On March 18th the Organization for Economic Cooperation and Development (OECD) announced the initiation of the first step in the most extensive and through international tax transparency assesment process that has ever been undertaken. Eighteen nations from the 91 participating members of the Global Forum on Transparency and Exchange of Information will soon undergo extensive analysis to determine the adequacy of their efforts to implement internationally agreed upon taxation standards, such as the effectiveness of the bilateral Tax Information Exchange Agreements (TIEA) which were signed by all participating jurisdictions. The first set assessment results are expected to be published before the next Global Forum meeting to be held in Singapore in September 2010. The eighteen reviewed nations will consist of Australia, Barbados, Bermuda, Botswana, Canada, Cayman Islands, Denmark, Germany, India, Ireland, Jamaica, Jersey, Mauritius, Monaco, Norway, Panama, Qatar and Trinidad & Tobago.

The peer-reviews come as a response to calls raised by G20 leaders at their Pittsburgh Summit in September 2009 for greater tax transparency and a “robust peer review mechanism” to ensure the rapid, timely and appropriate implementation of the OECD standard on information exchange. Mike Rawson, Chair of the Global Forum, commented on the upcoming reviews, saying: “…this is the most comprehensive, in-depth review on international tax co-operation ever…The peer review process will identify jurisdictions that are not implementing the standards. These will be provided with guidance on the changes required and a deadline to report back on the improvements they have made.”

Photo by claeskrantz

In an unprecedented step, Switzerland wishes to cease ratification of its DTA with France in protest at the French authorities’ handling of account data stolen from HSBC in Geneva. On December 9th, Eric Woerth, French Budget Minister, confirmed that the French Government had paid €500 million to a former HSBC-Switzerland employee who provided them with details on 130,000 accounts. Hans-Rudolf Merz, Swiss Finance Minister, requested on December 16th for ratification of the tax accord to be ceased, pending an investigation into the data purchase.

The Taiwan Ministry of Finance released a statement on December 11th, saying that it hopes to sign a DTA with China during their next round of negotiations.

The second protocol amending the DTA between China and Singapore came into effect on December 11th. The provisions within the DTA amendment will come into effect on January 1st, 2010.

Malaysia and Ireland signed an amendment protocol of their DTA on December 16th. Turkey and the Netherlands initiated revision negotiations for their current DTA on December 15th. The UK and Montserrat signed a DTA on December 9th. New Zealand and Belgium signed a second protocol amending the tax agreement standing between the countries. On December 13th, Switzerland and Bangladesh ratified a DTA between two countries. Greece ratified DTAs with Canada, Saudi Arabia, Qatar, Serbia, Morocco and Azerbaijan in December. On November 30th the tax accord between Japan and Kazakhstan was ratified.

Further, in December, 45 TIEAs were signed across the world, with a total of 178 agreements reached in 2009.

Photo by HM Treasury

It was reveled on November 11th by Klaus Tschütscher, Liechtenstein Prime Minister, that the nation will be considered as adequately complying with the G20′s and OECD’s efforts to combat international tax evasion. By signing Tax Information Exchange Agreements (TIEA) with Belgium and Netherlands, Liechtenstein has brought their total agreement number to the required minimum of twelve to be judged as having substantially implemented the internationally agreed standard in exchange of fiscal information. The status change also circumvents possible sanctions or actions from G20 nations, directed at jurisdictions they deem to be uncooperative in taxation matters.

Commenting on the event, the Prime Minister said, “I think this is a good standpoint for the future, though of course it’s an intermediate step,” he continued on to say “We are working in open markets, in a globalized world, so tax evasion should be marginalized”. Klaus Tschütscher also pronounced that the removal of the country’s “grey list” status is a “milestone”. Displaying his backing to these words, Liechtenstein is already in negotiation with more countries for similar tax information agreements and has joined Global Forum in Transparency and Exchange of Information.

Angel Gurría, OECD Secretary-General, praising the country on its efforts said, “I would like to commend Liechtenstein for its swift implementation of the OECD standard on exchange of information. After its acceptance of the standard on 12 March 2009, Liechtenstein has within a few months turned into reality its commitment to fully cooperate in tax matters. I would like to congratulate Prime Minister Klaus Tschütscher for his leadership and continued efforts in this process”.

