Just two days before the deadline for the submission of its report by the six-member Joint Investigation Team’s to the three-member Supreme Court Bench hearing the Panama case — the 142-member Global Forum on transparency and exchange of information for tax purposes would deliver to the G20 leaders’ Summit (7-8 July 2017) in Hamburg, Germany a list consisting of compliant and non-compliant jurisdictions.
According to a June 28th, 2017 Organisation for Economic Co-operation and Development (OECD) media release, the forum has been working to enhance global tax transparency, end banking secrecy and protect public finances by curtailing tax evasion since 2008.
Tax evasion continues to challenge governments in developing and developed countries, depriving them of resources that would otherwise be available to support sustainable development through investments in infrastructure, health and other common goods.
The Global Forum has developed a series of international tax transparency standards and constantly monitors and reviews implementation and adhesion by its members, including Pakistan.
In July 2016, G20 countries had called on the forum to devise objective criteria to identify jurisdictions that have not made sufficient progress toward a satisfactory level of implementation of the agreed international standards. These include those on Exchange of Information on Request (EOIR) and Automatic Exchange of Information (AEOI).
A list of non-cooperative jurisdictions was to be prepared for the G20 Leaders Summit in Hamburg, with jurisdictions needing to meet at least two of the three benchmarks to avoid inclusion: i) at least a “Largely-Compliant” rating with respect to the EOIR standard; ii) a commitment to implement the AEOI standard, with first exchanges in 2018 (with respect to the year 2017) at the latest; and iii) participation in the Multilateral Convention on Mutual Administrative Assistance on Tax Matters or a sufficiently broad exchange network permitting both EOIR and AEOI.
In addition, an overriding criterion applies in the case where a jurisdiction is determined by the Global Forum peer review process to be “non-compliant”, or is blocked from moving past Phase 1 of the EOIR standard, or where it was previously blocked from moving past Phase 1 and has not yet received an overall rating under the Phase 2 process.
The Global Forum established a Fast-Track review process to evaluate continuing efforts by some jurisdictions to meet transparency standards in the run-up to the G20 Summit. The latest results of the review show that progress has now been made by most jurisdictions.
Fifteen jurisdictions which previously had a less than satisfactory rating on their peer reviews against the EOIR standard were evaluated to assess whether recent progress would upgrade their rating if they were to be reviewed again.
Following the evaluation, the forum assigned the following provisional ratings:
Largely compliant — Andorra, Antigua and Barbuda, Costa Rica, Dominica, the Dominican Republic, Guatemala, the Federated States of Micronesia, Lebanon, Nauru, Panama, Samoa, the United Arab Emirates and Vanuatu.
Partially compliant — Marshall Islands.
Trinidad and Tobago, which previously had a rating of non-compliant, was unable to demonstrate progress to warrant any upgrade to its rating.
Applying the objective criteria, and taking into account the Fast-Track reviews, Trinidad and Tobago has been identified as the only jurisdiction which has not yet made sufficient progress towards satisfactory implementation of the tax transparency standards. Discussions are continuing with Trinidad and Tobago, and progress is anticipated soon.
A number of critical changes have been introduced by the reviewed jurisdictions, including the elimination of strict bank secrecy and bearer shares, improved access to accounting records and a more rigorous oversight and enforcement of obligations to maintain information.
All the Global Forum members stand on equal footing. The forum is the premier international body for ensuring the implementation of internationally agreed standards of transparency and exchange of information in the tax area.
Published in The Express Tribune, July 1st, 2017.