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.

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A total of €2,234.88 million was granted in state aid across the three surveyed countries in 2008, indicating an overall increase in grants across the countries. 98.9 percent of this amount was accounted for by aid granted by the Norwegian government.

The report shows that the primary contributions to the 2008 state aid increase were Norway’s tax relief schemes to the maritime sector and compensation to Norwegian farmers for pollution reductions. Lichtenstein increased state aid by 29 percent in 2008, all through funding of cultural and heritage projects. Between the three surveyed countries only Iceland decreased state aid in 2008, lowering their grants by 32.3% compared to 2007.

Norway provided 0.54 percent of it’s GDP in governments grants, compared to Iceland’s 0.13 percent and Liechtenstein’s 0.03 percent. The EU average for the same period was 0.42 percent of GDP. However, if crisis package aid is included in the statistics, then the level of aid granted in Norway is only a quarter of that is average for the countries of EU.

The European Free Trade Association is an intergovernmental organization set up for the promotion of free trade and economic integration to the benefit of its four member states: Iceland, Liechtenstein, Norway and Switzerland.

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According to the OECD’s “Revenue Statistics: 2009 Edition” report, published November 24th, the tax burden by its members has fallen as the worldwide financial crisis tolls global economies. The aggregate tax receipt-to-GDP ratio across the surveyed OECD nations in both 2007 and 2006 was 35.8%. Based on current provisional figures, this ratio has now fallen to an approximate 35.2% or 35.3%.

Mexico displayed the lowest tax burden with 21.1%, followed by Turkey and Korea at 23.5% and 26.6%, respectively. Denmark was ranked as the highest tax receipt to GDP ratio nation at 48.3%, Sweden and Belgium ranked second and third with 47.1% and 44.3%. The United Kingdom reported a figure of 35.7%, and the US is facing 26.9%. Based on the 2008 provisional figures, Iceland experienced the biggest year to year drop of 4.8%, and Mexico saw the highest rise with 3.1%. Australia, Japan, Netherlands and Poland did not provide provisional 2008 figures in time for the publication.

According to an OECD publication accompanying the “Revenue Statistics: 2009 Edition” report, the tax receipts of a nation typically fall proportionately more than GDP in times of recession. The current climate of government tax cuts aimed at boosting economic growth, only serves to accentuate this tax receipt-to-GDP fall.

Commenting on the findings Angel Gurría, OECD Secretary-General, said “Governments acted decisively in 2008 and 2009 to support demand during the crisis … but falling tax receipts underline the challenge they will face, once the recovery is secured, in maintaining sound public finances”.

The OECD has made available the “Revenue Statistics: 2009 Edition” report and the accompanying tax burden publication.

Beginning in 2010 Iceland will replace its lat-rate personal tax rate of 24.1% with a three tiered system. Those earning less than ISK200,000 per month will pay the same 24.1% that they do now. Earnings between ISK200,001 and ISK650,000 will attract a rate of 27%. Salaries above ISK650,001 will attract levies of 33%. The additional local government tax of 13% will remain the same.

The Icelandic tax-free limit will also be raised, from ISK113,000 to ISK119,000. Value Added Tax (VAT) will be raised by 0.50%, from 24.5% to 25%. VAT on food items will remains at its current rate of7%, but a new taxation level of 14%, dubbed the “sugar tax” will be instated for candy and sugar based beverages. Capital gains tax will be raised by 3%, to 18%. Couples with assets valued at above ISK120 million and individuals with over ISK90 million in assets, will see a 1.25% special asset tax applied to them.