29/10/2012 – At the Global Forum in Cape Town, South Africa, delegates from 81 jurisdictions and 11 international organisations evaluated whether all Forum members are exchanging tax information effectively.
The Forum’s Peer review report of South Africa, one of the the most active jurisdictions in the work towards transparency and exchange of information, finds the country’s legal framework and practices to be in accordance with the internationally agreed standard.
The importance of the Global Forum’s work in the region is highlighted by the election of its new Chair, Mr. Kosie Louw from South Africa. An increasing number of African countries are now members of the Global Forum, with Burkina Faso, Cameroon, Gabon, Tunisia and Uganda joining recently. In addition, Ghana and Kenya are engaged in a pilot project with the Global Forum’s progamme of technical assistance.
“The work of the Global Forum is key for South Africa and the African region,” said Pravin Gordhan, South Africa’s Minister of Finance. “Tax evasion is a barrier to development, growth and healthy societies. Seeing so many countries around the table today in Cape Town, working together to build a transparent environment, is very encouraging.”
On the occasion of the Global Forum meeting, the Czech Republic, Malta and New Zealand signed the Convention on Mutual Administrative Assistance in Tax Matters, following the signature by Romania earlier this month. Lithuania, Nigeria, Gabon, Kazakhstan and Latvia signed letters of intent to sign the Convention and such letters had earlier been received from Albania, Belize, Estonia, Morocco and Niue.
In less than 2 years since the amendment to the Convention responding to a call from the G 20 more than 50 countries have either become signatories or have stated their intention to do so.
“Especially in a time of austerity, we need to work together and ensure that everybody pays his or her share of taxes legally due”, OECD Deputy Secretary General Rintaro Tamaki said at the opening of the signing ceremony. “The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is a powerful tool that reinforces international cooperation to target tax evasion and avoidance by both individuals and corporations.”
Nine Peer Review Reports Adopted and Three Supplementary Reports
The Global Forum has adopted a further 7 Phase 1 reports (Dominica, Marshall Islands, Niue, Russia, Samoa, Sint Maarten and Slovenia), 2 Combined reports (Argentina and South Africa) and 3 Supplementary reports (Liechtenstein, Monaco and Uruguay). As a result of the Supplementary reports, the Global Forum has determined that Liechtenstein and Uruguay can now move to a Phase 2 review.
With 88 jurisdictions already reviewed, the Global Forum is reaching the end of the Phase 1 reviews. The stand-alone Phase 2 reviews, which examine whether countries are enforcing their tax-related legislation, was launched in the second quarter of 2012. These reviews will provide in-depth investigations into the procedures and resources available for the exchange of information The first stand-alone Phase 2 reviews will be published in 2013 and more than 50 Phase 2 reviews will be completed by the end of the same year
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THE PEER REVIEW REPORTS AT A GLANCE
Report on the legal framework and on its application (Phase 1 and 2)
Argentina: This combined (Phase 1 and Phase 2) review shows that Argentina’s legal and regulatory framework ensures that ownership information in relation to all relevant entities is available directly in the databases of the tax administration and that the competent authority has broad powers to collect information. In general, inputs received from Argentina’s exchange of information partners suggest that since 2011 it has made significant progress in handling requests for information. In particular, response times are faster and several of Argentina’s EOI partners praised the quality of its co-operation since the restructuring of its EOI system. http://www.eoi-tax.org/jurisdictions/AR.
South Africa: This combined (Phase 1 and Phase 2) review shows that South Africa fully endorses the international standard for transparency and exchange of information for tax purposes. South Africa’s legal framework ensures that ownership, accounting and bank information is available according to the standard. However, as the rules related to the availability of ownership information on partnerships only recently changed, South Africa should monitor its practical implementation. South Africa also has all the requisite access powers to obtain information, and its network of exchange mechanisms covers more than 90 jurisdictions. Inputs received from South Africa’s exchange of information partners attest to the high quality responses provided by the South African authorities in a swift and timely manner. http://www.eoi-tax.org/jurisdictions/ZA.
Reports on the legal framework (Phase 1)
Dominica: The Phase 1 review of Dominica found that it has made significant progress in expanding its exchange of information network which currently covers 30 jurisdictions. The legal and regulatory framework generally ensures keeping of ownership information by all relevant entities. However, significant deficiencies are noted with regard to the maintenance of accounting records by offshore entities. The competent authority has broad access powers but these powers cannot be used to obtain information from offshore entities. Due to significant deficiencies in the legal and regulatory framework, the report concludes that Dominica will not move to a Phase 2 review until it has acted on the recommendations made in the report. http://www.eoi-tax.org/jurisdictions/DM.
Marshall Islands: Since its commitment to the international standard in 2007, the Marshall Islands has rapidly expanded its exchange of information network which currently covers 14 jurisdictions. However, its legal framework does not fully ensure ownership information for all entities, and mechanisms to identify the owner of bearer shares which can be issued by some entities are insufficient. Obligations to keep accounting records consistent with the standard for all relevant entities are not in place and there are concerns with regard to Marshall Islands’ authorities’ power to access information in all cases. The report concludes that the Marshall Islands will not move to a Phase 2 review until it has acted on the recommendations made in the report. http://www.eoi-tax.org/jurisdictions/MH.
