EXCHANGEOFINFORMATIONASATOOLTOCOMBATOFFSHORETAX

EVASION

GrandPelaHotelandSuitesAbuja,Nigeria

23–25October2019

SESSION2:THEGLOBALFORUM,THEINTERNATIONALSTANDARDSANDAFRICA

GrandPelaHotelandSuitesAbuja,Nigeria

23-25October2019

GlobalForumonTransparencyandExchangeofInformationforTaxPurposesGlobalForumwebsite:www.oecd.org/tax/transparency

THEINTERNATIONALCONTEXT

3

Anincreasinglyglobalisedworld

Globalisation’seffects• Wealthcreation;•  Increaseofinternationalandcross-bordertransactions;

• Easyandfastmovementofpersons,capitalsandotherfinancialflows;

• Competition,includingintaxation.

Globalisation’sadverseconsequences• Easyforincomeandassetstobehiddeninotherjurisdictionsandbehindlayersofcorporateentities

• Difficultfortaxauthoritiestoinvestigateandauditcasesofcross-bordertaxevasion

TheOffshorePerspectiveofGlobalWealth

Thehiddenpartoftheicebergandneedforassistance

Domesticinformation

ForeigninformationDomestic

information

Foreigninformation(EOI)

Successfultaxexamination

Internationalelement

=EOI.€

€€€€€€ €

Taxation–Sovereignfunctionof

State

Informationgatheringpowers

restrictedtostate

territory

Taxpayersaremobile,

taxadministrationsarenot

EOI

Newrisks,Newchallengesforall

• Legislativedeficit:lackofdomesticandinternationalinstrumentstoprotectthetaxbase(e.g.DTCs,transferpricinglegislation,anti-abusemeasures);

•  Informationdeficit:lackofdomesticandinternationalinstrumentsensuringaccesstoinformation(e.g:EOIagreements,banksecrecy,bearershares);

• Administrativedeficit:lackofawareness,trainingandtoolsforthetaxadministration,andlackofpoliticalpriorities.

Newrisks

•  Implementationofinternationaltaxationstandards(transferpricinglegislation,anti-abusemeasures,DTCsuptothestandard,BEPS,MLIetc.).

•  Implementationoftransparencystandards(AML,anti-corruptionandtaxtransparencystandards)

• Trainandequipthetaxadministration

NewChallenges

Negativeimpactofinternationaltaxevasion

Directeffectonthesupplyofpublicservices,onpovertyandinequalities

Taxationinequalities,Taxpressureontheleastmobilefactors(assets,persons,companies,etc.),Disadvantageofthedomesticentitiesinthedomesticandinternationalcompetition

Dropofdomesticrevenuesnecessaryforthefinancingofdevelopment

Economic,financial,socialandpoliticalinstability

Whyistaxcooperationimportant?

Improvingdomestictaxtransparency

Coordinatedglobalresponse

Buildingpeernetworkswithotherjurisdictions

Deterrencetotaxevaders

Securingdomesticrevenuebase

Assistingdevelopmentofeconomy

Reinforcementofthesocialcohesion

Areyouawareof?

THEGLOBALFORUM

11

TheGlobalForumin4steps

2009CallG20callRestructuring

2010–2016:Firstroundofpeerreviews

2014-2015:AdoptionoftheAEOIstandard;andRevisionoftheTermsofreference(ToR)ofEOIR.

2016:BeginningofthesecondroundofEOIRpeerreviews

2017:FirstAEOI

2018:SecondAEOI

2020:ComprehensivepeerreviewsoftheAEOIstandardimplementation

Agrowinggroup

Already 157 members (31 African Countries) Yet to benefit : Guinea Bissau, The Gambia, Mali, Sierra Leone

Thismapisillustrativeandwithoutprejudicetothestatusofanyterritory,thesovereigntyexercisedoveritandthedelimitationofinternationalbordersandlimits.

