The update takes the form of a protocol amending the Convention on Mutual Administrative Assistance in Tax Matters. It will allow the exchange of bank information and align the convention to the international standard on information exchange for tax purposes.
The protocol will be available for signature at the OECD’s annual ministerial meeting in Paris on 27-28 May. This initiative is a reponse to a call by G20 leaders at their April 2009 summit for proposals for ways to help developing countries gain the benefits of the new co-operative tax environment.
Gordon Brown, UK prime minister, chair of the G20, indicated that “it would be helpful, in this regard, if an effective multilateral mechanism could be developed”.
The original convention began in 1995. It currently groups 14 countries — Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, Netherlands, Norway, Poland, Sweden, UK, US, and Ukraine – with Canada, Germany and Spain who have signed it but not yet ratified it.
Other OECD and Council of Europe members, including some G20 countries, are looking at signing the convention, and it is now being opened up to countries that are not members of either the OECD or the Council of Europe.
This will enable developing countries to sign the amended convention and benefit from the more transparent tax-co-operation environment. The protocol provides, among other things, for exchange of information, multilateral simultaneous tax examinations, service of documents and cross-border assistance in tax collection, while respecting national sovereignty and the rights of taxpayers and ensuring safeguards to protect the confidentiality of the information exchanged.
Angel Gurría, OECD secretary-general and Council of Europe secretary-general Thorbjørn Jagland said that as more countries join, the benefits of the convention grow. “The Convention is a unique instrument to counteract international tax avoidance and evasion,” Gurría said.
