seychelles | D - Non Compliant |
 British Virgin Islands | D - Non Compliant |
2015 Ratings
As of October 31, 2015 the ratings were as follows:[23] 8 countries still had deficiencies in their legal framework. 25 countries, including Switzerland, had completed their legal framework (Phase 1 review), but had not yet had a Phase 2 review. Among the countries and territories that had passed a Phase 2 review, none was rated non-compliant (Grade D) any more. Nine countries were rated as only partially compliant (Grade C), still including Austria and Turkey.
The ten countries and territories that were at the top of the Financial Secrecy Index 2015, an index established by the NGO Tax Justice Network and that also takes into account the size of the transactions in a tax haven, were categorized as follows: Lebanon had not completed Phase 1. Switzerland and the UAE had completed Phase 1 and were awaiting Phase 2. Luxembourg and Jersey had moved up to Category B, along with the Cayman Islands, Germany, Hong Kong, Singapore as well as the United States. Bahrain, which had not been among the top ten tax havens in 2013, was also in Category B. Japan and Jersey had improved their transparency and were not any more among the ten most important tax havens, moving to number 12 and 16 respectively.
The following jurisdictions are not eligible to move to Phase 2 review until they act on recommendations to improve their legal and regulatory framework:
| Country/Region |
|---|
 Micronesia |
| Guatemala |
 Kazakhstan |
| Lebanon |
| Liberia |
| Nauru |
| Trinidad and Tobago |
| Vanuatu |
The following jurisdictions have completed the Phase 1 review, i.e. their legal framework had been reviewed and they were eligible to move to Phase 2:
The following countries and territories had passed a Phase 2 review:
| Country/Region | Overall Rating |
|---|---|
| Australia | A - Compliant |
| Belgium | A - Compliant |
| Canada | A - Compliant |
| China | A - Compliant |
 Colombia | A - Compliant |
| Denmark | A - Compliant |
| Finland | A - Compliant |
| France | A - Compliant |
| Iceland | A - Compliant |
| India | A - Compliant |
| Ireland | A - Compliant |
| Isle of Man | A - Compliant |
| Japan | A - Compliant |
| Korea | A - Compliant |
 Lithuania | A - Compliant |
 Mexico | A - Compliant |
| New Zealand | A - Compliant |
| Norway | A - Compliant |
 Slovenia | A - Compliant |
| South Africa | A - Compliant |
| Spain | A - Compliant |
| Sweden | A - Compliant |
| Argentina | B - Largely Compliant |
| Bahamas | B - Largely Compliant |
| Bahrain | B - Largely Compliant |
 Belize | B - Largely Compliant |
| Bermuda | B - Largely Compliant |
| Brazil | B - Largely Compliant |
| British Virgin Islands | D - Largely Compliant |
| Cayman Islands | B - Largely Compliant |
 Chile | B - Largely Compliant |
 Cook Islands | B - Largely Compliant |
| Cyprus | D - Largely Compliant |
 Czech Republic | D - Largely Compliant |
| Estonia | B - Largely Compliant |
| Germany | B - Largely Compliant |
| Greece | B - Largely Compliant |
 Grenada | B - Largely Compliant |
| Guernsey | B - Largely Compliant |
| Hong Kong | B - Largely Compliant |
 Hungary | B - Largely Compliant |
| Italy | B - Largely Compliant |
| Jamaica | B - Largely Compliant |
| Jersey | B - Largely Compliant |
 Latvia | B - Largely Compliant |
 Liechtenstein | B - Largely Compliant |
| Luxembourg | B - Largely Compliant |
| Macau | B - Largely Compliant |
| Malta | B - Largely Compliant |
| Mauritius | B - Largely Compliant |
| Monaco | B - Largely Compliant |
| Netherlands | B - Largely Compliant |
| Philippines | B - Largely Compliant |
 Poland | B - Largely Compliant |
 Portugal | B - Largely Compliant |
| Qatar | B - Largely Compliant |
 Russia | B - Largely Compliant |
 Saint Kitts and Nevis | B - Largely Compliant |
