OECD: involve civil society and developing countries in peer review process

The OECD is imminently starting its peer review process to examine the progress that secrecy jurisdictions have made towards implementing effective tax information exchange. The review process is headed by François D'Aubert (France), supported by appointed representatives of India, Japan, Jersey and Singapore.

In the following letter to Michael Rawstron, chair of the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes, a widely based civil society coalition calls for a number of measures to strengthen the review process, not least the inclusion of civil society and a wider range of developing countries in the review process, and for disclosure of its outputs:

Michael Rawstron

Chair, Global Forum on Transparency and Exchange of Information for Tax Purposes

Treasury Department

International Tax and Treaties Division

Australian Federal Treasury

Langton Crescent

Parkes ACT 2006

AUSTRALIA

9 February 2010

Civil society and developing country participation in the peer review process

Dear Mr Rawstron,

We are writing in advance of the meeting of the Steering Group of the Global Forum on Transparency and Exchange of Information for Tax Purposes in Delhi and would like to raise some particular concerns that emerged during discussions at the OECD Global Forum on Development on January 28th 2010.

We welcome the OECD's awareness that developing countries have so far not profited from international cooperation in tax information exchange and that more needs to be done in this respect. We also welcome the increasing openness of OECD staff towards the role of automatic information exchange within an effective model of tax cooperation.

In a letter addressed to Angel Gurria we highlighted the importance of civil society and developing country participation in OECD work to develop a standard on country-by-country reporting. We also circulated a policy statement which sets out our priorities for the OECD in 2010.

In that policy statement, we called for emerging standards for tax cooperation with developing countries to become part of the international standard against which the Global Forum’s Peer Review Group assesses jurisdictions. We are concerned that no commitment has been made so far in this respect. As Art. 38 of the Outcome Document of the Conference on the World Financial and Economic Crisis and its impact on Development states: "Inclusive and cooperative frameworks should ensure the involvement and equal treatment of all jurisdictions. We call for consistent and non-discriminatory implementation of transparency requirements and international standards for exchange of information." The OECD and the Global Forum should work towards this aim by fully including developing countries in the peer review process.

Therefore, we call for the Global Forum’s steering group to agree to the inclusion of specific monitoring indicators regarding exchange of information with developing countries as part of the peer review process. Progress reports should address participation in new mutilateral agreements for information exchange, as well as the number and the implementation of Double Taxation Agreements (DTAs) and Tax Information Exchange Agreements (TIEAS) with all developing countries, including low income countries. The peer review should eventually identify the obstacles to developing countries making full use of these arrangements and the steps which Global Forum members can take to help overcome them. Financial and technical support to developing country tax authorities, and the automatic exchange of certain tax information to complement exchange on request, should form part of these considerations.

Civil society has advocated multilateral solutions in part because we are concerned that the negotiation by developing countries of new DTAs and the renegotiation of existing DTAs to include Art. 26 might be accompanied by pressure for a further switch from source taxation on dividends and royalty payments to residence taxation. As developing countries are usually capital importers vis-a-vis developed countries, this would be to the detriment of their efforts to mobilise domestic resources for development finance. We therefore call for the Peer Review Group to take a close look at changes of source taxation provisions in new and revised DTAs in their progress reports.

We welcome the new OECD task force on tax and development as an important step. However, civil society organisations (CSO) and developing country participation in this informal body is not a substitute for a broad involvement of these stakeholders in the official Global Forum peer review process. Substantial CSO and developing country government involvement in the peer review process is imperative to ensure confidence in it from all stakeholders. We note that existing peer review processes, such as that for the OECD Anti-Bribery Convention and the DAC, could serve as an example to build on; however, civil

society participation in the process of peer review itself must be mandatory.

Finally, we call for the public disclosure of all documented outputs of the peer review process and a multi-criteria public rating to be published annually to enable CSOs and media to monitor progress towards effective information sharing. This public rating should have appropriate criteria to measure the degree of opacity and the efforts made by each jurisdiction. Such a public multicriteria rating could eventually be used in other forums as a tool to implement coordinated counter-measures against non-cooperative jurisdictions. In this regard, we call on the steering group to take into account the Financial Secrecy Index criteria developed by CSOs.

Yours sincerely,

ActionAid UK

Richard Miller, Executive Director

Action Solidarité Tiers Monde, Luxembourg

Richard Graf, President

Alliance Sud- Swiss Alliance of Development Organisations

Peter Niggli, Director

CCFD-Terre Solidaire, France

Ms. Catherine Gaudard, Head of Advocacy

Christian Aid

Dr Daleep Mukarji, Director

Christian Aid Ireland

Margaret Boden, Chief Executive

CIDSE

Bernd Nilles, Secretary General

CNCD-11.11.11, Belgium

Arnaud Zacharie, Secretary General

CRBM / Mani Tese, Italy

Antonio Tricarico, Coordinator

Debt and Development Coalition, Ireland

Nessa Ní Chasaide - Coordinator

Development Research Center, Bulgaria

Svoboda Tosheva

Eurodad – European Network on Debt and Development

Nuria Molina, Director

Global Financial Integrity, USA

Raymond Baker, Director

Intermón Oxfam, Spain

Ariane Arpa, Executive Director

Jubilee Australia

Adele Webb, National Coordinator

KOO- Koordinierungsstelle der Österr. Bischofskonferenz

Hilde Wipfel

Misereor, Germany

Prof. Dr. Josef Sayer, Chief Executive Director

Norwegian Church Aid

Wenche Fone, Director of Development Policy

Oxfam France – Agir Ici

Luc Lamprière, Chief executive

Plate-forme paradis fiscaux et judiciaries, France

Jean Merckaert, Coordinator

Revenue Watch Institute

Karin Lissakers, Director

Tax Justice Network International

John Christensen, Director

11.11.11 Belgium

Rudy Demeyer, Director

Cc.

Anthony Gooch, Director of Public Affairs & Communications

Paulo Ciocca, Chair, OECD Committee on Fiscal Affairs

Eckhard Deutscher, Chair, OECD Development Assistance Committee

Francois D’ Aubert, Chair, Peer Review Group of the Global Forum on Transparency and Exchange of Information

Jeffrey Owens, Director, OECD Centre for Tax Policy & Administration

Pascal St Amans, Head of the Global Tax Forum Secretariat