Financial Transparency Coalition

The Organization for Economic Co-operation and Development (OECD) met in Mexico City over the past two days to discuss next steps in the global fight against tax evasion.  In a statement released by the OECD this afternoon, OECD Secretary General Angel Gurria referred to the recent actions taken by the G20 and the OECD, and the recent willingness on the part of tax havens to accept the OECD guidelines on the exchange of tax information as a “revolution.”  From the OECD:

Today, on the eve of the Pittsburgh G20 meeting, the Global Forum on Transparency and Exchange of Information dealing with tax matters, took major steps to confirm the end of the era of banking secrecy as a shield for tax evaders.

Hailing the breakthrough OECD Secretary General Angel Gurria said “what we are witnessing is nothing short of a revolution. By addressing the challenges posed by the dark side of the tax world, the campaign for global tax transparency is in full flow. We have equipped ourselves with the institutional means to continue the campaign. With the crisis, global public opinion’s expectations are high, their tolerance of non-compliance is zero and we must deliver”.

From my vantage point, it is difficult to view the acceptance of an extremely weak – if not irrelevant – standard (the OECD standard) as constituting a revolution.  Unless we have automatic exchange of tax information, we’ll never be able to fight tax evasion effectively. Nevertheless, great progress certainly has been made in recent months – the UBS settlement, for instance, was a major blow (although certainly not a fatal one) to Swiss banking secrecy.

Additionally, the OECD announced its future plans to address the issue of tax information exchange:

Building on the extraordinary progress made in the last few months to incorporate the globally accepted standards developed by the OECD in both new and existing agreements, the Forum took the following key decisions:

Teeth: to put in place a robust, comprehensive and global monitoring and peer review process to ensure that members implement their commitments; a Peer Review Group has been established to examine the legal and administrative framework in each jurisdiction and practical implementation of these standards. A first report on monitoring progress will be issued by end 2009.

Extended Global Reach: to further expand its membership and to enshrine the principle that all members enjoy equal footing.

Faster Agreements: to speed up the process of negotiating and concluding information exchange agreements including exploring new multilateral avenues.

Developing country assistance: to put in place a coordinated technical assistance program to assist smaller jurisdictions to implement the standards rapidly.

This all sounds good rhetorically, but we’re lacking the details – and the devil’s always in the details.  It will be interesting to see how this unfolds.