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Tuesday, June 19 2018 @ 10:37 AM EDT

OECD Criticizes Panama for Money Laundering

Money Matters OECD - Many financial centers, both onshore and offshore, are making progress in improving transparency and international co-operation to counter offshore tax evasion, but some still fall short of international standards that have been developed over the last seven years, according to OECD assessments. Significant restrictions on access to bank information for tax purposes remain in three OECD countries (Austria, Luxembourg and Switzerland) and in a number of offshore financial centers (e.g Cyprus, Liechtenstein, Panama and Singapore). Moreover, a number of offshore financial centres that committed to implement standards on transparency and the effective exchange of information standards developed by the OECD’s Global Forum on Taxation have failed to do so. (more)

Two newly published OECD reports highlight both what has been achieved so far and what still remains to be done. Improving Access to Bank Information for Tax Purposes – the 2007 Progress Report describes developments in OECD countries and six others (Argentina, Chile, China, India, the Russian Federation and South Africa) with respect to access for tax authorities to bank information. Tax Co-operation: Towards a Level Playing Field – 2007 Assessment by the Global Forum on Taxation compares the legal frameworks for international tax co-operation of 82 OECD and non-OECD economies. It is the second in a series of factual reports by the OECD’s Global Forum on Taxation, which was formed as part of the OECD’s efforts to curb harmful tax practices.

“No one country or even a small group of countries can address the issue of harmful tax practices on their own,” commented Paolo Ciocca, chair of the OECD’s Committee on Fiscal Affairs and co-chair of the Global Forum. “This is a global challenge which requires a global response. In co-operation with partner financial centres, that is what OECD is seeking to achieve.”

Lack of transparency and a failure to co-operate internationally create conditions that can be exploited by dishonest taxpayers to evade their tax obligations. Revenue losses due to tax evasion prevent governments from lowering tax burdens for honest taxpayers. In combating tax evasion, Mr. Ciocca said, progress has recently been made in the following areas:

* Nearly 100 more exchange of information arrangements are now in place, compared with one year ago, including tax information exchange agreements between the United States and Guernsey, the Isle of Man and Jersey which entered into force in 2006.

* The scope of some existing arrangements has been extended. For example, Switzerland has signed a number of protocols to its bilateral tax conventions to allow it to exchange information, including bank information, in cases of tax fraud and the like. Some of these protocols also allow for exchange of information in both civil and criminal tax matters in the case of holding companies.

* Access to bank information for tax purposes has been greatly improved in economies such as Belgium, which in November signed its first tax treaty providing for exchange of bank information for all tax purposes.

* Increasingly, legislation requires financial and other service providers to have available details of the beneficial as well as the legal owners of corporate vehicles. For example, in Macao, China; new anti-money laundering legislation requires financial institutions to verify the identity of customers and their beneficial owners. In San Marino, new legislation requires that from 2008 meetings of joint stock corporations must be held in the presence of a notary public who is required to identify holders of bearer shares.

* Some jurisdictions, such as Guernsey and Jersey, have brought into force legislation empowering them to fully implement the provisions of their bilateral exchange of information arrangements.

“The vast majority of OECD countries already meet or exceed the standards set in 2000 regarding access to bank information for tax purposes, and the direction of change is clear,” Mr. Ciocca said. A recent tax treaty between Belgium and the US, for example, covers for the first time full exchange of bank information.

But a number of jurisdictions still have not implemented the standards for transparency and exchange of information developed by the Global Forum. “The time has come for countries that have not yet done so to implement them,” Mr. Ciocca said. “In January 2008 the Committee on Fiscal Affairs will have a review of the future direction of this initiative. We will continue to press for further progress and explore within the Committee how such progress could be achieved.”

For further information, journalists are invited to contact Jeffrey Owens, Director of OECD’s Centre for Tax Policy and Administration (tel. + 331 45 24 91 08). Tax Co-operation: Towards a Level Playing Field – 2007 Assessment by the Global Forum on Taxation and Improving Access to Bank Information for Tax Purposes – the 2007 Progress Report are available to journalists from the OECD’s Media Division (tel.+ 33 1 45 24 97 00).

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