OECD Applauds Global Progress On Data Exchange, Tax; Says Can Do Even Better

Tom Burroughes

20 June 2012

The Organisation for Economic Co-operation and Development praised jurisdictions for progress made in exchanging tax details and transparency but warned that some nations still need to move faster to fully comply with standards.

In comments issued at a gathering of Group of Twenty world leaders in Los Cabos, Mexico, Paris-based OECD, which has created a Global Forum on Transparency and Exchange of Information For Tax Purposes, said there has been “steady progress” towards a goal of increased transparency.

G20 nations such as the UK, Germany, France and the US have been putting pressure on financial centers, such as Switzerland, the Cayman Islands, Liechtenstein and Monaco, to become more co-operative in exchanging tax information as large, often heavily indebted nations battle to close massive budget shortfalls. Dozens of jurisdictions have signed tax information exchange agreements in line with OECD standards.

Despite such pressures, the supposed demise of offshore wealth in the face of such pressures has not happened. In a report by Boston Consulting Group, issued at the start of June, it said that offshore wealth - defined as assets booked in a country where the investor has no legal residence or tax domicile – rose to $7.8 trillion in 2011, up by 2.7 per cent from the previous year. The rate was faster than for the rise in global wealth as a whole.

A total of 79 published “peer reviews” have been issued by the OECD, and a further 17 such reviews have been launched. Phase One reviews look at the legal and regulatory framework of a jurisdiction, while the Phase Two report will look at how standards are enforced in practice.

“Overall, the quality of co-operation within the Global Forum has been very satisfactory, with new members joining and more jurisdictions and implementing policy and legislative changes that address the deficiencies identified in their reviews,” the report said.

However, the report added: “Nearly all peer reviews to date also show that improvements are needed, with 32 reports concluding that one or more essential for the exchange of information are not in place. Where these deficiencies are serious, the move to the Phase Two reviews have been put on hold.”

The OECD said there are 12 jurisdictions where all elements of exchange of information and other requirements are in place with no significant improvements needed in any of them .

A further 20 jurisdictions will need to improve one or two elements .

Eleven jurisdictions will have to improve three or four elements . Four jurisdictions will have to improve five elements .