This article will review the OECD’s 2023 Global Forum Capacity Building report. The report sheds light on the Global Forum’s capacity-building and outreach activities throughout 2022 in support of the global implementation of tax transparency standards—exchange of information on request and automatic exchange of financial account information.
Global Transparency and Exchange of Information
With 165 members, the Global Forum is a major international body working on the implementation of global transparency and exchange of information standards around the world.
Since the G-20 declared the end of banking secrecy in 2009, the international community has achieved great success in the fight against offshore tax evasion. Working through the Global Forum, countries have implemented robust standards that have prompted an unprecedented level of transparency in tax matters. The forum aims to ensure that these high standards of transparency and exchange of information for tax purposes are in place around the world through its monitoring and peer review activities.
The main areas addressed are:
- Exchange of information on request: This standard requires the transparency of banking and accounting records, as well as ownership of entities and legal arrangements. It provides a framework for obtaining information on request between tax authorities.
- Automatic exchange of information: This standard allows for the automatic annual exchange of information on offshore financial accounts.
- Capacity building and technical assistance activities: This ensures that all members receive support and benefit from the tools to implement international tax standards. Guidance material, e-learning courses, and virtual classes are accessible through the resources tab.
Global Forum Report 2023
While 2022 marked the stabilization of the Covid-19 pandemic in many regions, members of the Global Forum face significant challenges to a sustained recovery from the economic effects of the pandemic and ongoing geopolitical upheaval.
To deliver its capacity-building and outreach program, the forum secretariat has continued to build on new methodologies developed during the pandemic. It has taken a hybrid approach in all capacity-building and outreach components, with a balance between in-person activities and virtual alternatives, and has also developed new knowledge tools, such as e-learning courses, toolkits, and other tools, shared with 82 member jurisdictions, to support its technical assistance program.
Developing countries sent around 2,400 requests for exchange of information in 2021, 47% originating from Asia.
Over 30 billion euros ($32 billion) of additional revenue has been identified by developing countries since 2009 through offshore tax investigations, including through the effective use of the exchange of information on request standard, voluntary disclosure programs implemented before the first exchanges under the automatic exchange of financial account information—AEOI—standard, and the effective use of AEOI data. In 2021 alone, African, Asian, and Latin American jurisdictions identified respectively 37.2 million euros, 140 million euros, and 261 million euros of revenue through AEOI.
The secretariat is fostering political engagement with high-level officials of member jurisdictions and non-member jurisdictions considering joining the Global Forum to raise awareness of the benefits of implementing the tax transparency standards. In 2022, it held over 90 meetings with ministers, heads of tax administration, and senior officials from jurisdiction and development partners to highlight the benefits of tax transparency in countering tax evasion and avoidance, enhancing voluntary tax compliance, and increasing tax collection.
The regional initiatives have continued to deepen their cooperation in line with regional priorities, increasing local ownership, and active participation by their members.
The Latin America Initiative adopted a framework on the wider use of treaty-exchanged information, while the Africa Initiative made significant progress on cross-border assistance for the recovery of tax claims, with both initiatives reporting their progress through annual reports.
The recently launched Asia Initiative has already set up its governance structure and adopted an ambitious work plan to implement the high-level objectives of the Bali Declaration endorsed by 16 Asian countries since the ministerial signing ceremony in July 2022.
The provision of technical assistance for the effective implementation of the standards on transparency and exchange of information remains a core mission of the Global Forum Secretariat. Ninety-seven countries benefited from technical support in 2022, the highest number ever reached, highlighting the growing need for technical assistance in all areas of the implementation of the standards, including for setting and implementing an appropriate information security management framework and a sound administrative AEOI compliance strategy.
The secretariat’s technical assistance program was rated 4.7 out of 5 by its beneficiaries. Its focus on sustainable and inclusive capacity-building programs continues to deliver encouraging results, with the successful conclusion of the pilot program on women’s leadership in tax transparency (22 female participants from developing jurisdictions) and the 2022 edition of the Train the Trainer program to members from Africa, Asia and Latin America (69 participants from 35 jurisdictions).
In 2022, the Global Forum’s capacity-building and outreach program contributed to building the capacities of over 10,400 officials through training events led by the secretariat (4,500 officials), e-learning courses (3,200 officials), and the training led by the laureates of the Train the Trainer program (2,600 officials).
Tax evasion and other illicit financial flows are a global challenge that requires a global response. International tax cooperation must be part of a set of effective and well-coordinated multilateral actions to respond to the crisis, and should be scaled up in a way that is universal in approach and scope and fully takes into account the different needs and capacities of all countries.
Tax cooperation is important for improving domestic tax transparency, coordinating a global response, building peer networks with other jurisdictions, deterring tax evaders, securing a domestic revenue base, assisting development of the economy, and reinforcing social cohesion. It is more than ever vital that tax administrations obtain information about the relevant actors and their economic activities, so that they develop the regulatory capacity to determine their obligations and the management capacity to implement legislation efficiently.
The monitoring and cooperation network of the Global Forum has strengthened the exchange of experience between tax administrations, helping them better face the challenges of international tax transparency and empowering them to combat tax evasion.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Alfredo Collosa is a consultant and tutor in tax administration at the Inter-American Center of Tax Administrations, as well as a professor, investigator, lecturer, and author of books and publications. He holds an Official Masters in Public Finance and Tax Administration (UNED-IEF).
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