The country became the 33rd to sign the Convention on Mutual Administrative Assistance in Tax Matters, which was developed by the OECD and the Council of Europe to promote international cooperation in the assessment and collection of taxes. It is open to every country aound the world.
The initiative was reformed after the April 2009 meeting of the G20 in London to put the fight against tax avoidance and evasion at its heart by making it compliant with the international standard on exchange of information.
“This is a great new tool for Greece to be able to tackle its tax evasion problems, which have been well documented by the EU taskforce,” Grace Perez-Navarro, deputy director of the OECD’s Centre for Tax Policy and Administration, told International Tax Review. “It will be able to collaborate with other countries to pursue taxpayers that are cheating.”
The Convention covers income or profits taxes, and capital gains or wealth taxes, consumption taxes, other goods and excise taxes; estate, inheritance or gift taxes; motor vehicle taxes and taxes on immovable property.
The exchange of information detailed in the Convention comes under three categories, on request, automatic or spontaneous. Simultaneous tax examinations, where the same taxpayer is audited in different countries at the same time, and the participation of signatories in tax examinations abroad, where officials of one country are present at a tax audit in another, are also possible under the Convention.
Spontaneous exchange of information refers to where one country could hand over to another details that were not requested if it believes there is a loss of tax in the second country; a taxpayer obtaining an exemption in relief in the first country would mean a loss of tax in the second; to save tax in either or both jurisdictions, a taxpayer has interposed one or more countries into their transaction’s structure; there has been deliberate transfer mispricing between companies in the same group to save tax; or it has information that may be relevant to the other country in assessing a taxpayer’s liability.
Perez-Navarro said a number of countries, particularly in the developing world are looking at signing the Convention. “It saves time rather than having to negotiate bilateral agreements,” she said. “Instantly, you have a group of countries to cooperate with.”