What are the OECD’s common reporting standards?
While much of the media attention of the recent G20 Summit in Hamburg focused on President Trump’s meeting with Russian President Vladimir Putin, and the throngs of anti-capitalist protesters, the Organization of Economic Cooperation and Development (OECD) issued a report to the member nations on its efforts to bolster international cooperation on tax issues. In short, the OECD reported that there have been vast improvements on tax transparency.
“Tax issues have been a key priority of the G20 since its inception, and 2017 is the year of implementation,” said OECD secretary-general Angel Gurría.
The OECD report is basically an update on the progress of implementing the Common Reporting Standard (CRS) and measures that participants have taken to address base erosion and profit shifting (BEPS). The update noted that the Global Forum on Transparency and Exchange Information for Tax Purposes (Global Forum) has grown to 142 member countries and jurisdictions.
“In the midst of the backlash against globalisation, we need to deliver on an agenda of inclusive growth, said Gurria.
Common Reporting Standard
According to the OECD, more than 60 jurisdictions have engaged in approximately 2,000 bilateral relationships for the automatic exchange of CRS information, 50 of which had previously committed to such exchanges when the CRS was first implemented this year.
The OECD credits this initiative with leading to the disclosure of offshore assets by 500,000 people, and the identification of around €85bn (£74.6bn) in additional tax revenue.
All 101 requested jurisdictions have committed to the automatic exchange of information starting no later than September 2018. More than 80 percent of these have the domestic and legal mechanisms in place to deliver on their exchange commitments, and financial institutions have already begun collecting the required financial information.
Base Erosion and Profit Sharing (BEPS) Project
The update also notes that measures are in play to reduce tax avoidance schemes by multinational enterprises in accordance with the joint G20/OECD BEPS project. In short, 101 countries and jurisdictions are collaborating to establish standards and assess implementation of the BEPS framework based on the OECD’s peer review process. Finally, the update notes that measures are being considered to enhance tax certainty and handle the complex tax issues related to the digital economy.
In sum the OECD and the G20 are making progress in their efforts to combat tax evasion and money laundering through such initiatives as the Global Forum and the BEPS project. Although there are legitimate uses of tax havens by individuals and businesses, adhering to the common reporting standards requires the advice and counsel of an experienced international tax attorney.
Posted in: International Tax