I have been fairly robust on the issue of tax information exchange agreements (TIEAs) on this blog.
I am sure I upset my friends in the OECD by doing so. I apologise to them. I know they are doing the best they can. And this was the best that was possible after George W Bush all but destroyed the OECD initiative against harmful tax competition in 2001. I accept that, entirely.
But I know we can do better now. Bush has gone. The world has changed. In some ways for the better.
I have two concerns about TIEAs. In many meetings with many tax officials (which I almost never refer to on this blog, but which happen, quite often) I am told by them that TIEAs are not delivering and cannot deliver. The burden of proof required to raise a request makes them virtually meaningless, bar their political significance as a rebuff to George W Bush over the last seven years. The havens do not always accept a request even when they think they have reached the appropriate level of proof to justify a claim for data.
Second, after seven or so years of this programme we have just got to 50 of them, and with the greatest of goodwill, those between the Faroes and the UK Crown Dependencies and Greenland and the UK Crown Dependencies are not going to be used that often, I bet — and that is six of the ones we have got.
To make this network effective we would need several thousand — 40 odd tax havens to 100 odd jurisdictions, and that excludes ones between the secrecy jurisdictions themselves. You can see we have a very long way to go — and no chance of really completing this process on a bilateral basis. The model is wrong. It’s not a criticism of anyone to say so — it is a blindingly obvious fact now that we can think differently.
I don’t dispute they’ve been the right direction of travel — any progress is better than none. But when there is something so much better we could grasp now who can blame me for hoping for more — maybe from the G20, maybe from the OECD negotiation process that will have to follow it.
Multilateral agreements opening enquiry to all who want to make it (unless civil rights abuse is suspected) has to be the right way to go. I’m hoping for that.
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It would seem that Guernsey is stepping up the campaign to use public money to fund ‘ambassadors’ to ‘reach important people’ to promote how great they are at complying to international specifications, such as introducing TIEAs with Finland etc. Even trumpeting the UK TIEA which won’t be ratified by 2011 at the earliest seems like distasteful spin to quell domestic questions in the face of the adverse publicity on an almost daily basis.
Interesting to note that the Cayman Islands have had a TIEA with the US for a while now, and they oonly budget for 120 requests a year. Shows how everyone is complicit in the understanding that TIEAs are next to uselss in combatting the sources of this unethical, but so deeply engrained that proponents look genuinely perplexed when challenged, practice.
[…] The reason is this: what they called for is an extension of the bilateral process of information exchange inherent in the OECD tax information exchange agreements. I’ve said it before — and I’ll say it again — these things are near to useless. Please read what I have to say here. […]
[…] The reason is this: what they called for is an extension of the bilateral process of information exchange inherent in the OECD tax information exchange agreements. I’ve said it before — and I’ll say it again — these things are near to useless. Please read what I have to say here. […]
Are you please able to give a concise explanantion (for my educational purposes more than anything else) as to the differences between a bilateral and multilateral TIEA.
Thanking you
Robert
Candidly as yet none of us know.
No one has used the OECD model for a multilateral TIEA – and no one knows if they will
As such I doubt the difference has significance right now
Richard
Richard,
Many thanks for your prompt response.