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Automatic Exchange of Information

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International Tax Evasion in the Global Information Age

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Abstract

This chapter provides important background to automatic exchange of information (Automatic Exchange) and examines key policy considerations regarding the new standard. As the OECD rules and guidance on Automatic Exchange run in the hundreds of pages, dealing with the subject at length is beyond the scope of this chapter. Instead, this chapter provides an overview of the framework for Automatic Exchange, which will not only be of importance to financial institutions, funds, and financial service providers but will also be of immense importance to lawyers, accountants, and financial planners in advising their private clients. Due to the broad scope of the rules affecting trusts, professionals advising private clients will want to understand the implications of the rules for their clients’ trust structures as soon as possible.

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Notes

  1. 1.

    OECD, Committee on Fiscal Affairs, Model Tax Convention on Income and on Capital, (Paris: OECD, 1992) (loose-leaf) at Art 26 [convention and commentary together: Model Tax Treaty].

  2. 2.

    See OECD, Manual on the Implementation of Exchange of Information Provisions for Tax Purposes (Paris: OECD, 2006) at 3, online: www.oecd.org/tax/exchange-of-tax-information/36647823.pdf [Manual on Implementation]; OECD, Automatic Exchange of Information: What It Is, How It Works, Benefits, What Remains to Be Done (Paris: OECD, 2012) at 7, online: www.oecd.org/ctp/exchange-of-tax-information/automatic-exchange-of-information-report.pdf [Automatic Exchange of Information].

  3. 3.

    See Manual on Implementation, above note 2 at 3.

  4. 4.

    Automatic Exchange of Information, above note 2 at 9. In a survey conducted by the OECD (in which both Canada and the United States participated), all thirty-eight countries noted that they received information automatically from treaty partners, and thirty-three (87 percent) of them said that they sent information automatically to treaty partners (Denmark sent information automatically to seventy countries) (see ibid at 15). Five countries each reported receiving records relating to more than EUR 15 billion in a particular year, while most countries reported exchanging information relating to billions of euros (see ibid at 17).

  5. 5.

    See G20, Communiqué, “G20 Meeting of Finance Ministers and Central Bank Governors” (20 July 2013), online: www.g20.utoronto.ca/2013/2013-0720-finance.html; Editorial, “The Group of 20 Tackles Tax Avoidance” New York Times (6 September 2013) A22, online: http://nyti.ms/1O0dgwK [NY Times Editorial, “G20 Tackles Tax Avoidance”].

  6. 6.

    See OECD, Standard for Automatic Exchange of Financial Account Information in Tax Matters (Paris: OECD, 2014) at 10, online: http://dx.doi.org/10.1787/9789264216525-en [Standard for Automatic Exchange]; OECD, “Common Reporting Standard” & “Commentaries on the Common Reporting Standard” in OECD, Standard for Automatic Exchange, ibid, 29 (standard) and 93 (commentaries) [standard and commentaries together: CRS].

  7. 7.

    See OECD, Promoting Transparency and Exchange of Information for Tax Purposes (Paris: OECD, 2010) at 2, online: www.oecd.org/newsroom/44431965.pdf.

  8. 8.

    See ibid.

  9. 9.

    See OECD, Tax and Development: Draft Practical Guide on Exchange of Information for Developing Countries (Paris: OECD, 2012) at 5, online: www.g20dwg.org/documents/pdf/view/306/.

  10. 10.

    See OECD, The Global Forum on Transparency and Exchange of Information for Tax Purposes: Information Brief (Paris: OECD, 2013) at 4, online: http://www.oecd.org/tax/transparency/global_forum_background%20brief.pdf [Global Forum Information Brief 2013]. See also OECD, Global Forum on Transparency and Exchange of Information for Tax Purposes: Progress Report to the G20 Leaders — Global Forum Update on Effectiveness and On-going Monitoring (Paris: OECD, 2013) Executive Summary, online: http://www.oecd.org/tax/transparency/progress_report__G20.pdf [Global Forum Update on Effectiveness].

  11. 11.

    See Global Forum Information Brief 2013, above note 10 at 4. See also Global Forum Update on Effectiveness, above note 10, Executive Summary.

