Transcript Various Agreements Between States Covering EOI

Various Agreements Between
States Covering EOI
ATAF Conference
Kampala, Uganda
19/20 April 2012
Ron van der Merwe
Types of Agreements
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Double Taxation Agreements
Tax Information Exchange Agreements
Mutual Assistance Agreements
Multilateral Assistance Agreements
First three are bilateral but can also be
negotiated by way of a multi-party process.
Basic Principles
• Creates a legal basis for the exchange of
information between States.
• Sets the standard of foreseeable relevance in
relation to requests.
• Sets standards of confidentiality.
• Ensures that bank secrecy and lack of
domestic tax interest cannot be used as a
barrier to exchanges.
Basic Principles
No obligation to exchange:
• If contrary to administrative laws and practices of either
State
• Information not obtainable under laws or normal
administration of either State
• Trade secrets
• Information injurious to State
Double Taxation Agreements
• Article dealing with EOI is virtually the same in both the OECD
and UN Models.
• Also adopted in regional models such as the SADC Model and
the proposed COMESA Model.
• Scope of exchange includes:
1. Request
2. Spontaneous
3. Automatic
4. Simultaneous Examinations
5. Industry wide exchanges
Double Taxation Agreements
• Current Models extend EOI to taxes of every
kind and description.
• Older treaties might limit EOI to taxes covered
by the treaty.
• DTA also has the possibility of including an
Article allowing assistance in collection – this
is a potential issue of great benefit to
developing countries.
Tax Information Exchange Agreements
• Model created by the OECD and endorsed by
the Global Forum on Transparency and
Exchange of Information.
• Membership in excess of 100 countries.
• TIEAs create a legal basis for EOI when there is
no need for a DTA between States due to low
levels of cross border activity.
• Members obliged to enter into TIEAs if
requested by another Member.
Tax Information Exchange Agreements
• Scope of EOI is limited under a TIEA in
comparison to a DTA.
• EOI may only be done on request.
• Taxes covered may be limited.
• No assistance in collection included.
• Start of a process which hopefully will be
extended in future to include all possible
exchanges??
Tax Information Exchange Agreements
• TIEAs can also be negotiated on a multi-party basis.
• Two multi-party negotiations have already been
successfully carried out under the auspices of SADC.
• Result being 6 TIEAs between SADC Members and
Guernsey and 7 TIEAs between the Isle of Man and
SADC Members.
• Multi-party negotiations for ATAF Members are
recommended by the Working group and endorsed
by the ATAF Council.
Multilateral Assistance Agreement
• ATAF Council has endorsed the possibility of a
Multilateral Assistance Agreement between ATAF
Member States.
• It is not meant to be a substitute for DTAs when
economic relations between any two States would
normally require a DTA.
• The advantage lies in the fact that such a multilateral
could be easily agreed and acceded to by States
whereas a DTA which deals with taxing rights takes
longer to negotiate and bring into operation.
Multilateral Assistance Agreement
• Model drafted by ATAF Working Group to be
presented to Member States for comment.
• Process to achieve consensus on the text would
require either a round table meeting or a written
procedure.
• Probably the best solution is a round table discussion
with delegates from Member States who are
authorised to take relevant decisions.
• Scope is in line with a DTA rather than the limited
TIEA.
Multilateral Assistance Agreement
• Summary of Articles.
Article 1
Definitions and rule for undefined terms.
Article 2
Object of Agreement – full EOI, simultaneous examinations,
tax examinations abroad and assistance in collection.
Article 3
Taxes covered – all taxes on income, capital and taxes on
goods and services.
Multilateral Assistance Agreement
 Article 4
EOI provision in line with OECD/UN Article. Confidentiality dealt
with in separate Article.
 Article 5
Tax examinations abroad – allows for visits to treaty partner in
order to be present at tax examination.
 Article 6
Simultaneous tax examination each in its own territory.
 Article 7
Assistance in collection in line with OECD/UN Article and only in
respect of taxes finally due and payable.
Multilateral Assistance Agreement
 Article 8
Confidentiality and use in line with OECD/UN standard.
 Article 9
Costs including provision for substantial or extraordinary costs.
 Article 10
Implementation of legislation to enable compliance with the
Agreement.
 Article 11
Agreement does not limit, nor is it limited by, other international
agreements.
Multilateral Assistance Agreement
 Article 12
Mutual Agreement procedure relating to implementation and
interpretation of the Agreement and procedures to be used in
exchanges. Direct communication allowed and dispute
resolution sanctioned under ATAF rules.
 Article 13
Depositary – ATAF Executive Secretary.
 Article 14
Notification of the Competent authority for each State.
 Article 15
Ratification and entry into force. 5 Member States.
Multilateral Assistance Agreement
Article 16
Amendments.
Article 17
Accession by further Member States.
Article 18
Signature by duly authorised representatives.
Article 19
Withdrawal.
EOI
• Finally, it should be noted that the multilateral
looks at exchanges between Members – the
process of entering into EOI agreements
outside ATAF should be a priority. Much
information will be sourced in countries
outside ATAF and Africa.
• Can you do an audit/transfer pricing
investigation without information??