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Global Forum Publishes Seven New Peer Review Reports on Transparency and Exchange of Information on request

IBX-Jakarta. Quoting from www.oecd.org/tax, The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) published today seven new peer review reports on transparency and exchange of information on request (EOIR), for six of its members (Albania, the Czech Republic, Mexico, Nigeria, Saint Lucia and Togo) and one non-member, which had previously been deemed of relevance to its work on EOIR (Nicaragua). More than half of the Global Forum members have now been fully reviewed in the second round of EOIR peer reviews and the ratings assigned are generally very good with 87% of the jurisdictions obtaining satisfactory overall ratings (“Compliant” or “Largely Compliant”), while 11% were assessed as “Partially Compliant” and 2% as “Non-Compliant”.

Key findings and recommendations include:

Albania was rated overall “Largely Compliant” with the EOIR standard, as was the case in its first review published in 2016. Albania has made significant progress on the availability of accounting information, access to information and on the quality and timeliness of responses where the ratings for those elements were upgraded from “Largely Compliant” to “Compliant”. Albania has introduced a beneficial ownership register that will serve as the tax administration’s primary source of beneficial ownership information. The report highlights a need for certain improvements regarding the definition of beneficial owner and relevant stakeholders’ awareness of it, to ensure the availability of adequate, accurate and up-to-date information for legal entities and legal arrangements and for bank accounts in all cases, in accordance with the standard.

The Czech Republic has substantial experience on exchange of information on request, as was recognised by its exchange partners, although the timeliness of responses provided to requests for information has not been optimal during the review period. The authorities took some corrective actions recently that need monitoring. The Czech Republic has put in place a beneficial ownership register and has introduced related amendments to its anti-money laundering laws and practices. The supervisory functions on the implementation of this register need to be improved. The overall rating of “Largely Compliant” from the 2015 report was maintained in the current peer review.

Mexico has made progress since its previous peer review in 2014, improving the efficiency of its process to access banking information, and expanding its treaty network. In early 2022, the country amended its fiscal code to introduce new requirements on beneficial ownership to ensure the availability of this information. The report highlights the need for further improvements, in particular the supervision of the new requirements to ensure the availability of adequate, accurate and up-to-date information. Since 2014, there were several changes in personnel within the country’s EOI unit, which affected the working arrangements of the competent authority, resulting in difficulties to respond to all requests in a timely manner and to provide status updates to its partners within the maximum of 90 days. The report includes recommendations for Mexico to improve its exchange of information practices. The overall rating of Mexico’s implementation of the EOIR standard was slightly downgraded compared to its last peer review, from “Compliant” to “Largely Compliant“, but remains satisfactory.

Nicaragua is not a member of the Global Forum but was identified as a jurisdiction of relevance to its work on EOIR and consequently evaluated. Whilst Nicaragua was given the opportunity to participate in its review, as is the case for Global Forum members’ reviews, it did not participate. Its evaluation is therefore primarily based on publicly available material. Nicaragua was rated “Non-Compliant” with the standard. The main shortcoming identified relates to access to banking information, which is subject to bank secrecy. This also affects the only exchange of information mechanism in place (Convention on Mutual Assistance and Technical Cooperation among the Central American Tax and Customs Administrations), as the domestic law framework prevents the exchange of banking information under this mechanism and impedes Nicaragua from giving effect to its network of exchange of information relationships. Improvements are also recommended in relation to the retention of accounting records under the tax law framework. Further, the availability of beneficial ownership information and effective supervision and enforcement of its sources need to be improved, though it is recognised that Nicaragua’s anti-money laundering framework has been ratcheted up incrementally, and Nicaragua established a register of beneficial owners of commercial companies in August 2020. More generally, insufficient information is available publicly to conclude positively on the practical implementation of the standard.

Nigeria’s legal and regulatory framework generally ensures the availability, access to and exchange of relevant information for tax purposes. Since its last peer review in 2016, Nigeria has introduced requirements for companies, limited partnerships and limited liability partnerships to identify and report beneficial ownership information to a central registry. Nigeria has also shown improvement in ensuring compliance of entities towards various obligations whilst ensuring that requested information was effectively exchanged. This report highlights the need for further improvements, to ensure the availability of legal and beneficial ownership for legal entities and legal arrangements in all cases. Overall, Nigeria maintained the “Largely Compliant” rating from its previous review.

Saint Lucia was found to be “Largely Compliant” with the standard on transparency and exchange of information upon request. Saint Lucia addressed many deficiencies identified in the previous peer review report released in 2016. Saint Lucia has also recently taken measures to implement the strengthened standard on the availability of beneficial ownership information. Its implementation requires some refinement and monitoring to ensure it fully meets the standard. The report notes that Saint Lucia’s Inland Revenue Department has been able to respond in a highly efficient manner to the large majority of the requests received during the review period (July 2018 to June 2021).

Togo underwent the first review of its legal and regulatory framework for EOIR. It was found broadly in line with the standard, including on the availability of beneficial ownership information of legal entities and arrangements, thanks to recent amendments in the country’s tax law. Some improvements are nevertheless recommended on the update of beneficial ownership information of bank accounts. In addition, Togo does not yet have a full effective network of international instruments allowing the exchange of information, as the Convention on the Mutual Administrative Assistance in Tax Matters, signed by the country in January 2020, has not yet entered into force. The implementation of the legal and regulatory framework in practice will be reviewed, and an overall rating assigned, in a Phase 2 review that will take place once Togo will have developed its experience in exchange of information and at the latest in 2026.

Source: https://www.oecd.org/tax/exchange-of-tax-information/global-forum-publishes-seven-new-peer-review-reports-on-transparency-and-exchange-of-information-on-request.htm

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