 Saint Vincent and the Grenadines | B - Largely Compliant |
| San Marino | B - Largely Compliant |
| Seychelles | B - Largely Compliant |
| Singapore | B - Largely Compliant |
 Slovak Republic | B - Largely Compliant |
| Turks and Caicos Islands | B - Largely Compliant |
| United Kingdom | B - Largely Compliant |
| United States | B - Largely Compliant |
 Uruguay | B - Largely Compliant |
| Austria | C - Partially Compliant |
 Costa Rica | C - Partially Compliant |
 Curacao | C - Partially Compliant |
 Indonesia | C - Partially Compliant |
 Israel | C - Partially Compliant |
 Saint Lucia | C -Partially Compliant |
 Samoa | C - Partially Compliant |
 Sint Maarten | C - Partially Compliant |
| Turkey | C - Partially Compliant |
Automated Exchange of Information
As of March 2015, more than 90 countries have committed in principle to the automated exchange of tax information.[24] More specifically, the first undertaking first exchanges by 2017 will be: Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, United Kingdom The ones undertaking first exchanges by 2018 will be: Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Marshall Islands, Macao (China), Malaysia, Mauritius, Monaco, New Zealand, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Sint Maarten, Switzerland, Turkey, United Arab Emirates, Uruguay
In the old situation, assessed at 2014, 50 countries had made a commitment (the list needs to be updated and completed):
| Country | Target Year for Implementation | Primary legislation | Secondary legislation |
|---|---|---|---|
| Mexico | 2017 | ||
| Hungary | 2017 | ||
| Monaco | 2017 | ||
| Czech Republic | 2017 | ||
| United Kingdom | 2017 | Yes | Yes |
| Germany | 2017 | ||
| Switzerland | 2018 | ||
 Ukraine | 2017 | ||
| Portugal | 2017 | ||
| Netherlands | 2017 | ||
| Italy | 2017 | Yes | |
| Iceland | 2017 | ||
| France | 2017 | ||
| Spain | 2017 | Yes | Yes |
| Norway | 2017 | ||
| Luxemburg | 2017 | ||
| Ireland | 2017 | Yes | |
| Denmark | 2017 | Yes | |
 South Korea | 2017 | Yes | Yes |
| Cyprus | 2017 | ||
| Sweden | 2017 | ||
| Colombia | 2017 | ||
 Belgium | 2017 | ||
| Greece | 2017 | ||
| Singapur | 2017 | ||
| Liechtenstein | 2017 | ||
| South Africa | 2017 | ||
| Mauritius | 2017 | ||
 Barbados | |||
| India | Yes | Yes | |
 Bulgaria | |||
 Serbia | 2017 | ||
| Poland | 2017 | ||
| Norway | 2017 | ||
| Finland | 2017 | ||
 Croatia | 2017 | ||
| Argentina | 2017 | ||
| San Marino | 2017 | ||
| Seychelles | |||
| Trinidad and Tobago | |||
 Greenland | |||
 Faroe Islands | 2017 | ||
| Guernsey | 2017 | ||
| Isle of Man | 2017 | ||
| Jersey | 2017 | ||
 Anguila | 2017 | ||
| Bermuda | 2017 | ||
 Gibraltar | 2017 | ||
| Cayman Islands | 2017 | ||
| Turks and Caicos | 2017 | ||
| British Virgin Islands | 2017 | ||
 Montserrat | 2017 | ||
| Austria | 2018 | Yes | |
 Aruba | 2018 |
As of November 2015, 41 countries have submitted specific commitments to implement legislation and other measures related to the automated exchange of tax information. No single tax haven has made specific commitments to the automated exchange of information so far. The following countries have passed primary legislation related to the automated exchange of tax information:[24]
| Country/Region |
|---|
| Austria |
| Denmark |
| India |
| Ireland |
| Italy |
| Japan |
| South Korea |
| Spain |
| United Kingdom |
For the automated exchange of information to be implemented secondary legislation is also necessary. India, Japan, South Korea, Spain and the UK are the only countries that have also passed secondary legislation until October 2015.[24] A peer review process on automated exchange of information, based on the existing peer review for information exchange on request, is in the process of being set up.
