By Judith Ugwumadu | 22 July 2014
A new global standard to help governments across the world share information to fight tax fraud has been issued by the Organisation for Economic Co-operation and Development.
The Group of 20 leading economies tasked the OECD with developing a tool to help governments clamp down on corporate tax dodging. The final version of the Standard for Automatic Exchange of Financial Account Information in Tax Matters was published yesterday, following endorsement by G20 finance ministers in February.
OECD Secretary-General Angel Gurría said: ‘The G20 mandated the OECD to work with G20 and OECD countries and stakeholders toward the development of an ambitious information exchange model that would help governments fight tax fraud and tax evasion.
‘[The standard’s] launch moves us closer to a world in which tax cheats have nowhere left to hide.’
The standard allows governments to automatically exchange financial information (including balances, interest, dividends and sale proceeds) reported by institutions based in their jurisdictions. It covers accounts held by both individuals and entities, including trusts and foundations.
The new consolidated version of the standard includes commentary and guidance for implementation, detailed model agreement and standards for harmonised technical and information technology solutions, such as the formal and requirements for secure transmission of data.
A total of 65 countries and jurisdictions have already publicly committed to implementing the standard, while more are expected to commit to implement the standard in the run-up to late October meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes in Berlin.
However, the Christian Aid charity argued that the OECD’s move against tax dodging would not benefit poorer and developing countries.
Joseph Stead, senior economic adviser at the charity, said: ‘There is an estimated $9 trillion of developing country taxpayers assets held offshore, revenues from which should be a significant source of financing for development.
‘But thanks to the decisions of the OECD many developing countries are likely to have to wait much longer to be able to enforce their own tax systems.
‘While there are some things to welcome in [yesterday’s] announcement, it will be too easy for developing countries to be excluded. As well as the fact that admission to the multilateral process can be vetoed without reason by any country, there is no mechanism for allowing developing countries to opt out of the requirement to provide information temporarily until they have the capacity to do so.’
The OECD will formally present the standard to G20 finance ministers at their next meeting in Cairns, Australia, on September 20-21.
‘Our message will be clear and simple: the automatic exchange of information standard is ready for implementation,’ Gurria said.