18Observers…andsoontheAUCAfricanDevelopmentBank FinancialActionTaskForce(FATF)

AfricanTaxAdministrationForum(ATAF)InterAmericanCenterofTaxAdministrations(CIAT)

AsianDevelopmentBank(ADB) Inter-AmericanDevelopmentBank(IADB)

CaribbeanCommunity(CARICOM) InternationalFinanceCorporation(IFC)

CentredeRencontredesAdministrationsFiscales(CREDAF)

InternationalMonetaryFund(IMF)

CommonwealthSecretariatIntra-EuropeanOrganisationofTax

Administrations(IOTA)

CouncilofEuropeDevelopmentBank UnitedNations

EuropeanBankforReconstructionandDevelopment(EBRD)

WorldBankGroup

EuropeanInvestmentBank(EIB) WorldCustomsOrganisation

Structure&PrinciplesoftheGlobalForum

AlldecisionstakenbyGlobal

Forummembers;

participatingonequalfooting

Consensusbaseddecisions

Consensus-1forreports

Self-standingdedicatedSecretariat

basedinOECDfundedbymembers

GlobalForumAllthemembers

SteeringGroup18members

PeerReviewGroup30members

AEOIGroup82members

Themission:Ensuringthe

implementationofthetax

transparencystandards

(EOIR&AEOI)

RobustpeerreviewprocessforEOIR(ratingsprovided

andreportspublished)

MonitoringoftheimplementationofEOIRandAEOI

(follow-upontherecommendations

made)

Tocome:peerreviewprocessfor

AEOI

Technicalassistanceinthe

implementationofthetaxtransparency

standards

MissionoftheGlobalForum

Peerreviewsandratings

GFratings

Businesssecurity

Policyinroutinginvestments

CorrespondingBanks

Listingprocess

Consequencesofratings

•  CouncilofEuropeDevelopmentBank

•  EuropeanBankforReconstructionandDevelopment

•  EuropeanInvestmentBank

•  InternationalFinanceCorporation(WorldBankGroup)

•  Etc.

•  G20Listofnon-cooperativejurisdictionsintaxtransparencymatter;

•  EUListofnon-cooperativejurisdictionsintaxmatters;

•  Nationalblacklists

Unprecedentedimprovementsintaxtransparency

About4,500newEOIrelationshipsinlinewithinternationalstandardshavebeenestablishedsince2009(+280%).

18jurisdictionshaveabolishedbearershares.13otherjurisdictionshaveimmobilisedthem.

70jurisdictionseliminatedstrictbanksecrecyforEOIpurposes.

Virtuouscirclefordomesticresourcesmobilisation

Reviewofthelegalframeworkand

practice

Recommendationsincaseofdeficiencies

Implementationofthe

recommendations

Moreinformationavailableand

accessibleforthetaxadministration

Improvingthefightagainstdomesticandinternationaltaxevasionand

avoidance

Strengtheningadministrativecooperationintaxmatters

StrengtheningthefightagainstdomesticandinternationaltaxfraudDomestic

resourcesmobilisation

TechnicalAssistance

Inductionprogrammeforallnewmembers

Preparingforpeerreviews

Reviewingorprovidingmodellegislation

AdviceonEOIsetupandorganisation

Manuals,ModelTIEA,EOItools,Beneficialownershiptool,

Trainings,mentoring

SupportforjoiningMAC

SupportonConfidentialityanddataSafeguards

THESTANDARDSOFTRANSPARENCYAND

EXCHANGEOFINFORMATION

22

Thetaxtransparencypyramid•  Exchangeofinformationonrequestwithsafeguardstoprotecttaxpayers’rightsandconfidentiality

•  Availabilityofinformationparticularlyownership,accountingandbankinformation

•  Accesstoinformationandpowerstoobtainit

Exchange

Availability

INFORMATION

Access

Exchangeofinformationonrequest

SubsidiaryA ParentB

CompetentAuthority

CountryA

Taxauditor

Suspicioustransaction:

ArepaymentsbyAtoBforadvisoryservicesjustified?

