|Monica Bhatia was also in the Global Tax 50 2015, 2014, 2013, and 2012|
Monica Bhatia is included in the Global Tax 50 for the fourth year running, having led the secretariat of OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes for almost five years.
2016 has been an important year for the Global Forum, which is mandated with ensuring implementation of the international standards on transparency and exchange of information for tax purposes.
Over the past year, the Forum reached a milestone when it completed the first round of peer reviews on all its members and relevant non-members on the standard of exchange of information on request (EOIR), which it has been working towards since the G20 leaders issued the mandate in 2009. "We have done 253 peer reviews and assigned 116 compliance ratings. That was quite a huge task. We have done that over the last five to six years, but this year was the culmination of all of that. So we marked a very important milestone," Bhatia told International Tax Review.
This effort has had a big impact in how tax transparency has improved over the past few years. The era of bank secrecy is almost over with more than 65 jurisdictions eliminating the practice since peer reviews began for the purposes of information exchange. In addition, around 30 jurisdictions have eliminated or immobilised bearer shares. Finally, there has been a rapid expansion of the network of international cooperation agreements, with the number of information exchange agreements growing from around 2,000 in 2009 to almost 7,000 today.
Another Global Forum project that has had a significant impact in international tax cooperation is the automatic exchange of information (AEOI) on the basis of the common reporting standard (CRS). "That is a huge amount of work where you have 101 countries that are going to start exchanging financial account information, either in 2017 or 2018. Our role is to monitor these commitments, to support countries in implementing what they want to implement and obviously to make sure that there is a level playing field and no one is dragging their feet and everybody is implementing in the proper manner. Now that's a huge task," Bhatia said. "All of this obviously with the objective that 101 countries have to deliver on their commitments."
The Global Forum is responsible for monitoring the participating jurisdictions and checking whether they have the legislation they are required to have, whether they have signed all the agreements, if they have confidentiality and data safeguards in place, and whether they are putting in place the necessary infrastructure. In addition, the Forum plays a supportive role, providing technical assistance to any country that needs it. "How can we support the implementation of the standards? Whether it's a carrot by supporting them, or a stick by monitoring and putting political pressure on them. All that work is ongoing this year."
The first milestone regarding the AEOI that was reached this year when financial account information started to be collected by financial institutions in preparation for the first AEOI exchanges in 2017.
Alongside this, the Global Forum made big progress this year in putting in place a Common Transmission System (CTS) to securely exchange information between jurisdictions under the AEOI Standard, as well as other types of tax information where appropriate. The cornerstone of the CTS is data security, with leading industry standards of encryption applied to each transmission. The development of the system is ongoing and the CTS is scheduled to be available for the first exchanges in 2017. "What the OECD is building is the pipeline through which that data will flow from one country to another," Bhatia said. "That itself is a huge project. It's an IT project. And we are doing it on behalf of our 101 countries, who otherwise would have to put in place bilateral transmission systems." Under the system, the OECD, or the Global Forum, will not handle any of the data whatsoever. The data transmission will happen between countries bilaterally and there will be a small subscription fee to this system in line with each country's GDP.
Separately, the Global Forum has had a successful year in growing the number of member countries. "We had as many as eight new countries join the Global Forum this year and our membership has grown to 137. And this is from almost 89 countries in 2009." Bhatia said.
In addition, the Panama Papers bought political attention to tax transparency – a key objective for the Global Forum. Although the Forum has spent several years trying to encourage Panama to implement international initiatives on tax transparency, it was in 2016 that they finally had some success. Panama had a peer review last year but they refused to implement AEOI, or CRS and they refused to sign the instrument on mutual administrative assistance, which 107 jurisdictions are now a part of," Bhatia said. "After a long series of discussions and working behind the scenes Panama did finally agree to commit to the CRS and they signed the multilateral convention and so I am very happy to say that they have turned a corner".
"Countries are really moving very quickly and responding to the need for tax transparency. In the Global Forum they find a place where they have a voice. They find a place where they have fair and transparent processes, which assess them. And also, very importantly, they find all the support because we advise them," Bhatia said.
The Global Forum has had a busy year, but for Bhatia, her most exciting moments included watching revenue authorities prosper, more countries committing to transparency, and supporting smaller countries.
"I have travelled a lot this year and I would say that countries that are actually recovering revenues, like Uganda, get me excited," she said, explaining that this is because she was formally a tax administrator and addressing tax evasion and avoidance and collecting revenues for development is close to her heart. "That's, like, a wow moment."
The French-based tax expert has an array of skills, having been trained in psychology, economics, law and finance. She has held posts as a commissioner in the Indian Income Tax Department, and in the Indian government as the director of tax policy and legislation, director of foreign tax and tax research and as an additional director of income tax, international taxation, before moving to Paris and the OECD in 2012.
In 2017, Bhatia said she is most looking forward to the first exchanges under the AEOI and CRS. "That will be a landmark moment in the world that you will have 51 countries exchanging information with each other. There will be millions of pieces of data going around. And we are anticipating how countries are going to use this information and what impact it is going to have," she said. "2017 is important because of the starting of automatic exchange and that's really an exciting time." She added that there are obvious concerns about the confidentially and the safeguarding of data, but the Forum is doing a lot of work in that regard, she said, as well making sure that this is handled properly. "I think that's going to change the world," she said.
However, Bhatia said she would like to see organisations come together to work collectively on tackling the global tax issues. On beneficial ownership, she said that "everybody realises it's very important, but people don't seem to be pulling their expertise together to do this. So, in the next year, the big thing is going to be: How do we work better together? Let's not duplicate efforts. Let's not go in different directions. Let's not go for different standards – we have to have the same standard. Let's put our heads together and say 'how do we do this in a better way and relieve the pressure off countries as well?'
"It's very exciting and I think we are changing the world," Bhatia concluded.
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