The London G20 Summit, held on the 2nd of April this year, heralded an unprecedented wave of Tax Information Exchange Agreement (TIEA). In what was described as “revolutionary” by Angel Gurría, OECD Secretary-General, the number of completed TIEAs has almost doubled since their inception in late 2000.
Since the G20 summit, and subsequent global push for greater tax transparency and compliance, the following 53 agreements have been signed.

United States – Monaco (8 September 2009)
Denmark – Turks & Caicos Islands (7 September 2009)
Netherlands – Antigua & Barbuda (2 September 2009)
Denmark – Gibraltar (2 September 2009)
Denmark – Anguilla (2 September 2009)
Germany – Liechtenstein (2 September 2009)
Netherlands – St Vincent & the Grenadines (1 September 2009)
Denmark – St Vincent & Grenadines (1 September 2009)
Denmark – St Kitts & Nevis (1 September 2009)
Netherlands – St Kitts & Nevis (1 September 2009)
Canada – Netherlands Antilles (29 August 2009)
United Kingdom – Gibraltar (27 August 2009)
Australia – Gibraltar (25 August 2009)
New Zealand – British Virgin Islands (14 August 2009)
New Zealand – Cayman Islands (14 August 2009)
New Zealand – Gibraltar (13 August 2009)
Germany – Gibraltar (13 August 2009)
United Kingdom – Liechtenstein (11 August 2009)
Monaco – San Marino (29 July 2009)
Bermuda – Ireland (28 July 2009)
New Zealand – Isle of Man (27 July 2009)
New Zealand – Jersey (27 July 2009)
United Kingdom – Turks & Caicos (23 July 2009)
Netherlands – Turks & Caicos (22 July 2009)
Netherlands – Anguilla (22 July 2009)
Ireland – Turks & Caicos (22 July 2009)
Ireland – Anguilla (22 July 2009)
New Zealand – Guernsey (21 July 2009)
UK – Anguilla (20 July 2009)
Belgium – Monaco (15 July 2009)
New Zealand – Cook Islands (9 July 2009)
Netherlands – Cayman Islands (8 July 2009)
Germany – Bermuda (3 July 2009)
Ireland – Gibraltar (24 June 2009)
Ireland – Cayman Islands (23 June 2009)
France – British Virgin Islands (17 June 09)
Australia – Jersey (10 June 2009)
The Netherlands – Bermuda (8 June 2009)
Denmark – British Virgin Islands (19 May 2009)
Faroes – British Virgin Islands (19 May 2009)
Finland – British Virgin Islands (19 May 2009)
Greenland – British Virgin Islands (19 May 2009)
Iceland – British Virgin Islands (19 May 2009)
Norway – British Virgin Islands (19 May 2009)
Sweden – British Virgin Islands (19 May 2009)
New Zealand – Bermuda (17 April 2009)
Denmark – Bermuda (16 April 2009)
Faroes – Bermuda (16 April 2009)
Finland – Bermuda (16 April 2009)
Greenland – Bermuda (16 April 2009)
Iceland – Bermuda (16 April 2009)
Norway – Bermuda (16 April 2009)
Sweden – Bermuda (16 April 2009)

Previous to these, 63 agreements had been signed, bringing the total at the 10th of September to 116.

The Taxation Information Exchange Agreement (TIEA) between the city-state of Monaco and the US will allow each jurisdiction a greater set of capabilities in fighting cross border tax evasion. The agreement will allow either nation to request bank, tax and other information from the other jurisdiction on the grounds that there have already been reasonable attempts made to obtain it by other means. The agreement also extends to allow officials from one country to enter the other for the purpose of conducting necessary interviews. Although, these capabilities are restricted to a case by case basis and have absolutely no scope “information fishing”. The agreement comes into force in 2010 and extends to both civil and criminal court proceedings.

At the TIEA announcement Neal Wolin, US Deputy Treasury Secretary, said “This administration is wholeheartedly committed to combating offshore tax evasion,” and also ”We are working with countries like Monaco to ensure that the IRS has access to the information that it needs to enforce U.S. tax law. Today’s agreement serves as an example for other financial centers around the world and reflects our continued efforts to end the use of offshore accounts as a tool for tax evasion.”