Taxinvestigation

CountryB

CompetentAuthority

Taxadministration

Priorrequest

Informationgathering

X

IntensifieduseofEOIRinstruments

The 2017 GF Survey

230-250% increase in 2009-2016

SomenumbersrelatedtoEOIR

€30million

396requests

SWEDEN(2010-14)

€326million

400requests

AUSTRALIA(2013)

THEPHILIPPINES

Morethan$1millionrecoveredIn2014with2requests

$62millionrecoveredin2013fromonetaxpayerand

fromonerequest

SOUTHAFRICA

UGANDA

$9millionrecoveredfrom20requestsin2015

ImpactofPanamapapers

28

Automaticexchangeoffinancialaccountsinformation

CountryBCountryA

FinancialInstitutionslocatedinA

CountryAtaxadministration

CountryBtaxadministration

AccountHoldersresidentinB

AccountHoldersresidentinA

FinancialInstitutionslocatedinB

AFRICAMATTERS-THEAFRICAINITIATIVE

29

TheFacts:TaxEvasionandotherIFFsareanAfricanissue

Africahasreceived$46,1billionfrominternationaldevelopmentassistancein2012

Africaisannuallylosingmorethan$50billionthroughillicitfinancialoutflows(moneyillegallyearned,transferredorused).

IllicitFinancialFlows

Launderingcriminalproceeds Corruption Taxavoidance

andevasion Marketabuse

TaxabuseconstitutesanimportantpartofIFFs

TotalOffshoreWealthbyRegion,2016

0 2 4 6 8 10 12

NorthAmerica

EasternEurope

LatinAmerica

AfricaandMiddleEast

WesternEurope

AsiaPacific

Global

TotalOffshoreWealth(USDTrillions)

TotalWealth(USDTrillions)

0 5 10 15 20 25 30

NorthAmerica

EasternEurope

LatinAmerica

AfricaandMiddleEast

WesternEurope

Asia-Pacific

Global

Shareoftotalwealthoffshore(%)

Shareoftotaloffshorewealth

AfricanmembersoftheGlobalForumBenin MauritaniaBotswana MauritiusBurkinaFaso MoroccoCameroon NamibiaCapeVerde NigerChad NigeriaCoted’Ivoire RwandaDjibouti SenegalEswatini SeychellesEgypt SouthAfricaGabon TanzaniaGuinea TogoGhana TunisiaKenya UgandaLesothoLiberiaMadagascar

•  17outthe31AfricanmembersoftheGFhavepassedsuccessfullytheirEOIRreview:

•  Severalmorereceivingtechnicalassistanceinpreparationfortheirreview.

•  The14otherjurisdictionshaverecentlyjoinedtheGFandarebenefittingfromtheGFinductionprogramme.

5AfricanmembersoftheGFarecommittedtoAEOI.2exchanginginformation2areengagedinapilotproject

EOIR

AEOI

WhyanAfricaInitiative?

• Internationaldimensionoftaxauditsisnotintegratedinthecultureoftheauditorsandofficials

• TaxrevenuesofAfricancountriesdependsessentiallyonCorporateIncomeTax.HowevermanycompaniesaresubsidiariesofMultinationalenterprises

ThebenefitsofEOIarerelativelyunknownorunderestimatedinthe

Continent

• Indiahassent1265EOIrequestsin2013,morethanthenumberofEOIrequestseversentbytheAfricancountries

AfricancountriesdofewornoEOI

• BroadEOInetwork• Well-resourcedEOIUnits• EOIprocesses• Dedicatedandtrainedstaffs

Ingeneral,Africancountriesdonothave

EOIcapability

Example:theMultilateralconvention

MACRatified(10) Cameroon,Ghana,Mauritius,Nigeria,Senegal,Seychelles,SouthAfrica,Tunisia,Uganda,Morocco

MACSigned(5) BurkinaFaso,Gabon,Liberia,Kenya,Mauritania

Intheprocess(6) Angola,Benin,CaboVerde,Chad,Eswatini,Madagascar,Rwanda,Togo,Lesotho.

Outofthe129PartiestotheMAC,only15areAfricancountries(11%). 129jurisdictionsarecurrentlycovered

Allformsofadministrativeassistance

EOIonrequest

SpontaneousEOI

AutomaticEOI

Simultaneoustax

examinations

Taxexaminationsabroad

Assistancein

recovery

Serviceofdocument

s

Atwo-pillarstrategy

OverviewoftheAfricainitiativeReinforcementofthefightagainstinternationaltaxavoidanceandsupportto

themobilisationofdomesticrevenuesinAfrica

Increasedurablyandconcretelytaxtransparency

andEOIinAfrica

AcombinationofspecificandmeasurabletargetstomeetduringtheAfrica

initiative

How?

