Inclusion and engagement were the buzzwords at this week’s Global Forum on Transparency and Exchange of Information for Tax Purposes, which held its third annual meeting Tuesday in Bermuda.
The formerly-grey-listed territory championed the role of small jurisdictions and developing nations in drafting tax information exchange treaties and enhancing their own regulatory frameworks, as it played host to more than 100 member countries for the Organisation for Economic Co-operation and Development forum.
Since the OECD white, grey and black lists were published three years ago, Bermuda has taken a leading role in the Paris-based policy group, acting as vice-chair of the Global Forum’s steering committee.
The territory was among the first to participate in the first phase of the Tax Information Exchange Agreement peer review programme and see its report reviewed and ratified by the Global Forum. Last month, the government tabled specified business legislation that will establish uniform guidelines for the maintenance of information and records in all financial sectors.
Looking to leverage this week’s Global Forum to shed its image as a “tax haven,” Bermuda drew on its long-standing commitment and early adoption of tax information exchange standards.
“It makes a lot sense to be in Bermuda, which has been a leader in implementing the internationally agreed standards on exchange of information. It is not by accident that you have almost 250 delegates expected at the meetings, and almost 97 delegations,” said Pascal Satin-Amans, head of the Global Forum Secretariat. “It shows that we now have a global issue that is addressed globally by a global community.”
Speaking before the conference on Monday, Bermuda Premier and Minister of Finance Paula Cox criticised the 2008 implementation of the TIEA process, calling it politically motivated — but said the OECD has now “sought inclusion.”
“We will continue to … contribute actively to efforts to advance the Global Forum’s mandate, at the same time continuing to ensure that the perspective of small jurisdictions is considered,” Ms. Cox said.
The needs of developing nations and small jurisdictions appear to be on the agenda of OECD leaders, as this week the Global Forum worked towards the development of multilateral instruments and technical assistance programmes.
“The Global Forum offers unparalleled access and participation at a decision-making level to international financial centres, including small, developing centres, and those with limited resources, which are traditionally sidelined from full participation in the organisations and institutions whose external policies most affect them,” Ms. Cox said at Tuesday’s opening ceremony.
In the VI
Like Bermuda, the Virgin Islands is currently undergoing the peer review process, according to VI Financial Secretary Neil Smith, who attended the forum as part of the VI delegation with Sylvia Moses, commissioner of the Inland Revenue Department.
This week the VI’s legislative and managerial practices with respect to exchange of tax information will be reviewed and codified in a report due for completion later this summer.
“The peer review says to the international community whether the VI meets the standards for tax purposes,” said Mr. Smith, adding that although the territory already has a good regulatory framework some reform is needed, although he declined to provide specific details.
The FS agreed that Bermuda’s seat on the steering committee could benefit smaller jurisdictions, but added, “We have different niches, although we are in the same business.”
Moving forward, the FS said he was pleased with the tone of the conference and progress in negotiations.
“There are some changes with some of the issues that surround the consistency of the assessments, but, as we progress, the organisation matures and we begin to approach things differently as we have a greater understanding of the issues each jurisdiction faces. As time goes on, there will be an evolution of standards,” Mr. Smith said.
One evolution of particular interest to the delegates is a new convention that provides for instantaneous exchange of information.
Yesterday the OECD released new amendments to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which open the convention to all countries, allowing them to sign on to cross border tax-cooperation and information-sharing protocols.
OECD Secretary General Angel Gurriá suggested the amended convention has the potential to “become the leading global instrument for tax cooperation around the world,” but he noted that signatories will retain the flexibility to lodge reservations in certain areas, such as assistance in tax recovery.
According to Mr. Smith, the convention will be extended to the VI as an overseas territory of the United Kingdom, which is a signatory. “We don’t have an issue with it in principle, but there are provisions that we have to be careful with, because it might reduce some of our autonomy and put obligations on us that may be difficult to fulfill because the administrative actions may be cost prohibitive,” Mr. Smith said.
Currently, the Global Forum is moving at full steam to complete the second phase of its peer review programmes by the end of the year. To date, the body has launched 50 reviews and 30 peer review reports.
This year, the Global Forum is moving into the final year of a three-year mandate to ensure “the rapid and effective global implementation of the standards of transparency and exchange of information,” which may ultimately sway future Group of 20 tax policy.
Mike Rawstron, chair of the Global Forum, said the “robust and challenging” peer review process has proved a catalyst for improvement that has been reflected in the confidence shown to the forum by international bodies.
“The IMF and the World Bank and the development banks and regional tax organisations all say our work is important and, particularly, the G-20 see our work as critical to their agenda,” he said.
Mason Marcus, a former Beacon business editor and now a freelance journalist, reported this story from Bermuda.