LEVELLING
THE PLAYING FIELD
Proposal by the International Trade and Investment
Organization
OECD Global Tax Forum
Ottawa 14-15 October 2003
INTRODUCTION
This paper proposes a way forward for the OECD harmful
tax practices initiative.
The participating partners made commitments to the
initiative on the understanding that a level playing
field would first be put in place. However, notwithstanding
the OECD’s public assurances to ITIO members
and other participating partners, progress towards
developing a level playing field is not at an advanced
stage.
For the OECD initiative to proceed in a timely and
effective manner, or indeed proceed at all, OECD countries
must fulfil their side of the bargain. Steps must
be taken as a priority to set up an objective process
for the creation of a level playing field.
Since its initiative began in 1998, the OECD Secretariat
has move towards greater recognition of the value
of proceeding on the basis of partnership. ITIO members
welcome this. They would urge OECD member countries
to support the OECD Secretariat’s efforts to
realise the level playing field on which the initiative
is predicated.
The proposals set out in this paper are presented
in good faith. We trust they will be considered in
the same light.
STRUCTURE
A constructive dialogue on the “level playing
field” issue requires the subject matter to
be defined and framed. This paper is thus divided
into the following sections:
| A. |
Preliminary
Considerations;
|
| B. |
General
and Specific Considerations on the Structure and
Function of the Level Playing Field in Relation
to Tax Information Exchange;
|
| C.
|
Existing
Proposals for Standards in Respect of Tax Information
Exchange upon Request – The EU Tax Package
and the OECD Model Agreement for Exchange of Information
Upon Request; and
|
| D. |
Conclusions and Recommendations. |
A.
Preliminary Considerations
| 1. |
Defining
and framing matters to be discussed requires a
common approach.
|
| 2. |
It
is suggested that the most logical approach to
defining and framing the issues for discussion
is to agree the general case relating to the level
playing field issues in relation to tax information
exchange and only then look at the specific circumstances
which apply at present.
|
| 3.
|
The
following specific considerations need to be
articulated
| a) |
Which
objective standard is to be used to assess
the “levelness” of the playing
field over time;
|
| b) |
What
is the norm or convention or current generally
applied standard in respect of the exchange
of information for tax purposes; and
|
| c) |
What
proposals exist for changing the current
norm or convention or current generally
applied standard and on what time line? |
|
B.
General and Specific Considerations on the Structure
and Function of the Level Playing Field in Relation
to Tax Information Exchange.
Structure
and Function of the Level Playing Field
4. Countries generally enter into tax information
exchange arrangements as part of tax treaties or other
arrangements which are motivated by a desire for mutual
economic and social benefits usually in the form of
increased trade efficiency.
5. The “level playing field issue” in
relation to tax information exchange is not a new
one. The importance of the requirement for a level
playing field in this regard has been repeatedly stated.
6. As it was put by Gabs Mahklouf in his paper at
the Global Forum meeting in the Cayman Islands in
October 2002, “The work that we will be
undertaking this week is intended to apply to both
OECD and non-OECD countries. We are looking to work
with you towards a common standard for all of us.”
7. Similarly, as was stated by Deputy Secretary-General
Seiichi Kondo at that same 2002 meeting in respect
of the OECD’s position on the issue of a
level playing field’s function, “I
am sure that you also wish to see a successful outcome
of this process so that by 2006 we will have achieved
our common goal of a level playing field that
will ensure fair competition.”