  12. 12.

    See OECD, A Step Change in Tax Transparency: OECD Report for the G8 Summit (Paris: OECD, 2013) at 5, n 2, online: www.oecd.org/ctp/exchange-of-tax-information/taxtransparency_G8report.pdf [Step Change in Tax Transparency].

  13. 13.

    See The Economist, “Tax Transparency: Automatic Response — The Way to Make Exchange of Tax Information Work” Economist (16 February 2013), online: http://econ.st/VQtEn9 [Economist, “Tax Transparency”]. International taxation deals with the tax aspects of international commerce and investment. See also Jinyan Li, Arthur Cockfield, & J Scott Wilkie, International Taxation in Canada — Principles and Practices, 2d ed (Markham, ON: LexisNexis, 2011) at 380: without evidence that a taxpayer is hiding income offshore, there will be no grounds for making a request, thereby complicating Canadian investigations into offshore tax evasion; Alicja Brodzka & Sebastiano Garufi, “The Era of Exchange of Information and Fiscal Transparency: The Use of Soft Law Instruments and the Enhancement of Good Governance in Tax Matters” (2012) 52:8 IBFD European Tax Journal 394: the international standard is inadequate to effectively tackle international tax evasion because the only form of EOI is EOI upon request, which presumes that the requesting state already knows what it is looking for.

  14. 14.

    See NY Times Editorial, “G20 Tackles Tax Avoidance,” above note 5.

  15. 15.

    See Economist, “Tax Transparency,” above note 13.

  16. 16.

    See Global Forum Update on Effectiveness, above note 10, Executive Summary.

  17. 17.

    See ibid.

  18. 18.

    See Automatic Exchange of Information, above note 2 at 19–20.

  19. 19.

    See ibid.

  20. 20.

    See ibid at 20: Norway and Denmark reported that in certain studies Automatic Exchange had revealed rates of non-compliance of 38.7 percent and 40 percent respectively.

  21. 21.

    Subtitle A of Title V of the Hiring Incentives to Restore Employment Act of 2010, Pub L No 111–147 enacted on 18 March 2010 [FATCA]. According to Pascal Saint-Amans, director of the Centre for Tax Policy at the OECD, with regard to Automatic Exchange, “FATCA has been a game-changer”: see David Jolly, “Group of 20 Supports Sharing Bank Data to End International Tax Evasion” New York Times (13 April 2013) B6, online: http://nyti.ms/1Qsti1R. See also Global Forum Information Brief 2013, above note 10 at 5, noting that FATCA has been a key catalyst for Automatic Exchange. For a description of FATCA, see Chapter 9. See also David Jolly & Brian Knowlton, “Law to Find Tax Evaders Denounced” New York Times (26 December 2011) B1, online: http://nyti.ms/1I7SMjg, noting that the USD 8 billion that the US Department of the Treasury hopes to bring in over the next ten years is disproportional to the expected implementation costs for foreign institutions, and also citing a variety of critics, including Professor H David Rosenbloom, who remarks that “the FATCA story is really kind of insane” and that “Congress came in with a sledgehammer.”

  22. 22.

    See Step Change in Tax Transparency, above note 12 at 5–6. See also United Kingdom, Press Release, “New UK Multilateral Action to Combat Tax Evasion” (9 April 2013), online: www.gov.uk/government/news/new-uk-multilateral-action-to-combat-tax-evasion, describing the agreement to develop and pilot multilateral tax information exchange, under which information will be automatically exchanged between the five countries. The United Kingdom has separately agreed to Automatic Exchange with its Crown dependencies (Guernsey, the Isle of Man, and Jersey) and some of its overseas territories (Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat, and the Turks and Caicos Islands): see Step Change in Tax Transparency, above note 12 at 6. These jurisdictions have also agreed to join the pilot Automatic Exchange project with France, Germany, Italy, Spain, and the United Kingdom announced in April 2013 (see ibid).

  23. 23.

