The Organization for Economic Cooperation and Development (“OECD”)
The Organization for Economic Cooperation and Development (“OECD”) has released the first pillar of its model framework for automatic exchange of tax information.
Standardized Form and Automatic Exchange
The “Standard for Automatic Exchange of Financial Account Information: Common Reporting Standard” establishes a standardized form that banks and other financial institutions would be required to use to gather a range of client account and transaction data to submit yearly to their domestic tax authorities. The different tax authorities would then exchange this information automatically, either bilaterally or multilaterally, depending on the specific agreement.
As summarized by the OECD: “The standard . . . calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.”
Swiss Banking Skepticism
The Swiss Bankers Association (“SBA”) noted that the recommendations from the OECD “are in general a step in the right direction,” yet continued to have problems with the overall framework:
“Firstly, the basis to be used for client identification are domestic money laundering regulations,” the SBA said. “There are still different standards in this area.” Secondly, “it is becoming apparent that the U.S. will not be prepared to offer full reciprocity,” the SBA said.
Finally, the Swiss Bankers Association noted the high costs that are likely to result with implementation of the new OECD standard. The new standard, claims the SBA, will be significantly higher than the costs of implementing FATCA.