Executive summary
Ensuring taxpayers pay the tax that is due is crucial to maintaining public finances and reinforcing the public’s trust in the tax system. In this regard, governments have long sought to ensure that taxpayers with offshore financial activities continue to meet their domestic tax obligations. This has become increasingly challenging as the financial sector has become progressively global in nature and of heightened importance as jurisdictions work to address the impacts of the COVID-19 pandemic.
The key tool available to governments to ensure the correct payment of tax with respect to offshore income and assets is the exchange of information between tax authorities. A very significant and recent milestone in this regard was the development by the OECD, working with G20 countries, of the Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI Standard).
The AEOI Standard built upon the pre-existing and ongoing exchange of information on request, to provide a common multilateral framework for the domestic collection and international exchange of information on Financial Accounts between tax authorities on an automatic basis.
In this regard the AEOI Standard provides a common approach to ensuring that Financial Institutions report information to their domestic tax authorities in relation to Financial Accounts held by foreign tax residents or, in certain cases, held by Entities controlled by foreign tax residents (defined as Controlling Persons). Tax authorities then exchange that information with the tax authority from the jurisdiction where the Account Holder/Controlling Person is resident. This allows tax authorities to verify whether taxpayers are properly declaring their international financial affairs and paying the tax that is due to their domestic tax authorities.
Recognising its huge potential, 120 jurisdictions have so far committed to exchange information under the AEOI Standard and more are expected. Furthermore, the vast majority of these jurisdictions have already introduced the necessary legal frameworks and technical solutions, and are collecting the information from their Financial Institutions and exchanging it with their exchange partners. The key task now is ensuring that the AEOI Standard operates effectively in practice and that its potential benefits are realised.
The Global Forum therefore monitors the global implementation of the AEOI Standard and carries out peer reviews to assess the quality of its implementation. It has already reviewed the domestic and international legal frameworks for the first 100 jurisdictions that committed to exchange information automatically from 2017 or 2018, and published the results in 2020. Since then, several jurisdictions have addressed the recommendations made. Their reviews and the conclusions drawn have been updated accordingly and are included in this report. This report also includes the review of the legal frameworks for the two jurisdictions that committed to commence exchanging information from 2019.
The Global Forum is also carrying out peer reviews to ensure that the exchanges are operating effectively in practice. This includes ensuring that Reporting Financial Institutions comply with the requirements and that the information is prepared, formatted and transmitted in accordance with the requirements. These reviews are ongoing, with the results expected to be published in 2022.
This report is structured as follows:
Chapter 1 provides the latest results of the monitoring process to track the timeliness of the delivery of all of the commitments to implement the AEOI Standard.
Chapter 2 sets out details of the peer reviews that have been conducted so far, along with: (i) a summary of the results of the reviews of the AEOI legal frameworks, including the updated determinations made with respect to each jurisdiction, and (ii) a summary of the reviews in relation to effectiveness in practice, including the key issues identified.
Chapter 3 presents the updated analysis and results of each jurisdiction’s peer review with respect to its legal frameworks implementing the AEOI Standard, including the specific recommendations made.
Annex A details the staging of the various reviews (the “Staged Approach”).
Annex B provides information on all the exchange agreements that are in place with respect to the AEOI Standard, including those activated through multilateral frameworks, as well as bilateral agreements.
Annex C contains the AEOI Terms of Reference, which provides the basis for the AEOI reviews.
The information in this report is up to date as of 10 November 2021. Further information and updates are available on the AEOI Portal (www.oecd.org/tax/automatic-exchange) and the relevant communication channels that each jurisdiction has in place domestically.