    In 2003, the European Union unveiled a modified Automatic Exchange regime that began in 2005 and focused solely on interest income arising at a financial institution resident in one EU member country that was payable to a resident of another member country: European Commission, Council Directive 2003/48/EC of 3 June 2003 on Taxation of Savings Income in the Form of Interest Payments, [2003] OJ, L 157/38, as amended by Council Directive 2004/66/EC of 26 April 2004, [2004] OJ, L 168/35 and Council Decision 2004/587/EC of 19 July 2004, [2004] OJ, L 257/7 [EU Savings Directive]. The system had evolved from the competing goals of two schools — member countries seeking information exchange and member countries holding on to bank secrecy — and represented a compromise that allowed Austria, Belgium, and Luxembourg to impose a withholding tax during a transition period: see Itai Grinberg, “The Battle over Taxing Offshore Accounts” (2012) 60 UCLA Law Review 304 at 328. Under the EU Savings Directive, countries using the transitional withholding system share the revenue with the country of residence (paying 75 percent of the receipts and keeping 25 percent) (see ibid at 329). In jurisdictions exchanging information, the paying agent reports payments to the tax authority of the country in which it is resident, which, in turn, passes along this information to the fiscal authority of the country in which the payee is resident (see ibid).

  24. 24.

    See Gabriele Parussini, “France’s Hollande: EU Savings Directive Will Be Adopted by Year End” Wall Street Journal (22 May 2013). In 2011, the European Union adopted a revised mutual assistance directive to enhance EOI: European Commission, Council Directive 2011/16/EU of 15 February 2011 on Administrative Cooperation in the Field of Taxation and Repealing Directive 77/799/EEC, [2011] OJ, L 64/1, online: http://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A32011L0016 [EU Parent-Subsidiary Directive]. This directive requires member countries to automatically exchange information on additional categories of income. See also Step Change in Tax Transparency, above note 12 at 6: the European Union in cooperation with the OECD has created standard computerized formats for use by the tax administrations of member countries to automatically exchange information under these two directives.

  25. 25.

    See Grinberg, above note 23 at 330: in return, Swiss companies have been permitted to take advantage of the zero withholding rate on dividends from European subsidiaries under the EU Parent-Subsidiary Directive, above note 24.

  26. 26.

    See Grinberg, above note 23 at 339. For an extensive discussion of the debate on anonymous withholding versus Automatic Exchange, see ibid at 347–72. More recently, Switzerland entered into a new tax agreement with the United Kingdom to strengthen relations around cross-border financial services and taxation, deal with previously undeclared assets, and agree to a final withholding tax on future investment income: see Francesco Carelli, “The New Tax Agreement between Switzerland and the United Kingdom — An Analysis” (2012) 52:6 IBFD European Taxation Journal 301. Under the agreement, relevant UK resident individuals may opt for either a one-time penalty payment or the release of their account details to UK tax authorities (see ibid at 3, citing Art 5(1) of the Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation on Cooperation in the Area of Taxation, 6 October 2011, UKTS 2013 No 9 (agreement, protocol, and exchange of notes entered into force 1 January 2013), online: www.gov.uk/government/uploads/system/uploads/attachment_data/file/190652/TS.9.2013.SwissDoubleTax.ProtEoN.pdf [Switzerland–UK Agreement]). Regarding the treatment of future income, relevant UK resident individuals have the option either to accept an anonymous final withholding tax remitted to the United Kingdom or to have the Swiss bank disclose income and capital gains derived from the assets to UK authorities (Carelli, ibid at 7, citing Art 19 and 22 respectively of the Switzerland–UK Agreement, ibid). Switzerland also signed a nearly identical agreement with Germany (Carelli, ibid at 1). For a discussion of the Swiss “Rubik” agreements, see Xavier Oberson, International Exchange of Information in Tax Matters: Towards Global Transparency (Cheltenham, UK: Edward Elgar, 2015) ch 9.

  27. 27.

