I, like many in the tax justice arena, was very dubious when the OECD set up the Global Forum on Transparency and Exchange of Information for Tax Purposes to undertake peer reviews of the operation of tax information exchange by participating states in the aftermath of the financial crisis and the rush to sign tax information exchange agreements (TIEAs).
TIEAs are deeply flawed and the OECD designed and promoted them.
The OECD was also remarkably cagey about this whole process: civil society was excluded from most involvement, far too many tax havens appeared to get positions of influence over it, the nature of the peer review process was not clear and there was some real doubt about whether the process might be a bit of a whitewashing exercise.
However, I was one of several speakers at the Tax Justice Network conference last week to comment that although reservations about process remain (and they do, and remain valid) the outcome of the review processes to date suggests that this is no whitewash.
The case of Jersey is an example. The fist phase report was critical of issues in Jersey’s access to data that we in civil society would have found hard to identify. Although it was noted that the deficiencies in the accounting requiremnts for many orgasiations in the island had not as yet given rise to any practical difficulties in exchanging data the review still demanded that they be remedied. That was welcome, of course.
That however was stage one, and the easy part. Having the right pieces of paper in place has been something that we’ve always said that a secrecy jurisdiction should be able to do without much problem – after all their legislatures are captured in very many case by the local financial services industry to ensure they meet its needs, and this was just another one of those needs. But, stage 2 was something else. We’ve always said that the test of these places would come when a review of actual activity was undertaken.
The OECD have delivered on this. They’ve revealed, in unambigupus terms, how little information exchange Jersey has actually done And they’ve also not avoided the fact that a perceived failure has occurred and they have levelled criticsm at Jersey for the fact that this has happended and have demanded reform.
This shatters Jersey’s reputation. Firstly it is not transparent when tiny amounts of data are made available. Second it is shown to be non-cooperative (as the UK has already officially labeled it).
And I have to say that I did not think the OECD would do such things.
So I say that although reservations still exist about this process and tax information exchange agreements themselves remain fundamentally flawed and in need of replacement with automatic information exchange the actual peer review proicess itself seems to be delivering, so credit is given where credit is due, and I offer it on this occasion, as I know others in TJN do as well.