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Tax

International Taxation

Exchange of Information 

As the world becomes increasingly globalised and cross-border activities become the norm, there is a need for tax administrations to work together to ensure that taxpayers pay the right amount of tax to the right jurisdiction. A key aspect for making tax administrations ready for the challenges of the 21st century is equipping them with the necessary legal, administrative and IT tools for verifying compliance of their taxpayers. Against that background, the enhanced co-operation between tax authorities through Exchange of Information (EOI) is crucial in bringing national tax administration in line with the globalised economy. 

Exchange of Information under the International Taxation scenario refers to co-operation in the exchange of information on taxpayers between tax authorities. The key to international tax co-operation is effective exchange of information. OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes has been at the forefront of international efforts to promote all forms of information exchange.

There are three types of exchange of tax information:

Exchange of Information on Request

This is the oldest form of exchange of information and is covered in Article 26 of the OECD's Model Tax Convention on Income and on Capital. Article 26 allows the tax authority in one country to request specific information in relation to a taxpayer or class of taxpayers to allow for the assessment and collection of tax, or for prosecution in the case of tax evasion.

Spontaneous Exchange of Information 

Certain international agreements provide for tax authorities to exchange information spontaneously where they discover something which may affect the tax payable in another country. For example, the EU's Directive on Administrative Co-operation in tax matters provides for spontaneous exchange of information.

Automatic Exchange of Information 

AEOI (Automatic Exchange of Information) is comparatively new, but is the systematic and periodic collection and transmission of “bulk” taxpayer information by the source country to the country of residence of the taxpayer, without the latter having to make a request for the same.

The Global AEOI regime include 

Central Electronic System of Payments (CESOP) 

An EU regime for the exchange of information on cross-border payments received by merchants.

Common Reporting Standard

exchanging information held on offshore bank accounts and other assets.

Country- by- Country Reporting

Exchanging information on entities global operations not in the public domain.

Crypto- Asset Reporting

Framework - exchanging information on cryptocurrency and other digital asset transactions.

Digital Platforms Information 

Exchanging information on the users (sellers) on digital platforms.

FATCA

Exchanging information on offshore bank accounts held by US citizens and companies.