OECD’s Automatic Exchange of Information – Following the U.S. Lead of FATCA – for Better or for Worse
There has been much grumbling and lamenting around the world about the U.S. law of FATCA that went into effect in 2014. See, Part 1- Unintended Consequences of FATCA – for USCs and LPRs Living Outside the U.S.
For better or worse, FATCA has become the basic model that has driven all of the large economies (some 50+ countries) to move along the same path of automatic exchange of information with countries around the world. Recent revelations last week of Luxembourg is likely to only increase the political motivation to push forward these efforts. See, the Guardian’s recent article, Luxembourg tax files: how tiny state rubber-stamped tax avoidance on an industrial scale, (5 Nov 2014, by Simon Bowers).
The OECD is now moving at light-speed, at least compared to the normal speed of the OECD, as its member countries have signed a ” . . . Common Reporting Standard for automatic exchange of tax information, now contained in Part II of the full version of the Standard. On 6 May 2014, the OECD Declaration on Automatic Exchange of Information in Tax Matters was endorsed by all 34 member countries along with several nonmember countries. . . ”
See the Automatic Exchange of Information programs provided by the OECD in its website
Importantly, and most recently on October 29, 2014, ” . . . 51 jurisdictions, 39 of which were represented at ministerial level, signed a multilateral competent authority agreement to automatically exchange information based on Article 6 of the Multilateral Convention. This agreement specifies the details of what information will be exchanged and when, as set out in the Standard. . . ”
Interestingly, it seems clear that the Common Reporting Standard for automatic exchange of tax information will become the future standard of automatic information.
Technology and a world wide financial sector that is globally connected throughout, allows governments around the world to make these systems possible; for better or for worse.