8. These statements echo earlier statements made in
Global Forum meetings including the November 2001
meeting, the record of which states at Para 74:
“The Bureau member for Ireland pointed out
that at the October (2001) meeting of the Forum on
Harmful Tax Practices several issues, including the
level playing field issue had been discussed. He
stated that the outcome of these discussions confirmed
that jurisdictions could not be held to a standard
that would exceed the international standard in this
area. He informed the delegates that the current proposal
to ensure a level playing field was to advance the
work in three areas: first, taking forward the harmful
tax practices project, second, updating Article 26
of the OECD Model Tax Convention, and third, implementation
of the 2000 Report on “Improving Access to Bank
Information for Tax Purposes.” He reported that
the Forum had agreed on these conclusions and that
the conclusions would be presented to the Committee
on Fiscal Affairs. Finally, he pointed out that this
work would have to be put on a harmonised timetable
with the tax haven work”
9. The primacy and rationale of the level playing
field have also been recognized in other fora as evidenced
by the concluding statement of the Heads of Government
of the 51 Commonwealth countries (including a large
number of both OECD and non-OECD participating partners)
at Coolom, Australia in March 2002:
“32. Heads of Government reaffirmed the
right of sovereign nations to determine their own
tax and fiscal policies and welcomed the proposed
adjustments being made to the OECD Harmful Tax Competition
Initiative and hoped that the dialogue, promoted by
the Commonwealth, would ensure that the process continued
to be inclusive. They reiterated that the
standards and timelines for non-OECD jurisdictions
should be no more onerous than those for OECD members.”
10. This recent statement echoes a statement found
in a February 2000 UK Treasury paper on tax competition
in which it was stated:
“4.7 Countries identified by the OECD as
tax havens will quite properly expect EU and other
OECD member countries to meet at least the same standards
of effective exchange of information including access
to, and exchange of bank information for, tax purposes,
as they themselves are expected to meet under the
Harmful Tax Competition initiative.”
11. The essence of the structure of a level
playing field in the current context is that all participating
partners implement at least the same minimum
standards in all bilateral and multilateral arrangements
to which they are a party at any given time and similarly
that all participating partners should be prepared
to apply the same consequences (if any), to any jurisdiction
that refuses to live up to this standard. In recognition
of the fact that information exchange standards are
not static, at such time as the minimum standards
change, a level playing field would also require that
participating partners should make such changes uniformly
and in respect of arrangements which apply to all
other participating partners. In recognition of the
fact that some countries may choose to put into effect
more than the minimum standards, participating partners
should be free to do so without compulsion either
to move beyond the minimum standards of the norm,
or to abstain from doing so.
12. The structure of the level playing field was also
captured in the ITIO/STEP report, Towards A Level
Playing Field (2002), as follows:
“The design of new rules to facilitate cross-border
exchange of information must evolve through a consensual
process including the following elements:
| • |
establishment
of a level playing field (i.e. all countries must
be subject to the same rules for the same activities,
implemented on the same timetable and with the
same consequences for non-co-operation).
|
| • |
discussion
of issues in a universal forum which includes
all jurisdictions offering facilities that may
be affected by the outcome;
|
| • |
appropriate
regard to competing considerations, such as reasonable
financial privacy….
“Discrimination is not the solution, however.
Fairness requires reliance on a legitimate process
in determining and realising the […..] goal
of the OECD and the non-OECD [countries] alike
in this exercise.” |
Specific Considerations
THE OBJECTIVE STANDARD FOR “LEVELNESS”
13. It is suggested that the objective standard for
“levelness” should relate to whether an
impartial observer would be able to observe and document
both the legal framework for the flow of tax information
and the actual flow of information between or among
the relevant authorities of all participating partners
according to an internationally agreed standard, which
in turn would specify the content and timeliness of
the information flow. Such a standard should permit
countries to arrive transparently at the internationally
agreed standard by a variety of mechanisms and should
not necessarily require a universally implemented
single convention.
14. The necessary prerequisite for levelness is therefore
an internationally agreed standard for the exchange
of information in tax matters.
PRESENT STATE OF “LEVELNESS”
15. There is at present no public international law
norm or convention in respect of exchange of information
in tax matters. Various countries negotiate exchange
of information protocols to suite their mutual commercial
interests and countries with DTA’s apply similar
or different standards for exchange of information
as among their trading partners according to their
commercial interests.
