OECD Discusses CRS Mandatory Disclosure Rules

Recent high profile leaks such as the release of the ‘Panama’ and ‘Paradise’ papers by the ICIJ have opened the discussion on the reality and methods used by taxpayers to hide their identity and assets from tax authorities through the use of offshore structures. The adoption and implementation of the OECD’s Common Reporting Standard (CRS) for automatic exchange of financial information by many jurisdictions worldwide has vastly increased transparency for tax authorities. However, loopholes remain and certain advisers and service providers are actively marketing schemes designed to circumvent reporting obligations under CRS.

Taking this into consideration, G7 Finance Ministers called on the OECD to discuss ways to address such CRS avoidance arrangements and arrangements aimed at providing beneficial owners with the shelter of non-transparent structures. In response, the OECD released a consultation document  on model mandatory disclosure rules targeted at promoters and service providers with material involvement in the design, marketing or implementation of CRS avoidance arrangements or offshore structures. The proposed rules would require such intermediaries to disclose information on the avoidance scheme to their national tax authority, information on those schemes would then be made available to other tax authorities in accordance with applicable information exchange agreements.

It should be noted that the rules contained in this public discussion draft are provisional and their ultimate implementation uncertain. Should a multilateral standard be agreed upon, the enactment of national legislation would be required as a next step. The Swiss authorities (SIF, FTA) have not yet commented on this matter.