Niue: The legal and regulatory framework for the availability of information is generally in place in Niue. However, identity and ownership information may not consistently be available in respect of all domestic trusts and foreign trusts with Niuean trustees. Requirements to maintain accounting records in Niue generally meet the international standard, but certain aspects need improvement. Niue’s tax authority has broad powers to obtain bank, ownership and accounting information. Niue signed its first TIEA with New Zealand, which is Niue’s main trading partner. This agreement meets the foreseeably relevant standard but as it is not yet in force Niue is not able to effectively exchange information in accordance with the international standard. The Global Forum recommends that Niue not move to a Phase 2 Review until it has acted on the recommendations made in the report. Niue will report back on the steps taken to address the recommendations made in this review within 6 months http://www.eoi-tax.org/jurisdictions/NU.
Russian Federation: Overall, Russia’s legal and regulatory framework generally supports the availability, access to, and exchange of all relevant information for tax purposes in accordance with the international standard. The report makes recommendations related to certain aspects of the framework which need improvement, including ensuring the identity of the holders of bearer savings books is known, and narrowing the scope of audit. Recent legislative reforms concerning secrecy of bank information now provide for access to all relevant bank information. Russia currently has a broad network of 50 double tax conventions that are in line with the international standard and has committed to ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters, which it signed in 2011. A Phase 2 Review in the 2nd half of 2013 will examine whether Russia has acted upon the recommendations made in this Phase 1 report.: http://www.eoi-tax.org/jurisdictions/RU.
Samoa: The legal and regulatory framework for the exchange of tax information in Samoa is in place to a large extent. Samoa’s network of exchange of information agreements comprises TIEAs in line with the international standard with 14 jurisdictions. Ownership information is generally available, although a gap has been identified with regard to the availability of information concerning all beneficiaries of international trusts. Deficiencies have also been noted in relation to accounting records of international entities and arrangements as well as liquidated domestic and foreign companies. While secrecy provisions do not generally hamper the ability of Samoa’s competent authority to access information for exchange purposes, some uncertainties exist with regard to a newly passed law. Samoa’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority, will be considered in detail in the Phase 2 Peer Review of Samoa which is scheduled for the first half of 2013. http://www.eoi-tax.org/jurisdictions/WS.
Sint Maarten: The legal and regulatory framework for the availability of information is in place in Sint Maarten, though some areas need improvement. The report identifies certain deficiencies and makes recommendations with respect to availability of information related to foreign incorporated companies effectively managed in Sint Maarten, limited partners of limited partnerships, and beneficiaries and holders of certificates of participation of private foundations, as well as access to information with regard to appeal rights, and the lack of an exception to prior notification to taxpayers where it could undermine an investigation. Sint Maarten continues to expand its network of exchange of information instruments - EOI agreements with 26 of Sint Maarten’s 50 EOI partner jurisdictions are currently in force. Sint Maarten is encouraged to quickly bring all its EOI agreements into force and in line with the standard. Sint Maarten’s Phase 2 Peer Review is scheduled for the first half of 2014 http://www.eoi-tax.org/jurisdictions/SX.
Slovenia: Slovenia’s Phase 1 review demonstrates the country’s high level of commitment to the international standard for transparency and exchange of information for tax purposes. Its legal framework generally ensures that ownership, accounting and bank information is available, although the requirements to keep underlying documentation should be clarified. Slovenia also has sufficient access powers to obtain this information upon request by any of its 69 information exchange partners, demonstrating that its network of information exchange mechanisms meets the international standard. Slovenia’s response to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority, will be considered in detail in the Phase 2 Peer Review of Slovenia which is scheduled for the first half of 2013. http://www.eoi-tax.org/jurisdictions/SI.
Supplementary reports
Liechtenstein: The supplementary report assesses the progress made by Liechtenstein since adoption of its Phase 1 report in August 2011. Liechtenstein has amended its corporation law to ensure that all relevant entities and arrangements are now obliged to maintain accounting records and underlying documents in accordance with the international standard. The country is improving laws that will increase the availability of ownership information which was found deficient in Phase 1 review. Further improvements to the legal and regulatory framework will be considered in detail during the Phase 2 Peer Review which is scheduled for the second half of 2014. http://www.eoi-tax.org/jurisdictions/LI.
Monaco: Since its Phase 1 and supplementary reviews, Monaco has greatly improved its legal and regulatory framework as regards the availability of ownership and accounting information. By virtue of amendments adopted in late 2011 and early 2012, Monaco is able to ensure that ownership information pertaining to public companies is available in all circumstances. Monaco has removed all references to bearer shares in its laws. All legal entities that have connections with Monaco are now required to keep accounting records in conformity with the international standard, so availability of ownership information and accounting records are now assessed to be “in place”. Monaco is nevertheless asked to conclude EOI agreements with more relevant partners. Any further developments in the legal and regulatory framework, as well as the application of the framework to Monaco’s EOI in practice will be considered in detail in the Phase 2 Peer Review which is now underway.: http://www.eoi-tax.org/jurisdictions/MC.
Uruguay: Uruguay’s authorities have taken a number of significant steps to respond to the recommendations of the Phase 1 report. As a result, Uruguay will progress to its Phase 2 Peer Review. The country expanded its network of EOI agreements with relevant partner jurisdictions. Uruguay also took positive steps to ensure the availability of ownership information on relevant foreign companies and adequate accounting information for all entities as well as to capture ownership information in relation to bearer shareholdings and provide for appropriate enforcement measures to ensure availability of ownership information. However, some gaps remain and Uruguay should act upon recommendations relating to bearer shareholdings and provision of relevant enforcement measures.. Uruguay’s Phase 2 Peer Review is scheduled for the first half of 2014.: http://www.eoi-tax.org/jurisdictions/UY..
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