    See OECD, Centre for Tax Policy and Administration, “OECD Releases System to Reduce Compliance Cost and Facilitate Cross-border Investment” (Paris: OECD, 2013), online: www.oecd.org/ctp/system-to-reduce-compliance-cost-facilitate-cross-border-investment.htm [“OECD Releases System”]: the system was developed after many years of cooperation between the OECD, the European Union, governments, and businesses. In January 2013, the OECD approved the TRACE Implementation Package for the Adoption of the Authorized Intermediary System, which contains documents and forms that can be used by any country wishing to implement TRACE’s unique system for authorized intermediaries: see OECD, “Treaty Relief and Compliance Enhancement (TRACE) — Implementation Package Approved by CFA” (Paris: OECD, 2013), online: www.oecd.org/ctp/exchange-of-tax-information/treatyreliefandcomplianceenhancementtrace.htm. For a discussion of the US qualified intermediary system, see Chapter 5, Section Background on the US Qualified Intermediary (QI) System.

  28. 28.

    See “OECD Releases System,” above note 27.

  29. 29.

    See OECD, TRACE Implementation Package for the Adoption of the Authorized Intermediary System (Paris: OECD, 2013) at 4, online: www.oecd.org/ctp/exchange-of-tax-information/TRACE_Implementation_Package_Website.pdf [TRACE Implementation Package]. However, unlike the US qualified intermediary system, which does not require the disclosure of certain individuals to the withholding agent or to the IRS, the TRACE Implementation Package, ibid at 5, requires that an intermediary claiming benefits on a pooled basis provide to the source country tax administrators on an annual basis (rather than at the time of the payment) investor-specific information about the beneficial owners of the income.

  30. 30.

    See ibid. The TRACE Implementation Package, ibid at 4–6, describes procedures that an authorized intermediary must follow to comply with the disclosure requirements.

  31. 31.

    This concern is based on the apparent problems that a number of jurisdictions are having in implementing the OECD standards on transparency and EOI. In June 2012, for example, eleven jurisdictions (Botswana, Brunei, Costa Rica, Guatemala, Lebanon, Liberia, Panama, Trinidad and Tobago, the United Arab Emirates, Uruguay, and Vanuatu) were cited as being unable to move to Phase 2 of the peer review process because critical elements necessary to achieving effective EOI were not in place in their legal framework: see Global Forum Update on Effectiveness, above note 10 at para 10. See also Chapter 3, Section 6, and Table 3.1 therein; Arthur J Cockfield, “Protecting Taxpayer Privacy Rights under Enhanced Cross-border Tax Information Exchange: Toward a Multilateral Taxpayer Bill of Rights” (2010) 42 University of British Columbia Law Review 420 at 452.

  32. 32.

    See discussion in Section 4.6, below in this chapter.

  33. 33.

    See Cockfield, above note 31 at 441, observing that a broader community of information sharers and increased access raises the risk of improper access or usage of taxpayer information by a third-party government and that a government’s ability to maintain accountability for and responsibility over transferred data may be strained as the data travels to multiple participants. See also NY Times Editorial, “G20 Tackles Tax Avoidance,” above note 5, noting that information may be used by villains in government who could sell personal financial data to would-be kidnappers and other unsavoury characters harbouring criminal intentions.

  34. 34.

    A practical challenge for routine EOI arises where the information received by a tax authority, for example, the IRS, does not include a TIN despite recommendations from the OECD that member states provide such information. The task of “TIN perfection” or correlating the account data in the information received by the IRS with a valid TIN in its databases is time-consuming and costly: see United States, Congress, Joint Committee on Taxation, Explanation of Proposed Protocol to the Income Tax Treaty between the United States and Switzerland (Washington, DC: Joint Committee on Taxation, 2011) at 41, online: www.jct.gov/publications.html?func=startdown&id=3791 [JCT, Proposed Swiss Protocol].

  35. 35.

    See James Ball, “Tax Transparency Campaigners Give Cautious Welcome to Treasury Deal” Guardian (2 May 2013), online: http://gu.com/p/3ftvg/stw, noting that the British Virgin Islands had more than 1 million offshore companies, that the usage of sham “nominee” directors and shareholders to mask real company owners was rife, and that such corporate secrecy could hamper the goals of automatic information sharing.

  36. 36.

    The United States has come under pressure regarding its “know-your-customer” rules for financial institutions and maintenance of information on beneficial ownership. The concern is that certain policies at the federal and state levels provide foreign persons with the ability to shelter income: see JCT, Proposed Swiss Protocol, above note 34 at 42.

  37. 37.

