Exchange of Information
and Tax Cooperation
Introduction
Role of international exchange of
information
• To ensure a correct application of
international and domestic tax rules; and
• To counteract tax avoidance and evasion
Different Mechanisms for Exchange of
Information and Tax Cooperation
Bilateral
Treaties
OECD Model
UN Model
Tax Information Exchange Agreements (TIEAs)
Model Agreement on Exchange of Information on Tax Matters
(OECD) (generally bilateral, some multilaterals have been
concluded)
Multilateral
cont…
Multilateral Conventions
Convention of Mutual Administrative Assistance in Tax
Matters and its amending Protocol (OECD and Council of
Europe)
Regional Conventions
SADC Agreement on Assistance in Tax Matters
CEMAC (Convention d’assistance mutuelle administrative en matière
fiscale)
UEMOA (Chapitre V Assistance Administrative)
Other – Working Agreements eg.
OECD Model Memorandum of Understanding on
Automatic Exchange of Information for Tax Purposes
OECD Model Agreement for the Undertaking of
Simultaneous Tax Examinations
• Each exchange of information instrument
provides different options for cooperation
Article 26 OECD Model Tax
Convention
The competent authorities of the Contracting States shall
exchange such information as is forseeably relevant for
carrying out the provisions of this Convention or to the
administration or enforcement of the domestic laws
concerning taxes of every kind and description imposed
on behalf of the contracting States, or of their political
subdivisions or local authorities, insofar as the taxation
thereunder is not contrary to the Convention. The
exchange of information is not restricted by Articles 1
and 2.1 and 2.
Overview of exchange of information
Country A
Legal Instrument
(bilateral or multilateral)
Ministry of Finance
or
Tax Administration
→
Competent
Authority
Country B
Ministry of Finance
or
Tax Administration
←Exchange of information→
Competent
Authority
information
information
Local & regional
Tax officials
Local & regional
Tax officials
9
Types of Information Exchange and
Tax Cooperation
Information Exchange
Exchange of Information on request (Specific)
Spontaneous exchange of information
Automatic (or routine) exchange of information
Industry-wide exchange of information
Simultaneous tax examinations
Tax examinations abroad
Tax Cooperation
Tax collection
Exchange of Information On Request
The competent authority of one country asks for
particular information from the competent
authority of another contracting party.
Spontaneous Exchange of Information
The provision of information to another
contracting party that is forseeably relevant to
that other party and that has not been previously
requested.
Automatic Exchange of Information
Involves the systematic and periodic
transmission of “bulk” taxpayer information by
the source country to the residency country
concerning various categories of income (e.g.
dividends, interest, royalties, salaries pensions,
etc.)
Industry-wide Exchanges of Information
The exchange of tax information specifically
concerning a whole economic sector and not
taxpayers in particular.
Simultaneous Tax Examinations
An arrangement by two or more countries to
examine simultaneously and independently,
each on its territory, the tax affairs of taxpayers
(or a taxpayer) in which they have a common or
related interest.
Conducting Tax Examinations Abroad
Allows tax administrations, when requested and
to the extent allowable by domestic law, to
permit authorised tax officials of another
country to participate in the conduct of tax
examinations carried out by the requested
country.
OECD Standard on exchange of
information
• Effective exchange
– Exchange on request
– Foreseeably relevant information
– Confidentiality of information exchanged
– Covers civil and criminal tax matters
– Must exchange bank information
– Does not allow sharing for non-tax purposes
– Must provide information even where the requested
state does not need it for its own purposes
Safeguards and limitations are
respected
• No obligation to:
– Carry out administrative measures at variance with
the laws and administrative practices of either state
(reciprocity)
– Supply information not obtainable under the laws or
normal course of administration of either state
(reciprocity)
– Supply information that would disclose a trade,
business or professional secret etc., or that would be
contrary to “public policy”
Transparency
• Reliable books and records
• Beneficial ownership information
• Access to bank information
Tax Cooperation
Assistance in Tax Collection
The collection of taxes with the assistance of
other countries.
Article 27 OECD Model
• The Contracting States shall lend assistance to
each other in the collection of revenue claims.
This assistance is not restricted by Articles 1 and
2. The competent authorities of the Contracting
States may by mutual agreement settle the mode
of application of this Article.
• Contracting States shall lend assistance
• Assistance not limited to residents of either state
or to the taxes covered by the convention
• Example
– A taxpayer owes taxes to Country A and is a resident of Country
B, taxes cannot be recovered in Country A, there are no assets in
Country B.
– The taxpayer works and receives wages from a company in
country C.
– If there is an agreement allowing assistance in tax collection
between A and C, A can ask C for assistance in collection by
means of a withholding of wages.
Conditions for making a request for
assistance (Article 27, paragraph 3)
• The revenue claim has to be enforceable under
the laws of the applicant state
• The revenue claim is owed by a person who, at
that time, cannot, under the law of the applicant
state, prevent its collection
• “revenue claim” normally covers the
originally assessed tax, accrued interest,
fines, penalties and costs
Status of the foreign claim in the
requested state
• In general, the requested state treats the foreign
tax claim as a domestic tax claim.
• Can take measures of conservancy even if the
revenue claim is not yet enforceable or when the
debtor still has the right to prevent collection.
• Taxpayer may not challenge the existence,
validity or amount of the claim in front of the
courts or administrative bodies of the requested
state.
• No obligation for the requested state to:
– Carry out measures at variance with the laws or
practices of either state
– Carry out measures contrary to public policy
– Provide assistance if the applicant state has not
pursued all reasonable domestic measures
– Provide assistance where the administrative burden is
disproportionate to the benefit