16. That is not to say however that there are not
broad common elements of to be found in the tax information
protocols utilized by some participating partners,
whether arising from the use of various versions of
existing model conventions such as the OECD Model
Convention or the UN Model Convention, or otherwise.
17. The proper method for identifying what such
broad common elements are as a matter of current practice
involves a “benchmarking” study of all
tax information exchange arrangements, whether within
a DTA or otherwise, entered into by each participating
partner, whether with another participating partner
or otherwise. Such an analysis has been commenced
by several of the participating partners and further
participation would be most welcome.
18. While “levelness” may not have been
achieved at this point in time due to the absence
of accepted standards, at least two proposals exist
for modifying the current state of “levelness”.
PREVIOUS TIMELINE PROPOSALS IN THE CONTEXT OF THE
1998 HARMFUL TAX COMPETITION REPORT AND ITS UPDATES
19. The 1998 Report and subsequent publications indicated
that as part of the leveling process, OECD Member
States would be reviewing their tax practices with
a view to the elimination of “harmful tax practices”.
This work was summarized and reported back to the
Global Forum at relevant times. By way of example
from the Global Forum meeting in Malta in July 2001,
the record of that meeting shows at the following
paragraphs:
1.
“The delegate for the UK indicated that he was
going to cover three areas: the member country work,
defensive measures and the commitment process going
forward. He first outlined that there had been no
change as regards the work with OECD member countries.
The list of 47 potentially harmful regimes that had
been identified in the 2000 Report remained unchanged.
He reported that the OECD member countries were in
a process of reviewing the regimes, partly through
the development of application notes, with a view
to determining whether the regimes were actually harmful.
OECD member countries were committed to remove
any features of their regimes that are actually harmful
by the April 2003 deadline. The reason that
there was only a short discussion on the OECD member
country work in the 2001 Report was simply a reflection
of the fact that no decisions had to be taken at this
point in time. He confirmed that Member country work
would continue in accordance with the 1998 and 2000
Reports and that the 2003 deadline remained unchanged.
2. The delegate for the UK further explained
that there had been only one change regarding the
co-ordinated framework for defensive measures. The
date for the potential application of defensive measures
against uncooperative tax havens had been put back
to April 2003. He reiterated that
defensive measures would be taken by the individual
OECD member countries and not by the OECD as an organisation.”
20. As events have transpired, it has not been possible
to date for the Member States of the OECD to agree
and publish which if any of the 47 potentially harmful
tax practices they have determined to be actually
harmful. This is certainly understandable given that
matters in respect of “harmful tax practices”
have not been finally resolved among the EU Members
of the OECD, with recent media reports that 2019 is
now the accepted EU target date for discontinuance
for some such “harmful tax practices”
21. Another aspect of the earlier proposals was related
to “coordinated defensive measures” which
were to be applied to “uncooperative countries
and jurisdictions”. As was indicated in the
July 2001 report at Para. 7 by the OECD Co-Chair:
“Third, he reported that the potential application
of a framework of co-ordinated defensive measures
with respect to tax havens would be delayed until
such time as it would apply to OECD member countries.”
22. Consistent with the above, at the same meeting
the French Delegate confirmed that:
“the aim of the project was to have, by
2005, a distinction only between co-operative and
uncooperative countries and jurisdictions irrespective
of whether such countries and jurisdictions would
be tax havens, OECD members or non-member economies”.
23. As events have unfolded no “coordinated
defensive measures” have been announced in relation
to uncooperative OECD or non-OECD countries. Indeed
many of the countries which have refused to participate
in the Global Forum process have now been granted
“immunity” from coordinated defensive
measures originally proposed.
C.
Existing Proposals for New Standards and Timelines
in Respect of Exchange of Tax Information upon Request
EU
Tax Package
24. Discussions subsequent to the publication of
the OECD’s new Model for tax information exchange
among the fifteen Member States of the European Union,
the ten EU Accession States, and a number of other
countries including some non-EU, OECD Member States
and several non-cooperative countries, have identified
a new alternative standard for exchange of tax information
upon request which the EU has proposed will apply
among those states as of 1 January 2005 if arrangements
are concluded by 30 June 2004. (It is noted that at
least four of the accession states including Malta,
Estonia, Lithuania, and Slovenia have requested derogations
of at least two years from this 2005 date.)