    See NY Times Editorial, “G20 Tackles Tax Avoidance,” above note 5, observing that Automatic Exchange produces huge quantities of data and that even some European tax authorities have struggled to stay on top of the information exchanged.

  38. 38.

    See Standard for Automatic Exchange, above note 6 at 10.

  39. 39.

    See Step Change in Tax Transparency, above note 12 at 7.

  40. 40.

    See ibid.

  41. 41.

    See ibid at 7–8.

  42. 42.

    See ibid at 8. Straw entities, including foundations, were used by taxpayers in the UBS and LGT Bank scandals: see Chapter 5, Section 4.

  43. 43.

    See Standard for Automatic Exchange, above note 6 at 12.

  44. 44.

    See Step Change in Transparency, above note 12 at 9–10.

  45. 45.

    Two legal platforms for Automatic Exchange are bilateral treaties incorporating Article 26 of the Model Tax Treaty, above note 1, and the Convention on Mutual Administrative Assistance in Tax Matters (together with the protocol amending the convention, CETS No 208, online: www.oecd.org/ctp/exchange-of-tax-information/ENG-Amended-Convention.pdf [Convention on Mutual Assistance]): see Step Change in Transparency, above note 12 at 11. The benefits of the Convention on Mutual Assistance include that it provides for all possible forms of administrative cooperation between states, it contains strict rules on confidentiality, it permits Automatic Exchange (see Convention on Mutual Assistance, ibid at Art 6), and it has a global reach, with as of June 2013 more than sixty countries, including all G20 countries, having signed it or pledged to do so (see Step Change in Transparency, ibid). The use of Automatic Exchange under the Convention on Mutual Assistance requires that the competent authorities of the parties (two or more) enter into a separate agreement to provide each other information automatically (see ibid). Alternatively, jurisdictions may rely on existing bilateral treaties, using the same competent authority agreement that would be used with the Convention on Mutual Assistance (see ibid). A further complication is that not all TIEAs provide for Automatic Exchange: see, for example, Canada’s TIEAs discussed in Chapter 6.

  46. 46.

    See Step Change in Transparency, above note 12 at 12.

  47. 47.

    In creating a standard format for EOI, including transmission methods and encryption standards, the OECD is drawing upon work being done for FATCA as well as existing formats such as Standard Transmission Format (STF), which was developed by the OECD for Automatic Exchange and uses Extensible Markup Language (XML), and FISC 153, which is the standard used for the EU Savings Directive, above note 23: see Step Change in Transparency, above note 12 at 13.

  48. 48.

    See Step Change in Transparency, above note 12 at 8.

  49. 49.

    See ibid.

  50. 50.

    See ibid. See also Convention on Mutual Assistance, above note 45. The convention was opened for signature by member states of the Council of Europe and member countries of the OECD on 25 January 1988, and it was revised in 2010 primarily to incorporate the internationally agreed-upon standards on transparency and EOI and to open it up to states that were not members of the Council of Europe or the OECD: see Council of Europe & OECD, Revised Explanatory Report to the Convention on Mutual Administrative Assistance in Tax Matters as Amended by Protocol, online: www.oecd.org/tax/exchange-of-tax-information/Explanatory_Report_ENG_%2015_04_2010.pdf. Under ch III (Forms of Assistance), the Convention on Mutual Assistance broadly provides for assistance in relation to EOI (Art 4–9), assistance in recovery of tax claims (Art 11–16), and service of documents (Art 17), and under ch IV (Provisions relating to All Forms of Assistance), it has a number of operating provisions including Art 21 on protection of persons and on limits to the obligation to provide assistance and Art 22 on secrecy. The United States ratified the Convention on Mutual Assistance on 30 January 1991, and Canada ratified it on 21 November 2013.

  51. 51.

    See Standard for Automatic Exchange, above note 6 at 13.

  52. 52.

    See OECD, “Jurisdictions Participating in the Convention on Mutual Administrative Assistance in Tax Matters: Status” (20 January 2016), online: www.oecd.org/ctp/exchange-of-tax-information/Status_of_convention.pdf.

  53. 53.

