On April 6th the OECD and Council of Europe released a media statement announcing that the CMAAT will be updated in order to bring it up to currently agreed upon standards of international tax transparency. The Convention, opened for signing in 1988, is an international framework which provides facilitation of multinational exchange of fiscal information. The Convention will be updated to reflect modern internationally agreed upon standards in tax transparency and exchange of fiscal information. Under the update, domestic tax law limitations will be removed and exchange of bank information will be available.

The CMAAT update will open participation in the agreement to non-Council of Europe and non-OECD nations, and invitations will be extended for new signatories, especially among developing economies. Angel Gurría, OECD Secretary-General, explained the need for the change, saying that it “…provides for the opening of the convention to countries that are not members of the Council of Europe or the OECD, thereby transforming it into an instrument to fight tax evasion worldwide.”

The CMAAT, originally drawn up under the aegis of the OECD and the Council of Europe, is currently enforced by Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, Netherlands, Norway, Poland, Sweden, United Kingdom, United States, and Ukraine. Canada, Germany and Spain have signed the agreement, though have yet to ratify it.

Photo by notfrancois

On January 28th the EC placed an official request to the Belgium Government to address its tax treatment of dividends and interest distributions to foreign owned investment funds, as it claims the current treatment is discriminatory and restricts the freedoms mandated by the Treaty of the European Union. Under current legislation, distributions made by a Belgian company to Belgian investment funds can be exempt from withholding tax, if the receiver meets a predetermined set of legal requirement concerning its investments and investors. Conversely, distributions made to foreign held investment funds will face a tax burden of 15 or 25 percent, depending on the circumstances.

The request comes as the second step of Article 258 of the TFEU (Treaty on the Functioning of the European Union), which outlines the EC’s infringement procedures. The first stage of the process involved the EC making a request to Belgium to supply information in order for an investigation to be conducted. The current stage consists of a formal request of action, called a reasoned opinion. The last stage is invoked if Belgium does not make a satisfactory reaction to the reasoned opinion, at which point the matter may be referred to the Court of Justice of the European Union.

Photo by historic.brussels