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OECD released global Standard for Automatic Exchange of Financial Account Information

Jul 22, 2014 18:21 IST

The Organisation for Economic Co-operation and Development (OECD) on 21 July 2014 released single global standard for automatic exchange of financial account information between jurisdictions.

The Standard for Automatic Exchange of Financial Account Information in Tax Matters calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis.

Two Components of the Standard

  • Competent Authority Agreement (CAA)
  • Common Reporting Standard (CRS)

Main Elements of the Standards for Automatic Exchange

  • The Standard provides for annual automatic exchange between governments in the field of financial account information. The financial account information includes balances, interest, dividends, and sales proceeds from financial assets which are reported to governments by financial institutions. It also covers accounts held by individuals and entities, including trusts and foundations.
  • The Standards also provides confidentiality clause and safeguards in the exchange of information. For this the countries will need to pass domestic laws as per their respective legal jurisdictions to enable such cooperation.
  • Also, the Standards provides that each competent authority needs to notify the other competent authority immediately regarding any breach of confidentiality or failure of safeguards and any sanctions and remedial actions consequently imposed.

The OECD will formally present the Standard to G20 Finance Ministers at their meeting in Cairns, Australia, on 20-21 September 2014.

Background

The new framework is a major development in the fight against black money and important move towards greater transparency and putting an end to banking secrecy in tax matters.

The Standard was developed at the OECD Secreteriat in Paris, France. These Standards were developed under a mandate from the G20 of major economies, endorsed by G20 Finance Ministers in February 2014, and approved by the OECD Council.

More than 65 countries and jurisdictions have already publicly committed to implementation, while more than 40 have committed to a specific and ambitious timetable leading to the first automatic information exchanges in 2017.

Countries and jurisdictions publicly committed to implementation of Automatic Exchange of Information

Andorra, Anguilla, Argentina, Australia, Austria, Belgium, Bermuda, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Chile, People’s Republic of China, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Montserrat, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Turks & Caicos Islands, United Kingdom, and United States, and the European Union.

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