    See Canada, Department of Finance, “Ratification of the Convention on Mutual Administrative Assistance in Tax Matters” (Ottawa: Department of Finance, 2013), online: www.fin.gc.ca/treaties-conventions/notices/maatm-aammf-eng.asp.

  54. 54.

    See ibid.

  55. 55.

    See Step Change in Transparency, above note 12 at 11: the competent authority agreement would activate and “operationalize” Automatic Exchange between the participants.

  56. 56.

    See ibid.

  57. 57.

    See OECD, Centre for Tax Policy and Administration, “Convention on Mutual Administrative Assistance in Tax Matters” (Paris: OECD, 2016), online: www.oecd.org/ctp/exchange-of-tax-information/conventiononmutualadministrativeassistanceintaxmatters.htm. See also OECD, “Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information” (Paris: OECD, 2014), online: www.oecd.org/tax/automatic-exchange/international-framework-for-the-crs/multilateral-competent-authority-agreement.pdf.

  58. 58.

    See OECD, “Signatories of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information and Intended First Information Exchange Date” (27 January 2016), online: www.oecd.org/tax/exchange-of-tax-information/MCAA-Signatories.pdf.

  59. 59.

    See Brodzka & Garufi, above note 13.

  60. 60.

    For Canada, see the discussion in Chapter 4. For the United States, see the discussion in Chapter 5.

  61. 61.

    See Step Change in Transparency, above note 12 at 8. For a discussion of the confidentiality requirements under the Agreement on Exchange of Information on Tax Matters (Paris: OECD, 2002) [Model TIEA] and the Model Tax Treaty, above note 1, see Chapter 6, Section 3.8, and Chapter 7, Section 2.4, respectively. For a discussion of the domestic laws of Canada and the United States, see Chapter 4, Section 11, and Chapter 5, Section 2, respectively.

  62. 62.

    OECD & Global Forum on Transparency and Exchange of Information for Tax Purposes, Keeping It Safe: Joint OECD/Global Forum Guide on the Protection of Confidentiality of Information Exchanged for Tax Purposes (OECD: Paris 2012), online: www.oecd.org/tax/transparency/final%20Keeping%20it%20Safe%20with%20cover.pdf.

  63. 63.

    See A Step Change in Tax Transparency, above note 12 at 9. The OECD notes that many countries already use protocols developed by the OECD for electronic EOI upon request, for example, with “point-to-point” transmission directly from one country’s EOI portal to the other country’s portal (see ibid). Within the European Union, exchanges take place through the use of a secure network (CCN) (see ibid).

  64. 64.

    OECD, “Model Competent Authority Agreement” & “Commentaries on the Model Competent Authority Agreement” in OECD, Standard for Automatic Exchange, above note 6, 21 (agreement) and 65 (commentaries) [agreement and commentaries together: MCA]. See Standard for Automatic Exchange, above note 6 at 14.

  65. 65.

    See Standard for Automatic Exchange, above note 6 at 14.

  66. 66.

    See ibid.

  67. 67.

    See ibid.

  68. 68.

    See ibid.

  69. 69.

    See ibid.

  70. 70.

    See ibid.

  71. 71.

    See ibid at 14–15.

  72. 72.

    See MCA, above note 64, ss 1–7.

  73. 73.

    See MCA, above note 64.

  74. 74.

    See Canada, News Release, “Canadian Government Combats International Tax Evasion by Joining Forces with International Tax Jurisdictions” (Ottawa: Canada Revenue Agency, 2015), online: http://news.gc.ca/web/article-en.do?nid=983299: as part of Canada’s Economic Action Plan 2015, Ottawa also proposed an investment of CAD 25.3 million over five years in CRA to improve its offshore tax evasion risk assessment systems and business intelligence and to hire additional auditors.

  75. 75.

    See Standard for Automatic Exchange, above note 6 at 15.

  76. 76.

    See OECD, “Strengthening the International Community’s Fight against Offshore Tax Evasion: Australia, Canada, Chile, Costa Rica, India, Indonesia and New Zealand Join Multilateral Agreement to Automatically Exchange Information” (Paris: OECD, 2015), online: www.oecd.org/newsroom/australia-canada-chile-costa-rica-india-indonesia-and-new-zealand-join-multilateral-agreement-to-automatically-exchange-tax-information.htm.

