Global

Details

  • Service: Tax, International Executive Services, International Tax
  • Type: Regulatory update
  • Date: 2/13/2014

OECD - Single global standard for automatic exchange of information 

February 13:  The Organisation for Economic Co-operation and Development (OECD) today released a document—Standard for Automatic Exchange of Financial Account Information—that is the latest step towards automatic exchange of information (AEOI) globally about bank accounts and other financial assets held offshore.

Read the OECD report.


Following in the wake of FATCA, this new proposed standard is intended to facilitate such information exchange between participating countries.

Automatic exchange of information (AEOI)

The legal basis for AEOI will either be the Multilateral Convention on Mutual Administrative Assistance in tax matters, or alternatively a bilateral treaty. In either case the OECD’s standard then envisages a bilateral Competent Authority agreement providing for automatic exchange of information.


Information exchange is envisaged to be reciprocal, but the same framework could in principle be used when there is no desire for reciprocity. In addition to the envisaged bilateral agreements implementing the exchange of information between tax administrations, the OECD document provides common reporting and due diligence rules that will need to be implemented into domestic law of participating countries.


The OECD document makes the point that this is intended to be a minimum standard—countries can ask for more information—and crucially, it is not intended to restrict other types of AEOI. This raises the prospect that financial institutions might be required to report under multiple AEOI regimes simultaneously, thus significantly increasing cost and complexity.

Like FATCA in some aspects

As with the U.S. FATCA regime, the scope will be broad to reduce the risk of circumvention. Thus, it will apply not just to banks, but also to certain brokers, investment firms, and some insurance companies.


Many aspects of the OECD proposals are consistent with the Model 1 IGA approach under FATCA. However, there are a number of areas where the standard deviates from the Model 1 IGA—such as the removal of minimum threshold limits and new account opening definitions. This will considerably increase the amount of work required.

AEOI attachments

The OECD document includes sample text of two documents as attachments.


  • The first is a model Competent Authority Agreement.
  • The second is the Common Standard on Reporting and Due Diligence for Financial Account information, intended to promote consistency in due diligence and information gathering processes.

The OECD will shortly release a commentary which will attempt to establish a common standard for implementation and application.

KPMG observation

Tax professionals with KPMG’s AEOI Group note that although these new rules are intended to improve efficiency and reduce costs for financial institutions, whether these goals can be achieved will very much depend on whether individual countries are consistent in the way they implement the rules and how these interact with other similar regimes such as FATCA and the EU Savings Directive. The broader scope of today’s proposed rules also is of concern for the same reasons. The experience of tax professionals with these other regimes suggests that assessing the impact of the proposed new rules and gearing up for their implementation on a potentially global basis are likely to be major tasks ahead—particularly given the speed with which these proposals could be introduced.


For more information, contact a tax professional with KPMG’s AEOI Group including:


Hans-Juergen Feyerabend

+49 69 95 87 2348


Victor Mendoza

+34 91 45 63 488




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now