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OECD Reviews Jurisdictions' Tax Transparency

Thursday, June 2, 2011

The Organisation for Economic Cooperation and Development (OECD) has released a series of new Peer Review reports, covering the exchange of information for tax purposes, and making recommendations for improvements in this area.

The OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes has released reports examining nine countries. Four focus on the legal framework in place for the exchange of information - covering Hungary, the Philippines, Singapore and Switzerland - while five also focus on these mechanisms in practice, relating to France, the Isle of Man, Italy, New Zealand and the US.

France's legal and regulatory framework is praised as "good", with full access to all relevant ownership, accounting and banking information available. France exchanges a large volume of information, having one of the world's largest networks of international exchange of information instruments, with 142 partners. On average, it responds to 790 requests on an annual basis, and sends well over 1,000 of its own. According to the Review, France's regular partners are, on a whole, satisfied with the way it exchanges information. Nonetheless, it is recommended that improvements are brought in to ensure a more timely response to information requests, a key concern of France's partners.

The Isle of Man's legal and regulatory framework for the exchange of information is in place, with the general regulatory environment deemed comprehensive, and the power of authorities to obtain relevant information seen as clear. However, certain limitations apply, and the report recommends improvements regarding the availability of accounting information for limited partnerships, and notes that the Isle of Man authorities should clarify their practice of disclosing information to other enforcement agencies.

As with the Isle of Man, Italy's relevant frameworks are seen as comprehensive, especially in regards to ensuring the availability of all types of ownership, accounting and bank information. It has 85 bilateral exchange of information agreements incorporated into its 91 double tax conventions (DTCs), and, although separate tax information exchange agreements (TIEAs) have not been signed, eight have been agreed, and Italy is in negotiations with over 40 other jurisdictions. Response time is, once again, seen as a weak point, with only 15% of cases replied to within 90 days. As a result, the report recommends that Italy should improve its response times and the time needed to ratify the treaties signed.

The OECD believes that New Zealand has strong experience in the field of information exchange, and has established sound practices in this area. The majority of New Zealand's DTC exchange of information clauses comply with OECD standards, and each of its 18 signed TIEAs follow the OECD Model. Its framework for the availability of ownership, accounting and bank information is seen as being generally thorough. Improvements must be sought, however, on the requirements relating to nominees and accounting records for liquidated companies.

Response times are, again, an issue when it comes to the US, in spite of its well regarded, extensive and active exchange of information programme. On average, the US replies to around 1,000 requests a year, and automatically exchanges 2.5m pieces of information. In addition, improvement is needed with respect to ownership and accounting information for some limited liability companies with single foreign owners.

Hungary has an extensive treaty network, with 68 DTCs allowing for the exchange of information, and EU legislation providing for such transactions with EU member states. There are, however, deficiencies. While information in the case of private limited liability companies, partnerships and foundations is available, this is not fully ensured in relation to limited companies, foreign trusts, companies and partnerships, the OECD said. Consequently, while Hungary has a system in place for the international exchange of information, this system lacks all the elements needed to make it effective. Uncertainties and ambiguities in the interpretation or interaction of different regimes are highlighted in particular, and must be addressed quickly, the OECD said.

The Philippines currently has 37 DTCs in force, which provide for the exchange of information, and is building a model TIEA with the view to expanding its treaty network. According to the Review, it has made significant progress in exchange of information, including allowing access to information and ending bank secrecy with its recently passed Exchange of Information Act. The report recommends that the Philippines continue to expand its treaty network to ensure that it covers all relevant partners.

Singapore has been updating and renegotiating its treaties following amendments to its domestic law. The legal and regulatory framework for the exchange of information is in place in Singapore, but some areas need improvement. In particular, the report recommends that Singapore’s competent authority should have the power to obtain all relevant information for all of its exchange partners regardless of whether they need the information for their own tax purposes. The OECD also suggests improvements in the exchange of information network to ensure Singapore has agreements to the standard with all relevant partners.

The Review notes the significant change in Switzerland’s approach to exchange of information for tax purposes over the past two years, with rapid progress made to implement its commitment to the internationally agreed standard. However, the OECD is critical of what it deems Switzerland's shortcomings, noting that only a limited number of Switzerland’s exchange of information agreements meet the standard, and that, while bearer savings books are being phased out, they still exist.

The Global Forum recently expanded in size, now numbering 101 members following the addition of Colombia, Macedonia, Georgia, Ghana and Nigeria. It expects to grow still further in the coming months, with another 20 members predicted to join before the end of the year.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions


Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation


Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees


Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees


Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax


Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision


Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment


Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations


Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations


Madeira: Legal Framework and Formation Rules and Fees


Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004


Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment


Monaco: Legal Framework and Formation Rules and Fees


Nevis: Legal Framework and Formation Rules and Fees


Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama


Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance


Vanuatu Legal Framework and Formation Rules and Fees

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