  77. 77.

    See Standard for Automatic Exchange, above note 6 at 15. See also CRS, above note 6, s I.

  78. 78.

    See Standard for Automatic Exchange, above note 6 at 15.

  79. 79.

    See ibid. See also CRS, above note 6, s VIII(A) & (B).

  80. 80.

    OECD, Standard for Automatic Exchange of Financial Information in Tax Matters: Implementation Handbook (Paris: OECD, 2015) at 35, online: www.oecd.org/ctp/exchange-of-tax-information/implementation-handbook-standard-for-automatic-exchange-of-financial-information-in-tax-matters.pdf [CRS Implementation Handbook].

  81. 81.

    See ibid.

  82. 82.

    See ibid.

  83. 83.

    See ibid.

  84. 84.

    See ibid at 36.

  85. 85.

    See ibid.

  86. 86.

    See ibid at 37.

  87. 87.

    See ibid.

  88. 88.

    See ibid.

  89. 89.

    See ibid.

  90. 90.

    See ibid.

  91. 91.

    See ibid at 39.

  92. 92.

    See ibid.

  93. 93.

    See ibid at 40.

  94. 94.

    See ibid at 40 and 42.

  95. 95.

    See ibid.

  96. 96.

    See ibid at 43.

  97. 97.

    See ibid.

  98. 98.

    See ibid.

  99. 99.

    See ibid at 45.

  100. 100.

    See ibid.

  101. 101.

    See ibid. In general, the following persons are excluded: corporations the stock of which is regularly traded on one or more established securities markets and “Related Entities” of such corporations, Governmental Entities, International Organisations, Central Banks, and Financial Institutions (see ibid).

  102. 102.

    See ibid at 47.

  103. 103.

    See ibid. See also FATF, International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation: The FATF Recommendations (Paris: FATF, 2012), online: www.fatf-gafi.org/recommendations.html [FATF Recommendations].

  104. 104.

    See CRS Implementation Handbook, above note 80 at 47.

  105. 105.

    See ibid.

  106. 106.

    See ibid at 48.

  107. 107.

    See ibid.

  108. 108.

    See ibid.

  109. 109.

    See ibid at 77.

  110. 110.

    CRS, above note 6, s VIII(A)(6)(b). See CRS Implementation Handbook, above note 80 at 78.

  111. 111.

    See CRS Implementation Handbook, above note 80 at 78–79.

  112. 112.

    See ibid at 79.

  113. 113.

    See ibid.

  114. 114.

    See ibid.

  115. 115.

    See ibid at 79–82.

  116. 116.

    See ibid at 83.

  117. 117.

    See, for example, ibid at 79–82.

  118. 118.

    See ibid at 83.

  119. 119.

    See ibid.

  120. 120.

    See ibid: the CRS draws from the FATF Recommendations, above note 103, on beneficial ownership.

  121. 121.

    See CRS Implementation Handbook, above note 80 at 83. The CRS includes within the definition of Controlling Person any natural person who may exercise ultimate control of an Entity that is a settlor, trustee, beneficiary, or protector. This may impose additional due diligence requirements on Reporting Financial Institutions (see ibid at 84).

  122. 122.

    See ibid at 83.

  123. 123.

    See ibid.

  124. 124.

    See ibid at 84.

  125. 125.

    See ibid.

  126. 126.

    See ibid.

  127. 127.

    See ibid. These rules are further explained ibid at 84–85.

  128. 128.

    See ibid at 85.

  129. 129.

    See ibid.

  130. 130.

    See ibid.

  131. 131.

    See ibid.

  132. 132.

    See ibid.

  133. 133.

    See Standard for Automatic Exchange, above note 6 at 15.

  134. 134.

    See CRS, above note 6, s II.

  135. 135.

    See ibid, ss III and VIII(C).

  136. 136.

    See Standard for Automatic Exchange, above note 6 at 15–16.

  137. 137.

    See ibid at 16.

  138. 138.

    See ibid.

  139. 139.

    See CRS, above note 6, Commentary on s IV at para 1.

  140. 140.

    See ibid, Commentary on s IV at paras 4–6.

  141. 141.

