A Vital Tool in International Tax Transparency
Automatic Exchange of Information (AEI) is a vital tool in international tax transparency as it provides for the automatic flow of tax information between national tax authorities as opposed to information being ‘on demand’ - sometimes governments aren’t even aware of what information is available in the first place, and therefore cannot know what to ask for.
In July 2014, the OECD published a Common Reporting Standard (CRS) for sharing such information, which contains some positive elements for automatic exchange of information. Reciprocal AEI is due to come into place by 2017, subject to the completion of necessary legislative procedures. However, there are some serious gaps in the inclusion of countries of the Global South, and without the participation of all countries, such transparency measures fall flat. Civil society organisations believe that any information exchange system should be an inclusive multilateral instrument. Importantly, provisions should be made for non-reciprocal information exchange with countries of the global South during a transitional period, to allow them to benefit from access to information as soon as possible. These countries may not currently have the same capacity within their tax authorities as Global North countries, and need to time to build that, but this should not disadvantage their participation in a new system. Further, there should be no unrelated conditions for entry for global South countries, such as having to reform policies, and the scale and volume of data being exchanged should be transparent, so that the public can hold governments to account on how the system is working.
DDCI asks the Irish government to actively support Global South countries to participate equally in AEI processes globally, and in the meantime to grant non-reciprocal AEI so that these countries are not further disadvantaged in relation to tax. While it is welcome that in all new tax treaties, Ireland now includes an exchange of information clause, this should now become an automatic footing. As data protection structures, confidentiality and data security are critical elements for Ireland in any automatic exchange of information, the Irish government should support capacity development in these areas, particularly in our nine Irish Aid partner countries.
You'll find a very informative inforgraphic about AEI here.