G-20 Summit – global automatic tax information exchange by 2014?
For the press, the most eye-catching item on the agenda at the recent G-20 Finance Ministers Summit in St Petersburg was the (still rather vague) proposal to clamp down on corporate tax avoidance by tackling base erosion and profit shifting. For many STEP members, however, perhaps the most important item was the (very firm) instruction to the OECD that it should produce a clear timeline for completing work on a single global standard for automatic information exchange in 2014 in time for the next G-20 summit in October.
The proposed OECD global standard is to be largely based on the FATCA Model 1 IGA model. If we therefore put the G-20/OECD initiative alongside the recent statement from the US (that delayed FATCA reporting for a further six months and also seemed to recognise that FATCA Model 1 IGAs seemed to offer a much easier solution to everyone than raw FATCA) it becomes relatively easy to envisage that in reality rather than the introduction of unilateral FATCA reporting to be followed quickly by a new system of OECD multilateral FATCA-style reporting, we will actually see a single move globally to automatic exchange of information (AEOI), perhaps in 2015 or 2016.
Multilateral AEOI has always been the long-term objective of bodies such as the OECD. But there now seem to be growing numbers putting their weight behind the OECD model, including most recently the EU Commission. With the US also showing (some might say rare) flexibility regarding the introduction of its own (unilateral) AEOI model, it may be that consensus has now been built for a quick move to global AEOI in the next 24 months.