    See ibid. For an example of complex rules relating to residence, see the 100-page chapter on the residence rules under the tax laws of Canada and the United States in David S Kerzner, Vitaly Timokhov, & David W Chodikoff, eds, The Tax Advisor’s Guide to the Canada–U.S. Tax Treaty (Toronto: Thomson Reuters Carswell, 2008) (loose-leaf) ch 4.

  142. 142.

    See CRS, above note 6, Commentary on s IV at paras 4–6.

  143. 143.

    See ibid.

  144. 144.

    See ibid, Commentary on s V at para 2.

  145. 145.

    See Standard for Automatic Exchange, above note 6 at 16.

  146. 146.

    See CRS, above note 6, Commentary on s V at paras 8–24.

  147. 147.

    See ibid.

  148. 148.

    See Standard for Automatic Exchange, above note 6 at 16.

  149. 149.

    See CRS, above note 6, Commentary on s VI at paras 12–13.

  150. 150.

    See Standard for Automatic Exchange, above note 6 at 16.

  151. 151.

    For a discussion of the tax haven peer review grades, see Chapter 3, Section 6.

Further Readings

  • Cockfield, Arthur J. “Protecting Taxpayer Privacy Rights under Enhanced Cross-border Tax Information Exchange: Toward a Multilateral Taxpayer Bill of Rights” (2010) 42 University of British Columbia Law Review 420.

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  • ——— “The Limits of the International Tax Regime as a Commitment Projector” (2013) 33 Virginia Tax Review 59.

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  • ———. “The Rise of the OECD as Informal ‘World Tax Organization’ through National Responses to E-commerce Tax Challenges” (2006) 8 Yale Journal of Law & Technology 136.

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  • Dean, Steven A. “More Cooperation, Less Uniformity: Tax Deharmonization and the Future of the International Tax Regime” (2009) 84 Tulane Law Review 125.

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  • ———. “Philosopher Kings and International Tax: A New Approach to Tax Havens, Tax Flight, and International Tax Cooperation” (2007) 58 Hastings Law Journal 911.

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  • ———. “The Incomplete Global Market for Tax Information” (2008) 49 Boston College Law Review 605.

    Google Scholar 

  • Grinberg, Itai. “Beyond FATCA: An Evolutionary Moment for the International Tax System” (2012) [unpublished, archived at the Georgetown University Law Center, The Scholarly Commons, Paper 160], online: http://scholarship.law.georgetown.edu/fwps_papers/160.

  • ———. “The Battle over Taxing Offshore Accounts” (2012) 60 UCLA Law Review 304.

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  • Luchena Mozo, Gracia Ma. “The Prevention and Resolution of Tax Conflicts within the Framework of International Exchange of Information” (2012) 52:5 IBFD European Taxation Journal 226.

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  • Marley, Patrick, & Susan Wooles. “Canada’s Tax Information Exchange Agreements: Impact on Tax Planning” (2010) 39 Tax Management International Journal 606.

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  • OECD. Standard for Automatic Exchange of Financial Account Information in Tax Matters (Paris: OECD, 2014).

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  • ———. Standard for Automatic Exchange of Financial Information in Tax Matters: Implementation Handbook (Paris: OECD, 2015).

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  • Sawyer, Adrian. “Peer Review of Tax Information Exchange Agreements: Is It More Than Just about the Numbers?” (2011) 26 Australian Tax Forum 397.

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  • Yates, Marie Thérèse et al. “The Death of Information Exchange Agreements? Part Three” (2011) 22 Journal of International Taxation 48.

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  • Zagaris, Bruce. “Bilateral Agreement Alternative to FATCA Implementation Brings New Twist to International Tax Cooperation” (2012) 28 International Enforcement Law Reporter 113.

    Google Scholar 

  • ———. “The Procedural Aspects of U.S. Tax Policy towards Developing Countries: Too Many Sticks and No Carrots?” (2003) 35 George Washington International Law Review 331.

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    David S. Kerzner & David W. Chodikoff

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Kerzner, D.S., Chodikoff, D.W. (2016). Automatic Exchange of Information. In: International Tax Evasion in the Global Information Age. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-40421-9_8

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