See also
- FATF blacklist
- List of offshore financial centres
- Financial Secrecy Index
- European Union withholding tax
References
- 1 2 3 4 "Tax Transparency 2013 Report on Progress" (PDF). Global Forum on Transparency and Exchange of Information for Tax Purposes. 2013. Archived from the original (PDF) on August 21, 2014. Retrieved 19 August 2014.
- 1 2 "About the Global Forum". GFTEITP. n.d. Retrieved 21 November 2015.
- 1 2 "About the Global Forum". GFTEITP. Retrieved 21 November 2015.
- 1 2 "Exchange of Information on Request". OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. n.d. Retrieved 7 May 2016.
- ↑ "Four countries on OECD tax haven blacklist". Reuters. 2 April 2009. Retrieved 7 May 2016.
- ↑ "OECD names and shames tax havens". BBC. 3 April 2009. Retrieved 7 May 2016.
- ↑ Jane G. Gravelle (15 January 2015). "Tax Havens: International Tax Avoidance and Evasion" (PDF). Congressional Research Service. p. 60. Retrieved 7 May 2016.
- 1 2 "Summary of Outcomes of the Meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes Held in Mexico on 1 - 2 September 2009" (PDF). The Global Forum on Transparency and Exchange of Information for Tax Purposes. p. 6. Retrieved 19 August 2014.
- ↑ Harmful Tax Competition: An Emerging Global Issue (PDF). OECD. 1998. p. 82.
- 1 2 Shaxson, Nicholas (2011). Treasure Islands - Uncovering the Damage of Offshore Banking and Tax Havens. Palgrave Macmillan. ISBN 978-0-230-34172-2.
- ↑ G20 declares door shut on tax havens, The Guardian, April 2, 2009
- ↑ "OECD List as per 2009-04-02" (PDF). Retrieved 2011-03-22.
- ↑ BBC (2009-04-07). "OECD removes tax havens from list". BBC News. Retrieved 2009-04-07.
- ↑ Crispian Balmer (14 August 2009). "British Virgin Islands, Cayman on tax "white list"". Reuters. Retrieved 8 May 2016.
- ↑ Clark, Andrew (2009-04-10). "Welcome to tax-dodge city, USA". London: The Guardian. Retrieved 2009-04-14.
- ↑ Alexander Neubacher (11 April 2009). "The World's Shortest Blacklist: Why the Fight against Tax Havens Is a Sham". Der Spiegel. Retrieved 7 May 2016.
- ↑ "Convention on Mutual Administrative Assistance in Tax Matters". OECD. n.d. Retrieved 21 November 2015.
- ↑ "Standard for Automatic Exchange of Financial Account Information in Tax Matters". OECD. 21 July 2014. doi:10.1787/9789264216525-en. Retrieved 7 May 2016.
- ↑ "Multilateral Competent Authority Agreement (MCAA)". GFTEITP. Retrieved 21 November 2015.
- ↑ "Global Forum Members". Global Forum on Transparency and Exchange of Information on Tax Purposes. Retrieved 20 November 2015.
- ↑ "Global Forum Observers". GFTEITP. Retrieved 20 November 2015.
- 1 2 Global Forum:2013 Annual Report
- ↑ "Summary of Compliance Ratings". GFTEITP. Retrieved 20 November 2015.
- 1 2 3 "Automatic Exchange Portal: Common Reporting Standard by Jurisdiction". GFTEITP. Retrieved 21 November 2015.