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CREATING THE FRAMEWORK FOR CROSS BORDER TAX TRANSPARANCY

By ROBERTO BERNALES
International tax consultant and Professor of Tax Law of the University of Deusto

CREATING THE

A long way has been walked since 2009 when the new era in tax exchange of information started.Today there seems to be consensus between most jurisdictions in the world on the steps taken and the work developed by the Global Forum on Transparency and Exchange of Information and the OECD, and their implementation in the next future (i.e.the implementation of the exchange of information on request (EOIR) standard by 2017, and the automatic exchange of information (AEOI) standard, meaning the common reporting standard, CRS, referred to financial information, by2018. Further, jurisdictions signing the multilateral Convention on Mutual Administrative Assistance in Tax Matters and the multilateral Competent Authorities Agreement for the CRS, as the complementary tool needed to facilitate the practical application of the Convention, are increasing thus making it possible the establish mentof a robust tax transparency framework.
However, to enable a real cross-border tax transparency some elements should be strengthened and other elements should be included in the current framework.The AEOI should be expanded not only to financial information and country by country reporting but also to beneficial ownerships.It is clear that the implementation of the beneficial owner information standard is not working properly.Further, in too many cases trusts,foundations and other similar arrangements seem to be out of the set of rules created to guarantee tax transparency. A common approach to this issue from common law and civil law jurisdictions, avoiding the existing reluctances between them, is needed in order to guarantee real tax transparency.If we want the legal framework to be more than a formal structure that can beeasily avoided, a step forward should be taken in order to implement a system where tax authorities shared their tax rulings provided to their multinational taxpayers (in line with the new EU directive). Experience shows that the lack of transparency on tax rulings can be exploited by certain companies to reduce their fair tax contribution, with the complicity of some governments which play a disloyal role to the international community and, even worse, to their own taxpayers.
Governments should send a clear message on their commitment to the new framework by restricting to the minimum investment coming from jurisdictions which do not respect either legally or factually the new transparency standards. Companies using those types of jurisdictions should be penalized to the maximum in their options to enter into public contracts with federal, state and local governments.
Professionals of tax advising and planning should take a more active role in the building of the new framework.They seem to have been on the defensive more than playing an active role in building the new framework.This is understandable considering that they are seen in many cases as the facilitators of international tax avoidance.It is time to consider international common standards of tax advising and planning that should be developed and implemented by the bodies representing these professionals. Maybe we need to monitor these professionals (OECD  dixit) but we also need their loyal contribution to the new framework.
A thorny issue that will have to be confronted sooner or later from a common perspective is the situation of whistle blowers. Their information has given a dramatic impulse to the acceptance of the new standards.Governments have used extensively the data provided by them. However, there are borders that cannot be trespassed without violating certain rights. In the future, a common standard on the balance between those rights and the right of civil society to protect itself against those who do not pay their fair share of taxes should be found. As a general rule, as it happens with other criminal offences, those providing information on tax offenders should be protected, not prosecuted. Enabling a new framework of tax transparency should also respect taxpayer human rights. The implementation of that framework should not forget the concern about taxpayer privacy and procedural guarantees. The international community should be able to reach a common standard also on this important issue.

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