Exchange on request, automatic exchange of financial account information and TRACE (Treaty Relief and Compliance Enhancement), spontaneous exchange of rulings, country-by-country reporting, voluntary disclosure programmes. Session by Achim Pross, Head, International Co-operation and Tax Administration Division, OECD Centre for Tax Policy and Administration and Monica Bhatia, Head, Secretariat of the Global Forum on Transparency and Exchange of Information for Tax Purposes, Meeting of the OECD Parliamentary Group on Tax, 19 Oct 2015

1. THE COMMON REPORTING
STANDARD
Achim Pross, OECD
Monica Bhatia, Global Forum
4th Meeting of the OECD
Parliamentary Group on Tax
19 October 2015, Paris

2. CONTEXT AND BACKGROUND
2

3. 3
AEOI the basics: what, how and why?
What?
• Systematic and
periodic
transmission of
“bulk” taxpayer
information by the
source country to
the residence
country.
• A core form of tax
cooperation as
provided for by
DTAs/the MAC.
How?
• Information on
various potential
categories obtained
by a tax authority
(e.g. dividends,
interest, royalties,
salaries, pensions,
changes in
residence, value
added tax refunds
etc.).
• Exchanged with tax
authorities of treaty
partners.
Why?
• The taxpayer’s
country of residence
can check its tax
records to verify
offshore
income/assets have
been accurately
reported.
• Deterrence impact
and voluntary
compliance.

4. 4
History of AEOI
‘81
Design of the
Paper Standard
Format
‘92
Standard
Magnetic
Format (SMF)
Adopted
‘03
Approval of EU
Savings Directive
(builds on SMF)
‘05
Standard
Transmission
Format (STF)
Adopted –
incorporated
into EUSD

5. 5
Recent developments
• Annual automatic information
reporting.
• Reporting by Foreign Financial
Institutions of accounts held for US
taxable persons.
• Wide definition of Financial
Institution and Financial Accounts.
• Standardised due diligence rules.
• Very often implemented through
IGAs backed by domestic
legislation.

6. 6
Recent developments
• Intergovernmental agreement
supported by domestic legislation.
• Reporting by Foreign and US Financial
Institutions.
• Due diligence rules more closely
building on anti-money laundering
procedures.
• Commitment to develop standardised
reporting arrangements.
FATCA: an intergovernmental approach

7. 7
Recent developments
Early
Adopters
Group
Calls for a new single international
standard - most effective and efficient
“We commit to establish the automatic exchange of information
between tax authorities as the new global standard …” Jul 13
“… we fully support the OECD work with G20 countries aimed at
presenting such a new single global standard for automatic
exchange of information by February 2014 and to finalizing technical
modalities of effective automatic exchange by mid-2014.” Sep 13
“We committed ourselves to early adoption of the Common
Reporting Standard, through joining the initiative first launched by
France, Germany, Italy, Spain and the UK in April 2013.” Mar 14

8. 8
Recent developments
“… we endorse the global Common Reporting
Standard for the automatic exchange of tax
information (AEOI) …”
“We will begin to exchange information
automatically with each other and with other
countries by 2017 or end-2018 …”
G20 Leaders,
Nov 2014
“We welcome financial centres’
commitments to do the same and
call on all to join us.”

9. 9
Recent developments
“The European Council invites the
Council to ensure that, with the adoption
of the Directive on Administrative
Cooperation by the end of 2014, EU law
is fully aligned with the new global
standard.” Mar 14
European Union
In Dec 14 the Directive implementing the
Standard was adopted, with exchanges
taking place from 2017.

10. • Implements the
new Standard.
• AEOI based on
Article 6 of the
Multilateral
Convention.
10
Recent developments
On 29 October 2014, 51 jurisdictions signed a multilateral competent
authority agreement to automatically exchange information.
Currently 61 signatories and more to follow

11. 11
Recent developments
In addition to the 52 signatories, over 40 more jurisdictions have
committed to the Global Forum that they will implement the
Standard to a timetable resulting in exchange in 2017 or 2018.