25. The fundamental objective of the EU’s Tax
Package which sets out the new alternative standard
is to bolster the EU’s internal market and tax
base without damaging the EU’s financial services
sector. As was stated in the July 2001 text of the
EU’s announcement of the launch of its Tax Package:
“In order not to hamper the competitiveness
of the EU financial industry, Member States
have committed themselves to promote the adoption
of information exchange in their dependent and associated
territories, such as the Channel Islands and Aruba.
At the same time, the EU has started exploratory talks
with some key third countries with the view of having
"equivalent measures" introduced there.
“The objective of this is to avoid flows
of capital from the EU financial centres to these
third countries, once the exchange of information
is introduced in the EU. Contacts were started
with the USA in February and extended to San Marino,
Liechtenstein, Monaco, Andorra and Switzerland.”
26. The automatic exchange of information component
in the EU proposal relates primarily to the taxation
of savings income, but the general scope of the
implications of the directive as it applies to the
exchange of tax information upon request generally
is much more broad, exempting Switzerland, Luxembourg,
Austria and a number of other countries which have
refused to cooperate with the OECD’s Harmful
Tax Competition project from engaging on exchange
of information upon request on a basis consistent
with the OECD Model Agreement indefinitely. As
was stated at Para 6 of the relevant section in the
January 2003 European Council of Finance Ministers
meeting conclusions:
“The Council agrees that ( in extension
to its conclusions of 13 December 2001) the
directive on the taxation of Savings based on exchange
of information as the ultimate objective,
will contain provisions ensuring that:
“- 12 Member States will implement automatic
exchange of information from 1 January 2004, the date
of implementation of the directive, and of the agreements
with third countries as well as with the dependent
or associated territories.
“- Austria, Belgium and Luxembourg will from
the date of implementation of the directive and of
the agreements with third countries as well as with
the associated or dependent territories operate a
(transitional) withholding tax, with 75/25 revenue
sharing and will - implement automatic exchange of
information, if and when the EC enters into
an agreement by unanimity in the Council with Switzerland,
Liechtenstein, San Marino, Monaco and Andorra to exchange
of information upon request as defined in the OECD
agreement, (The OECD Agreement on Exchange
of Information on Tax Matters as developed by the
OECD global forum working group on effective exchange
of information (DAFFE/CFA(2002)24/final)) , applying
simultaneously the withholding tax rate defined for
the corresponding period, for the purposes of the
directive ; and, if and when the Council agrees
by unanimity that the USA are committed to exchange
of information upon request as defined in the OECD
agreement for the purposes of the directive.”
27. Further, the EU’s Tax Package has been
developed specifically to address a current “level
playing field” problem within the EU and therefore
to an extent the OECD itself. As was noted in
the European Commission’s July 2001 FAQ regarding
the current state of exchange of information for tax
purposes;
“Do Member States not already co-operate
in exchanging information on cross-border interest
on savings?
“Not sufficiently. There are legislative
provisions in place for Member States to exchange
information. Bilateral tax treaties include a clause
providing for information exchange and there is an
EC Directive on Mutual Assistance in Tax Matters Directive
(77/799), which provides for information exchange,
on request, spontaneously and automatically. The problem
with the clauses in tax treaties and with the Mutual
Assistance Directive is that they allow Member States
to refuse to provide information in certain cases,
e.g. if they would not under their domestic laws or
administrative practices be able to carry out or collect
this information for their own purposes or if the
applying State itself would not be able to provide
similar information if requested.
“These exceptions mean that certain countries
cannot, under their current laws,exchange information
on savings interest and that other countries are not
required to provide information to these countries.
