International tax-related information exchange generates billions in revenue, Global Forum reports

By Doug Connolly, MNE Tax

The automatic exchange of financial account information between countries has been linked directly to at least EUR 3 billion (USD 3.4 billion) in additional tax revenues. Moreover, it has contributed, through voluntary disclosure programs and other initiatives, to a total of more than EUR 112 billion (USD 127 billion) in additional tax revenues, according to a “Global Forum” annual report released November 17.

The Global Forum on Transparency and Exchange of Information for Tax Purposes, which operates under the support of the OECD and G20, is the leading international organization focused on transparency in tax matters and standards for international information exchange. It has a worldwide membership that has grown to 163 jurisdictions, with Algeria and Belarus being the latest to join in 2021.

The organization’s 2021 annual report notes that last year 102 Global Forum jurisdictions automatically exchanged information with respect to more than 75 million financial accounts worldwide – representing a total of about EUR 9 trillion (USD 10 trillion) in assets.

Nearly 90% of the jurisdictions receiving the information reported using it in tax compliance and enforcement efforts.

Expanding information network

The Global Forum operates a capacity-building program that it launched ten years ago that has helped to expand developing country participation. Among developing countries, 46 jurisdictions have either begun automatic exchange of information or have committed to do so in the next few years, according to the report. This has resulted in developing countries identifying more than EUR 30 billion (USD 34 billion) in additional revenue through voluntary disclosure programs and offshore tax investigations.

A total of 105 Global Forum members now have begun annual automatic exchange of information regarding financial assets held offshore, with three jurisdictions starting last year – Nigeria, Oman, and Peru.

The number of countries engaging in automatic exchange of information is expected to further increase to 120 by 2024. Albania, Ecuador, and Kazakhstan start this year. Jamaica, Kenya, Maldives, and Morocco have committed to begin automatic exchange in 2022. These countries will be followed in 2023 by Jordan, Moldova, Montenegro, Thailand, Uganda, and Ukraine. Finally, Georgia and Rwanda join the ranks in 2024.

Nonetheless, that will still leave more than 40 countries in the Global Forum that have not yet committed to a first year to begin exchanges. Moreover, two jurisdictions that have committed – Sint Maarten and Trinidad and Tobago – still do not have in place the necessary legal frameworks, the report notes, and the Pacific island country of Niue does not have in place the technical requirements to operationalize the exchanges.

Ongoing and future initiatives

Jurisdictions’ implementation of automatic exchange of information standards is evaluated through a Global Forum peer review process. The reviews assess whether jurisdictions have established the necessary legal frameworks – both domestic (financial institution reporting) and international (appropriate information exchange). Most of the jurisdictions that have been reviewed so far have been deemed fully or largely compliant with the standards.

Next year, the Global Forum plans to launch an Asia initiative focused on tax transparency and combating tax evasion in Asian countries. The program will join existing regional initiatives for Africa, Latin America, and the Pacific Islands.

The Global Forum is also launching next year a program on women leaders in tax transparency focused on gender equality in tax administrations.