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G20 hears of strong progress from exchange of information group

Only eight jurisdictions around the world fulfil all the elements required for effective exchange of information, G20 leaders were told at their summit in Cannes today.

Another 15 jurisdictions, including Belgium, Canada, Cayman Islands and the US, will need to improve one or two elements; 10, such as Hong Kong, China, Jersey and Singapore, will have to improve three or four elements and three jurisdictions - Andorra, Aruba and Malaysia will have to improve five elements.

The Global Forum on Tax Transparency and Exchange of Information, which is under the auspices of the OECD, produced the results in a study entitled Tax Transparency 2011; report on progress. The forum promotes the effective implementation of the internationally agreed standard on transparency and exchange of information.

A global forum to discuss exchange of information standards was first set up in 2001 by OECD member countries and other participating members. It was relaunched after the G20 summit in London in April 2009 as the Global Forum on Tax Transparency and Exchange of Information and now includes 105 member jurisdictions and the EU, together with nine observers, such as the UN, the World Bank and regional development banks.

The body operates through a two-part peer review process. Phase 1 looks at the legal and regulatory framework of the member jurisdictions; phase 2 assesses the implementation of the standard. Determinations are made according to the availability of any relevant information in tax matters, such as ownership, accounting or bank information, the appropriate power for the administration to access the information and the administration’s capacity to deliver this information to any partner which requests it, either through double tax treaties or tax information exchange agreements.

The forum has produced reports on 59 jurisdictions since the peer review process began in 2010. The results are available here.

“The Global Forum is producing real change as many of these jurisdictions have already reported on action taken following their assessment,” wrote Mike Rawstron, an Australian official who chairs the Global Forum, in the report to the G20 leaders. “Where changes in legislation are significant, a supplementary report is launched to reflect the progress made. This clearly shows that the peer review process is having an impact and is successful in enhancing Global Forum member compliance with the internationally agreed standard.”

Out of the 44 jurisdictions which had concluded fewer than 12 agreements to the standard, the minimum required, as of April 2 2009, only five (Guatemala, Montserrat, Nauru, Niue, and Uruguay), have not reached this threshold, in some cases mainly because they do not have the resources.

The G20 report found that progress on the availability of bank information has also been confirmed by the peer reviews as this element is in place in 98% of the jurisdictions reviewed, giving rise to only a limited number (four) of recommendations; progress is still required in the availability of ownership and accounting information as the respective elements are in place in only 19 (ownership information) and 29 (accounting information) jurisdictions; and access powers granted to competent authorities are sufficient in most cases with the element found not to be in place in only 11 out of 59 cases.

The eight jurisdictions found to have all the elements in place for effective exchange of information, “with no significant improvements needed in any of them”, were Australia, France, India, Ireland, Isle of Man, Italy, Japan and Norway.

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