“Furthermore, the tax treaties clauses
and the Mutual Assistance Directive do not include
common rules concerning the details of the information
to be reported, the format and frequency of the information
exchanges, and the mechanisms to carry out the information
exchange, with the result that even when information
is exchanged it is not always in a very usable form.
The present proposal for a Directive would establish
a clear and comprehensive system of information exchange
between Member States in the savings taxation area.”
28. In summary, the elements of this new EU standard
for exchange of tax information upon request are as
follows.
29. The newly proposed EU minimum standard in respect
of the exchange of tax information upon request, which
the EU will expect of its own members as well as other
European countries and the United States of America:
a) will come into effect at an indeterminate point
in time in the future, likely after 2011,
b) will be restricted to exchange of information
upon request, and
c) will apply essentially only to tax information
exchange in criminal matters in circumstances in which
the dual criminality standard for cooperation is maintained
and the scope of criminal activity is limited to “tax
fraud and the like”.
30. As a condition precedent to its agreement in respect
of such cooperation, Switzerland has indicated that
it has received assurances from the majority of OECD
Member States (the fifteen EU Member States plus itself),
that it will not be pressured to enter into any other
form of tax information exchange protocol in the context
of the recently developed OECD Global Forum Model
(as discussed below) or otherwise. The text of this
arrangement as set out by the Swiss Ministry of Finance
on 21 March 2003 is:
“In a memorandum of understanding (MOU)
Switzerland commits itself to the EU in the double
taxation agreement with the EU member states and on
the basis of mutuality to agree to administrative
assistance in cases of tax fraud. This would cover
individuals and companies. Administrative assistance
would be provided on justified request in cases of
tax fraud under Swiss law, as well as in cases of
other equally serious offences. “Offences comparable
to tax fraud include violations of precisely definable
penal tax regulations of other states which exhibit
the same degree of wrongdoing as tax fraud in Switzerland
but which are not covered by Swiss procedures and
thus by extension not by Swiss law. Simple tax evasion
is not covered by this provision.”
“Clarifications, which were necessary
from Switzerland's perspective, were completed in
a three-party meeting on 6 March 2003 between Switzerland,
the European Commission and the EU Presidency. To
be clarified in particular was the implied intention
of the EU in the Council resolution of 21 January
2003 of continually seeking to persuade Switzerland
and other third countries to move to a system primarily
envisaged for tax havens in internal OECD discussions,
in other words, for countries with no income tax and
standards not comparable to those in Switzerland.
This requirement has been dispensed with. The agreement
precisely regulates the conditions under which revisions
can be made. Decisions with regard
to improvements of a purely technical nature can be
made on a regular basis.
“Consultations on substantive changes can
only ensue after the agreement has been fully implemented
and sufficient experience has been gained on the tax
rate of 35% valid from 2011 onwards, or if both parties
agree to have consultations of this nature. In this
regard, international developments could also be taken
in to consideration. The results of such consultations
are in no way prejudiced by the agreement. In addition,
the commitments of both parties are established in
the memorandum of understanding, in terms of which
the agreement should be implemented in good faith
and not circumvented via unilateral measures.
“An element of the agreement reached on 6 March
in the three-party meeting is also Switzerland's participation
in the directives on the zero-taxation of dividend,
interest and royalty payments between related companies
in the source state.
“Overall the stability of the agreement sought
by Switzerland is sufficiently assured. It has been
possible to uphold key concerns.”
31. There can be no doubt, given the total absence
of any contrary public statement by any person representing
any OECD country, that Switzerland and the other non-cooperative
countries are to be granted what amounts to indefinite
immunity from any pressure to adopt exchange of
information upon request according to the March 2002
Model Agreement.
32. The Finance Ministers of the European Union Member
States, which together with Switzerland make up a
majority of the OECD countries, have committed themselves
to assisting in negotiations with a number of other
countries to ensure that this EU proposed minimum
standard is adopted by this larger group. It is noted
that such negotiations in respect of the proposed
new EU standard are intended to take place with
countries which have refused to make any commitments
to the OECD’s Harmful Tax Competition initiative
and further, that such negotiations are intended to
exclude most non-OECD countries and many OECD countries
which did make commitments to the OECD initiated process.