Removepoliticalobstacles:

• Showingthelossofdomesticrevenues

• Raisingawarenessatthepoliticallevel

•  Integrationintheregionalandinternationalagenda

• Politicalbuy-inandTaxadministrationsupport

EncouragetheuseofEOI:

• Assistanceinthelegalandadministrativeimplementationofthetaxtransparencystandards

• Capacitybuilding• Training

Acalltoaction

aimedatboostingAfricancountries’effortstowardsimplementingtheinternationalEOIstandardsandusingEOItoolstoimprovetheirdomesticresourcemobilization

SignedNovember2017inYaoundé

Presently25Africancountries

aresignatories

YaoundéDeclarationYaoundéDeclarationNov.2017•  25Africancountrieshave

joinacalltolaunchanAfricanAgendaontacklingIFFfromAfricathroughtaxtransparencyandEOI.

•  TheAU,theRECs,UNECA,theGlobalForum’sAfricaInitiativeandtheothertechnicalassistanceproviders(ATAF,CREDAF,WATAF,etc.)mustworktogetherandalongwithAfricancountriestodocumentandimplementthisagenda.

2015-2017Targets 2018-2020WorkProgramme The minimum requirements for enablingeffectivetaxcooperation:

Tax cooperation in Africa is expanding andacceleratingtoincorporatepreparationsforAEOIaswell.

1.  Establishinga functionalEOIunitwithin thetaxadministrationwithadequateresources.

2.  Delegatingthecompetentauthorityfunctionfrom theMinistry of finance to operationallevel.

3.  Broadening the network of exchange ofinformation partners through the signing oftheMultilateralConvention.

4.  Increasing the use of tax cooperation bymakingaminimumnumberof EOI requeststopartnercountries(atleast30requests).

5.  Measuring the impact of EOI bymonitoringtheadditionalrevenuegainedfromrequestssent.

1.  Meeting the 2015-2017 Targets for newmembers.

2.  Definition and implementation of a taxcooperation strategy to tackle internationaltaxevasion.

3.  Taking steps toward the implementation oftheAEOIstandards,inparticularundergoingadiagnosticofmembers’confidentialityanddatasafeguardframeworks.

4.  Committing to start AEOI in a reasonabletimeframe for a critical number of Africancountries.

Thetargets

TheAfricaInitiative,anexistingframeworktotackleIFFs

OpentoallAfricanjurisdictions

Partnershipwithdonorsand

technicalbodies(ATAF,CREDAF)

Commitmenttoimplementtheinternationaltaxtransparencystandards

Amonitoringprocesstomeetthe

targets

Technicalassistanceprogramme

ThepathtowardwinningthefightagainstIFFs

EnhancedcollaborationwiththeAUandUNECA

Broadeningthepartnershipwithall

technicalandinstitutionalbodies

inAfrica

Settingupanyearlyreportingprocessto

theAU

Improvingthecommunicationto

thepublic

Deepeningandmutualising

technicalassistance

Meetingthecommitments

Buildingawareness

Rating Botswana Partiallycompliant**

BurkinaFaso Largelycompliant Cameroon Largelycompliant Gabon Largelycompliant Ghana Partiallycompliant** Kenya Largelycompliant Lesotho Largelycompliant Liberia Ratingin2019 Morocco Largelycompliant Mauritania Largelycompliant Mauritius Compliant** Nigeria Largelycompliant Senegal Largelycompliant

SouthAfrica Compliant Seychelles Largelycompliant Tunisia Ratingin2019 Uganda Largelycompliant

AfricaandEOIR

*AfricannewmembersbenefitingfromanInductionProgrammeareyettobereviewed.**Secondroundofassessments.

