GLOBAL STANDARD ON AUTOMATIC EXCHANGE OF INFORMATION

Starting in September 2017, the move to automatic information exchange will make it much easier for tax authorities to track down tax cheats.

More than 65 countries have already publicly committed to implement automatic information exchange, including offshore financial centres such as Switzerland, Luxembourg, Singapore and the British Crown and Overseas Territories. Other centres such as Dubai and Panama have signalled that they will resist the transparency initiative;

A group of 45 jurisdictions, the Early Adopters Group, have already publicly committed to a timetable for implementation of the Standard. These jurisdictions, which comprise a diverse range of large and small juridictions, have set an ambitious and achievable timetable for implementing the Standard, such that all laws and processes would be in place for the first information exchanges to begin by September 2017. The other jurisdictions  are likely to come under pressure to implement the measures a year later in 2018, as G20 countries have expressed a willingness to impose sanctions on jurisdictions that refuse to share information. A blacklist of uncooperative countries that do not sign up to transparency measures will likely be drawn up by the OECD.

Early Adopters Group

1. Argentina
2. Belgium
3. Bulgaria
4. Colombia
5. Croatia
6. Cyprus
7. Czech Republic
8. Denmark
9. Estonia
10. Finland
11. France
12. Germany
13. Greece
14. Hungary
15. India
16. Iceland
17. Ireland
18. Italy
19. Latvia
20. Liechtenstein
21. Lithuania
22. Malta
23. Mexico
24. The Netherlands
25. Norway
26. Poland
27. Portugal
28. Romania
29. Slovakia
30. Slovenia
31. South Africa
32. Spain
33. Sweden
34. Switzerland
35. United Kingdom including Crown Dependencies and Overseas Territories
36. Isle of Man
37. Guernsey
38. Jersey
39. Anguilla
40. Bermuda
41. British Virgin Islands
42. Cayman Islands
43. Gilbraltar
44. Montserrat
45. Turks and Caicos Islands

The Standard

The Standard calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis.

The Standard provides for annual automatic exchange between governments of financial account information, including balances, interest, dividends, and sales proceeds from financial assets, reported to governments by financial institutions and covering accounts held by individuals and entities, including trusts and foundations. It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

The full version of the Standard includes commentaries and guidance for implementation by governments and financial institutions, detailed model agreements, as well as standards for harmonised technical and information technology modalities, notably a standard format and requirements for secure transmission of data.

Banks and other financial institutions will face significant compliance costs for implementing the new rules that will require them to identify their clients' tax residences and exchange relevant information.