As was stated in the Ecofin press release of 3 June
2003:
“The Council of the European Union and the
representatives of the governments of the Member States,
acting within the Council, will do their utmost to
assist the Commission in ensuring that appropriate
agreements with the Swiss Confederation, the Principality
of Liechtenstein, the Republic of San Marino, the
Principality of Monaco and the Principality of Andorra
are concluded in sufficient time to enable the provisions
of Council Directive 2003/ /EC of ................
on taxation of savings income in the form of interest
payments to be applied from 1 January 2005 in accordance
with Article 17 thereof, and in particular that the
said agreements provide for the application of measures
equivalent to those contained in the Directive not
later than 1 January 2005.”
33. From the perspective of the non-OECD participating
partners, it is significant and troubling that the
countries which refused to make any commitment to
the OECD’s Harmful Tax Practices project are
now being offered coordinated rewards
in the form of less onerous exchange of information
standards and greater trade in services access by
the majority of OECD member countries, on the basis
of such refusal.
OECD Model Agreement for Exchange of Tax Information
Upon Request
34. The background to the commitments given by a significant
number of small and developing countries in respect
of the OECD Harmful Tax Competition Initiative is
well known.
35. The commitments given by the non-OECD countries
and territories were conditional on the existence
of a level playing field which would apply to both
OECD and non-OECD countries, in respect of the standards
and time lines for implementation of new protocols
for the exchange of information upon request as well
as a level playing field in terms of consequences
for OECD and non-OECD countries which did not cooperate
in implementing such standards.
36. A number of the participating partners expended
a significant amount of resources in terms of time,
effort and money were devoted to the creation of a
Model Agreement which contained standards which could
be implemented by all concerned on a defined time
line. The ongoing work of the participating partners
in respect of the accounts requirements, (including
the ongoing work with respect to trusts and partnership
accounts), which would be utilised by all participating
partners, has similarly consumed valuable resources.
37. The subsequent proposals agreed as among the majority
of the OECD Member States including the EU Member
States and Switzerland need not necessary render the
work on the Model Agreement without utility.
38. Developments subsequent to the publication by
the OECD of its Model Agreement and within the context
of the European Union, have merely shown that many
countries including both OECD and non-OECD countries
are not yet ready to adopt exchange of tax information
upon request as set out in the 2002 Model and that
many others consider that the proposal in respect
of exchange of information upon request which Switzerland
together with the EU Member States have acceded to,
is the most appropriate next step toward a “level
playing field” at the present time.
39. Consistent with this view, the OECD has deferred
the publication of the list of “actually harmful
tax practices” carried on by its Member States
that was to have been published by the end of April
2003.
40. Also consistent with the fact that the 2002 Model
Agreement is ahead of its time, it is noted that although
the 2002 Model Agreement was published more than a
year and one half ago, treaties which the OECD Member
countries have entered into or updated since that
time do not use the 2002 Model Agreement. By
way of examples, it is noted that the United Kingdom
has concluded new or amended treaties with countries
which have been participating partners throughout
the process and otherwise, which do not use the
2002 Model Agreement:
a)
UK – Mauritius March 2003
b) UK – Chile July 2003
c) UK – Canada May 2003
d) Canada – Peru 2003
41.
The recently published revised UK – Australia
treaty (August 2003) does set out at Article 27 an
exchange of information protocol which more closely
resembles the 2002 Model than the earlier version.
These countries should be commended for such a step.
However it is noted that although these countries
made this steip, the new DTA still contains the old
OECD Article 26 “carve out” which obviates
any obligation in respect of administrative matters
at variance with domestic practice. Further, although
both countries have revised other treaties with OECD
Member States during the period since the publication
of the 2002 Model, this is the only example of the
use of 2002 Model language found.