12. CRS BUILDING BLOCKS AND
COUNTRY IMPLEMENTATION
12

13. 13
CRS: the basic framework
Country BCountry A
Financial Institutions
located in A
Country A tax
administration
Country B tax
administration
Account Holders
resident in B
Domestic legal
obligations to report
information
Account Holders
resident in A
Financial Institutions
located in B
Agreements and systems
to exchange information
Systems/procedures to
obtain, process, use and
protect the information

14. 14
Building blocks
Domestic
legislation
International
agreements
Administrative and
IT capacity
Confidentiality and
data safeguards
The
Standard

15. 15
Domestic legislation
1. Needed to ensure the information to be exchanged is
reported by financial institutions
2. Must be consistent with the Standard
3. Must be in place in good time before the obligations
commence (e.g. in advance of 1 January 2017 for
exchange to a 2018 timetable).
4. Several approaches/policy options available

16. 16
International agreements
Multilateral
Competent
Authority
Agreement
Multilateral
Convention
Art. 26 DTC
TIEA
including
AEOI
Legal basis
• Permits automatic
exchange.
• Legal protections
(use of data)
Exchange details
• What is to be
exchanged
• Timing of
exchange
Bilateral
Competent
Authority
Agreements

17. A RELATED OECD PROJECT:
TRACE
17

18. • TRACE Implementation Package: a standardised system for
claiming withholding tax relief at source on portfolio
investments.
• Based on the same infrastructure and technical solutions as
CRS:
– FIs follow similar due diligence procedures to determine
tax residence of account holders
– FIs report annually similar information about account
holders to governments
– Same IT solutions (XML schema, transmission systems)
TRACE: what is it?

19. • Investors foregoing relief to which they are entitled (also possibly
impacted BEPS work on treaty abuse)
• Limited assurance for governments that investors are effectively
entitled to benefits obtained (e.g. fraudulent refund claims)
• Significant and unnecessary administrative burdens for all
stakeholders due to lack of standardisation and archaic paper based
procedures
Why TRACE?

20. EOI FOR TAX PURPOSES:
ROLE OF THE GLOBAL FORUM
20

21. 21
Commitments to implement
2017
2018
Technical assistance offered

22. 22
Mandate
Monitor
Support
Review
Ensure the delivery of the commitments to AEOI
All members to implement the Standard effectively
Peer review to ensure effective global implementation

23. Implementation support
23
Tools
Handbook,
FAQs,
multilateral
agreements
Confidentiality
assessments,
Help Desk, peer
learning
Training
9 events so far,
400 delegates
More planned
Pilot
Projects
Peer assisted
implementation
5 pilots
underway +
bilateral
programs

24. 24
Looking ahead: Targets in 2016
1. Critical to deliver the commitments to the AEOI Standard.
Monitoring will be ongoing, with increased targeted
support
2. Complete the multilateral confidentiality assessments
3. Continue support for lower capacity jurisdictions to
benefit from the AEOI Standard
4. Develop the peer review mechanism: likely to be staged
review targeted to risk areas

25. 25
AEOI: A call to action
• Bringing about transparency and international tax
cooperation needs legislative changes
• Need for political leadership to push through difficult
reforms
• Timelines are short – but necessary to ensure we take
advantage of this new standard quickly
• Build linkages to other tax reform and transparency efforts
including tax modernisation and anti-money laundering
• Effective use of information received – return on the
investment
• Ensure developing countries are not left behind

26. 26
Useful resources
Questions and comments:
Achim.PROSS@oecd.org
Monica.BHATIA@oecd.org
AEOI PORTAL: http://www.oecd.org/tax/automatic-exchange/

27. ROLE OF THE GLOBAL FORUM:
EXCHANGE OF INFORMATION
ON REQUEST
27

28. Introduction
28
Problem
• Taxpayers are
mobile, tax
authorities are
not
• Result:
knowledge
imbalance
Making
transparency
the norm
• End of bank
secrecy
• Increasing
requests for
information
Levelling the
playing field
• Financial
centres
• Access for
lower capacity
countries

29. EOI on Request – state of play
• Global Forum - inclusive participation of 127
members and 14 international organisation
observers
• Robust peer review process - 215 reviews completed,
86 jurisdictions rated for overall compliance
• Global acceptance that transparency is the norm – all
major financial centres significantly improved
• Assistance for lower capacity members now a core
function. Working with international development
agencies; Global Forum recognised in Addis Ababa
Declaration
29

30. EOIR – A strengthened standard
• A new round of peer reviews commencing in mid-
2016
• Drawing on lessons learned and looking closely at
both legal frameworks and practical effectiveness
• A strengthened standard: availability of beneficial
ownership information; the quality of EOI
exchanges; group requests
• A strengthened process: closer monitoring of
responses to peer review recommendations
30

31. EOI on Request – the next five years
• Completion of the next round of reviews
• Greater awareness and use of EOI by all, including
lower capacity members – thus strengthening the
impact of tax transparency on domestic resource
mobilisation
• 2016 onwards: two complementary pillars of EOI –
on request and automatic (and requests likely to
increase dramatically)
31