AvailabilityofbeneficialownershipinformationhasastrongimpactontheoutcomeofthesecondroundofEOIRreviews

GhanaandBotswanaareactivelyworkingtofilltheidentifiedgaps

GoodperformanceofAfricanmembersinthefirstroundofEOIRpeerreviews

Country Year of the first AEOI Number of partners that each jurisdiction sent information to in

2018 Seychelles 2017 54

South Africa 2017 57

Mauritius 2018 54

Ghana 2019 -

Nigeria 2019 (2020) -

Morocco Pilot project with France -

Egypt Pilot project with UK -

AfricaandAEOI

MeasuringProgress:

ReportonTaxtransparencyinAfrica

Thefirst• ProgressreportontaxtransparencyinAfrica

• OfanannualseriesofreportswhichwillmeasuretheprogressAfricancountriesaremakinginimprovingtaxtransparencyandtheimpactoftheseimprovements

2018AfricaInitiativeProgressReport

Keyfacts

18

2

5

3

1

22

2014

2018

LevelofpriorityofEOIfortaxauthorities

None Very/low Medium Very/High

0 500 1000 1500 2000 2500 3000 3500

2013

2019

NumberofEOIrelationships

EOIrelationshipsin2013and2019

Bilateralrelationships RelationshipsincludingMAC

7

19

5

19

2

18

3

24

0

5

10

15

20

25

30

2014 2018

NUMBE

ROFCO

UNTR

IES

EvolutionoftheEOIinfrastructure

CAdelegation EOIUnit Trackingsystem Dedicatedstaff

38 67 109194 192119

186295

489

681

2014 2015 2016 2017 2018(HALF)

EOIrequestssent(cumulative)

EOIrequestssent(annual)

RevenuegainedfromEOIRinAfricaIn2018,Africanmemberssent192EOIrequests(38in2014).AsaresultofEOIR,5countrieshavereportedhavingcollectedadditionaltaxesofoverUSD22million.

FirstimpactsofAEOIinAfrica

2AfricanmembershavereportedoverUSD300millionofadditionalrevenuesgainedfromvoluntarydisclosureprogrammessetuppriortotheirfirstAEOIexchanges.

Worldwide,500000taxpayershavedisclosedtheirassetsheldabroadandUSD95billionhavebeencollected

NIGERIA

Following a commitment to implementAEOI,NigerialaunchedaVoluntaryAssetsand Income Declaration Scheme (VAIDS)in June 2017, which took effect from1stJuly2017to31stSeptember2018.Thescheme yielded about 30billionNaira(USD82.6million)andgrewthetaxpayerdatabase from 14million in 2016 to19millionin2018.

SOUTHAFRICA

The Special Voluntary Disclosure Programme(SVDP) set up from October 2016 to March2017 by South Africa, prior to its first AEOIexchanges in September 2017, generatedUSD283millionofadditionalrevenues.In total, South Africa has collected closetoUSD1.5billionfromitsthreeVoluntaryDisclosure Programmes since the launchofitsfirstVDPin2010.

14Africancountriesarebenefittingfromanintensivementoring

programme(Inductionprogramme)

“Alacarte”assistanceto15otherAfrican

countries.

23trainingeventsorganisedinAfricaattendedby1085

officials.

14technicalassistance

missionswithATAF

2015-2018technicalassistanceinAfricaBenin,CaboVerde,Chad,Côted’Ivoire,Djibouti,Egypt,Eswatini,Madagascar,Niger,Rwanda,Tanzania,Togo,Namibia,Guinea(newmembers).

2019Ayearofcelebration:AfricaInitiative’s5th

anniversary

StrategicpartnershipwiththeAfricanUnion

Commission

HighlevelgatheringofAfricanministersoffinancesandrepresentativesfrommajorAfricaninstitutions

(AUC,AfDB…)

Africanproposalsforenhancinginternationaltax

co-operationbased

SigningceremonyoftheConventiononmutual

administrativeassistanceintaxmatters

Technicalmeetingforheadoftaxadministrationsandpartnerorganisations

Commitmenttotaxtransparency

Preparationofthe2019ReportonTaxtransparency

inAfrica

VISITTHEGLOBALFORUMWEBSITE:WWW.OECD.ORG/TAX/TRANSPARENCY

51

ANYQUESTION?