Sunday, June 06, 2010

Tax info exchange needs to champion transparency

We note an upbeat article in India's Business Standard, entitled "Tax information exchange champions transparency."

And it states that:

"Recent report of OECD reveals that not only has the (OECD) standard been universally endorsed, but it is now being implemented by over 400 information exchange agreements."

And this complements a story in the Hindu Business Line that:

"In signs that more countries are willing to share information on tax-related issues, over 440 bilateral pacts have been signed so far, which translates to an average of over 32 pacts every month since last April."

This is part of the drumbeat of information that is being pushed out there by the OECD and others which asserts, basically, that the tax haven (secrecy jurisdiction) problem has been, if not solved, then curtailed effectively.

These writers are perpetrating one of the great deceptions of the modern offshore world. We have demonstrated unequivocally that although the signing the OECD's information exchange method is certainly better than the previous situation (how could it have been worse?) the improvement is marginal. First, the OECD's standards are absolutely unacceptable and pitifully weak (also see here) and skewed against developing countries (eg see this recent report which notes:)

"Only 6 percent of DTTs show a signature of a Low Income Country (with an even smaller participation of 3 percent for Least Developed Countries). The situation with TIEAs is even worse: There is no single LIC (leaving aside LDC) as signing party of any TIEA documented on the OECD website."

Second, they are very far from being the internationally accepted standard, as the OECD wants people to think: just look at what is happening in the US, the UK, Switzerland, and around the world - it is clear that automatic exchange of information is the emerging standard (also see here.)

And for our (relatively new) permanent web page exploring these issues, see here.

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