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Global agreement continues to expand international tax cooperation

Since June 1 2011, the amended Multilateral Convention on Mutual Administration Assistance in Tax Matters has been open for signatories from all over the world to adopt the most comprehensive multilateral instrument for all forms of tax cooperation to tackle tax evasion and avoidance.

“Our two organisations have cooperated exemplarily and quickly to respond to the call of G20 leaders and our members to update the Convention and make it available to all countries,” said Thorbjørn Jagland, secretary general of the Council of Europe and Angel Gurrìa, secretary general of the OECD.

“As their secretaries general, we now urge all countries interested in countering cross-border tax evasion and ensuring compliance with their tax laws to join this multifaceted instrument,” they added.

The OECD and the Council of Europe jointly launched the Convention in January 1988. It was designed to facilitate administrative cooperation among member countries to more effectively counter international tax evasion and other forms of non-compliance.

So far, 94 jurisdictions participate in the Convention and its extension means it now includes all G20 countries, each of the BRICS, almost all OECD countries, most major financial centres and a growing number of developing countries. 

In the first six weeks of 2016, Senegal and Kenya have both already signed the Convention, with China, Singapore and Saudi Arabia’s adoption entering into force this year as well.

The Swiss Federal Council also signed the Multilateral Competent Authority Agreement for CbCR in Paris, along with numerous states and territories on January 27 2016.

Senegal became the 93rd jurisdiction to sign the Convention on February 4, as well as becoming the 32nd to sign the Multilateral Competent Authority Agreement for the automatic exchange of country-by-country reports.

China confirmed that it had adopted the Convention on February 1 2016.

It indicated that the first tax information exchanges will take place in January 2017, applying to 16 Chinese taxes including individual income tax, corporate income tax, VAT, business tax, and consumption duty.

However, China clarified in its announcement that it would not assist other signatories in pursuing unpaid taxes.

The Convention was altered in 2010 – triggered by G20 discussions – because of a protocol that required the adoption of the international standard on exchange of information on request and to further expand the agreement to developing countries.

“We call on all countries to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters without further delay,” said a statement from the G20 leaders’ summit in September 2013.

The Convention provides the tool for countries to swiftly implement mechanisms for automatic information exchange. Authorities from 79 jurisdictions have taken advantage of this and have signed a multilateral agreement under Article 6 of the Convention.

Countries that do not want to fully participate in the Convention are able to lodge reservations in certain areas, such as assistance in recovery of taxes, which may be withdrawn at a later stage if the country requests.

Rights and safeguards in place under national and international law remain applicable under the Convention.

A coordinating body has been set up to monitor the Convention’s implementation across countries.

All countries that have joined the Convention so far are able to participate on an equal basis in the coordinating body, which encourages them to work together and operate more effectively. 

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