42. The OECD’s ongoing work to encourage all
international financial services centres, and in particular
those which compete with the non-OECD participating
partners such as Singapore and Hong Kong, is also
to be commended and encouraged. It is to be hoped
that these countries and territories will also agree
to implement the same standards as accepted by all
of the participating partners and on such same time
lines as may be agreed.
43. The OECD is also to be commended for the transparency
of its 2003 Improving Access to Bank Information for
Tax Purposes update. This document also clearly sets
out that the standards which are set out in the 2002
Model have not been uniformly achieved by its own
members as at August 2003. The 2003 update also confirms
that the current EU proposals are the closest to a
common standard among OECD Member States.
44. The EU’s proposal for a common standard
in respect of exchange of information upon request
by 2011 or such later date as should be agreed as
among the relevant countries may therefore be viewed
as a clarifying transitional step toward the eventual
global adoption of the 2002 Model Agreement.
D.
Conclusions and Recommendations
45. Subsequent to the publication in March 2002 of
the Model Agreement on the exchange of information
upon request, the majority of OECD participating partners,
as a result of negotiations with “non-cooperative
tax havens”, have endorsed a new standard and
time line for the exchange of tax information upon
request. This new standard is scheduled to come into
effect at a point in time yet to be determined, but
likely to be after 1 January 2011. This standard is
to apply as between the majority of OECD Member States
and competitors of non-OECD participating partners
including countries identified by the OECD as “non-cooperative”.
46. The level playing field principle requires
that no participating partner should be obliged to
enter into any agreement for the exchange of tax information
on more onerous terms than are offered to other participating
partners and uncooperative countries.
47. It also follows that participating partners should
continue to monitor developments outside of the Global
Forum process and should continue in their Global
Forum participation and bilateral dialogue.
48. It is therefore proposed that the Global Forum
adopt the following resolution:
“All participating partners, recognizing
that the proposed new standard for tax information
exchange upon request, as set out in the Model Agreement
published by the OECD in March 2002 and further clarified
in the Global Forum Meeting held in the Cayman Islands
in October 2002, has significant value as a guide
for the future evolution of tax information exchange
upon request, and further recognizing that the conditions
precedent for the implementation of any commitments
given by either OECD countries or non-OECD countries
as part of, or in response to, the OECD’s Harmful
Tax Competition Initiative have not been met, and
further recognizing that there is at present no ascertainable
date at which such conditions precedent will be met,
therefore recommend that:
(i) Without prejudice to the commitments of our individual
countries, participating partners continue to be at
liberty to engage in bilateral dialogue on all matters
of mutual interest including tax information exchange;
(ii) with a view to advancing the Global Forum process
through documenting the existing global norms and
facilitating the work on the current global status
of tax information exchange upon request, each participating
partners should compile from each tax treaty or tax
information exchange agreement or other relevant agreement
or arrangement to which that participating partner
is a party, the language which sets out the requirements
for tax information exchange upon request as well
as any legal (including constitutional) or administrative
constraints in respect of any such exchange and to
share that compiled information with all other participating
partners at the earliest opportunity and in any event
no later than 1 January 2006;
(iii) participating partners will meet periodically
in the Global Forum to review whether as a matter
of fact, the conditions precedent to the implementation
of commitments made in the context of the OECD’s
Harmful Tax Competition Initiative have been fulfilled,
bearing in mind the three year following 1 January
2005 timeline set out for review in the EU’s
arrangements with, Switzerland, Luxembourg, Austria,
Belgium, San Marino, Andorra, Liechtenstein, and Monaco,
and therefore commencing no later than 1 January 2009,
the fourth anniversary after the 1 January 2005 proposed
implementation date as set out in the EU Tax Package
agreement of 3 June 2003; and
(iv) the Global Forum be expanded to include the non-cooperative
countries and territories which have been instrumental
in the development of the new proposed standard and
time line which have supplanted those developed in
the existing Global Forum.”
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