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In March 2009, Luxembourg, Belgium, Switzerland and several other countries agreed to break their banking secrecy, under pressure from the G20. A year later, the Global Forum on Transparency and Exchange of Information for Tax Purposes, representing 91 countries, is preparing to evaluate the implementation of the commitments that have been made in this context. Europolitics talked to the Head of its Secretariat, Pascal Saint-Amans.a

A year ago, several jurisdictions sought information on the implementation of OECD standards on the exchange and request of information between fiscal administrations. Do you still relish this victory over banking secrecy?a

It is not an OECD victory over whomsoever, but rather significant progress on transparency and the exchange of information for tax purposes, which concerns all of the countries in the world. It will finally allow member states to receive all of the taxes due to them and will, from now on, prevent taxpayers from abusing banking secrecy.

Is this really the beginning of the end of banking secrecy, as stressed by the G20?

It is only the beginning of the end of banking secrecy in a fiscal context. Banking secrecy is essential, because it enables the protection of privacy. Neither you nor I would like our banking information to be displayed in the window of the agency of which we are a customer. Access to certain information should only be authorised in limited cases and defined by law. Combating fraud and tax evasion is part of this, universally from now on.

Are OECD standards well interpreted? A debate has already begun between Switzerland and France.

The OECD standard is the exchange of information, including banking information, upon request. Information must be obtained when the request is "probably appropriate" and all the necessary data are provided. In general, the tax office must communicate the name of the taxpayer it is investigating, that of the bank where he is likely to hold an account and any other element demonstrating the probably appropriate nature of the request. However, the supply of this information is not compulsory. Sometimes it is impossible. This is how the standard is interpreted by the international community.

All of this is rather theoretical. What happens in practice?

The standard can be found in the terms of reference adopted by the Global Forum. It is in this light that the countries will now be assessed. All of the particular elements that Switzerland, like other countries, has integrated into its bilateral conventions will be subject to examination by peers. This is why the Global Forum was created.

How will the assessment of countries be carried out?

The legislative and regulatory framework of each member of the Global Forum will be assessed in a contradictory manner - two countries will examine the case of a third, with the assistance of the Secretariat - in order to determine whether it is compatible with the OECD standard. For example, if a country settles for a lax law on trusts, which does not make it possible to effectively identify the real beneficiaries of these entities, we would consider that it does not fulfil its obligations. It will, in fact, be incapable of undertaking the exchange of information.

Will the political subdivisions of federal states, such as Delaware or Montana in the United States, also be examined?

Yes, of course. Peer assessment can only work if it is fair and exhaustive.

Has a timeframe already been set up?

The evaluation process will take place over the coming two years. A timeframe will no doubt be published this week.

In hindsight, do you believe that the conditions imposed by the G20 and the OECD in order that a country may be removed from the grey list' of jurisdictions that have not yet proven themselves in terms of transparency were sufficient? It would have been enough to integrate OECD standards into twelve bilateral conventions for the avoidance of double taxation.

It was necessary to establish a criterion, which would make it possible to distinguish between countries that have begun to apply the OECD standard and those that have committed to doing so but have not made any progress in this direction. That allowed us to prime the pump. And it worked well: in one year, 22 countries were removed from the grey list', which only contains fifteen or so names. Another two or three will be removed this week. But is this enough? No, of course not. It's one thing to negotiate and sign agreements. It's another to implement them, correctly apply them and create the necessary authorities to this end. The Global Forum will see to it that this is done.

Are OECD standards still relevant today, following the financial crisis? The European Parliament has called on the Union to strive for the globalisation of the automatic information exchange system, and therefore the eradication of banking secrecy in the area of taxation.

This question is increasingly being asked. The OECD standard is the exchange of information upon request. This is clear, there is no question of changing it. Several OECD countries are opposed to it. Having said this, the automatic exchange of information is also a good system, already applied by several OECD countries, between one another.
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Title Annotation:Organisation for Economic Co-operation and Development
Publication:European Report
Article Type:Interview
Geographic Code:4E
Date:Mar 17, 2010

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