{"id":21222,"date":"2013-06-18T07:36:11","date_gmt":"2013-06-18T06:36:11","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=21222"},"modified":"2013-06-18T07:36:11","modified_gmt":"2013-06-18T06:36:11","slug":"the-oecd-is-moving-in-the-right-direction","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2013\/06\/18\/the-oecd-is-moving-in-the-right-direction\/","title":{"rendered":"The OECD is moving in the right direction"},"content":{"rendered":"

The OECD proposal for\u00a0automatic information exchange, published overnight,<\/a> has a realistic appraisal of taxpayer and bank behaviour implicit within it. They say:<\/p>\n

In order to limit the opportunities for taxpayers to circumvent the model by shifting assets to\u00a0institutions or investing in products that are not covered by the model a reporting regime requires a\u00a0broad scope across three dimensions:<\/p>\n

\u00ef\u201a\u00b7 The scope of financial information reported: A comprehensive reporting regime would cover\u00a0different types of investment income including interest, dividends and similar types of income,\u00a0and also address situations where a taxpayerseeksto hide capitalthatitselfrepresentsincome or\u00a0assets on which tax has been evaded (e.g. by requiring information on account balances).<\/p>\n

\u00ef\u201a\u00b7 The scope of accountholders subject to reporting: A comprehensive reporting regime requires\u00a0reporting not only with respect to individuals, but should also limit the opportunities for\u00a0taxpayers to circumvent reporting by using interposed legal entities or arrangements. This means\u00a0requiring financial institutions to look through shell companies, trusts or similar arrangements,\u00a0including taxable entities to cover situations where a taxpayer seeks to hide the principal but is\u00a0willing to pay tax on the income.<\/p>\n

\u00ef\u201a\u00b7 The scope of financial institutions required to report: A comprehensive reporting regime would\u00a0cover not only banks but also other financial institutions such as brokers, collective investment\u00a0vehicles and insurance companies.<\/p>\n

Besides a common agreement on the scope of the information to be collected and exchanged,\u00a0an effective model of automatic exchange of financial information also requires an agreement on a\u00a0robust set of due diligence procedures to be followed by financial institutions to: (i) identify reportable\u00a0accounts and (ii) obtain the accountholder identifying information thatisrequired to be reported for such\u00a0accounts. The due diligence procedures are critical as they help to ensure the quality of the information\u00a0that is reported and exchanged.<\/p><\/blockquote>\n

The most important points here are:<\/p>\n

1) More than interest is covered<\/p>\n

2) Companies are covered<\/p>\n

3) \"Other\u00a0arrangements' are covered - which I sincerely hopes covers trusts and foundations because it is hard to see what else is envisaged<\/p>\n

4) The\u00a0understanding that a wide range of\u00a0financial\u00a0institutions has to be covered is very welcome - because this has been a wide open door for abuse<\/p>\n

5) A wider range of income is covered than the\u00a0European Union Savings Tax Directive as it\u00a0currently\u00a0stands - which is vital.<\/p>\n

The moves are in the right direction on these issues.<\/p>\n","protected":false},"excerpt":{"rendered":"

The OECD proposal for\u00a0automatic information exchange, published overnight, has a realistic appraisal of taxpayer and bank behaviour implicit within it. They say: In order to
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