Automatic exchange of information (AEOI) provides for the automatic exchange of a predefined set of information between tax authorities. The AEOI Standard requires the annual exchange of information on financial accounts held by non-resident individuals and entities in a pre-defined format. The information exchanged includes details about the financial account (e.g. the financial institution maintaining it, the account number and the account balance) and details about the account holder (e.g. their name, address, date of birth and taxpayer identification number).
Implementing the AEOI Standard requires jurisdictions to collect the information each year from their financial institutions (which include banks, hedge funds and investment trusts) and to automatically exchange it with the jurisdictions where the account holder is tax resident (provided the jurisdiction has in place the necessary framework to keep the information confidential and properly safeguarded). The AEOI Standard is therefore built on three key components:
Through these three components the AEOI Standard provides for a powerful tool to help deter and identify offshore tax evasion through holding financial assets abroad. AEOI requires jurisdictions to have in place the required standards in relation to confidentiality and data safeguards, particularly in relation to the policies and systems, to ensure the information they receive is kept safe.
This requires the following components:
The Standard for Automatic Exchange of Financial Account Information in Tax Matters, developed by the OECD with G20 countries, represents the international consensus on automatic exchange of financial account information for tax purposes, on a reciprocal basis.
Exchange of information on request (EOIR) is an essential tool for tax authorities worldwide to ensure that all taxpayers pay the correct amount of tax. Under the EOIR Standard, tax authorities can make specific requests to other tax authorities for information that will allow them to progress their tax investigations. The information that could be requested includes accounting records, bank statements and information on the ownership of assets.
Implementing the EOIR Standard requires each jurisdiction to respond effectively to requests they receive from their exchange partners. The EOIR Standard is therefore built around three key requirements:
Once in place and operating effectively in practice, the EOIR Standard provides the foundation for effective international co-operation to tackle offshore tax evasion.
The core function of the Global Forum is to monitor the implementation of the international standards on transparency and the exchange of information for tax purposes and to review the effectiveness of their implementation in practice. To that end, the Global Forum carries out peer review processes in relation to each of its members and non-members that are relevant to its work. This is to ensure that the standards are properly implemented and on the basis of a level playing field.
The monitoring and peer review processes provide assurance to Global Forum members that all jurisdictions are properly implementing the standards and highlight where more needs to be done. The Global Forum has an established peer review process in relation to the EOIR Standard, which is already in its second round. With respect to the newer AEOI Standard, the Global Forum has already reviewed the domestic and international legal frameworks in place and initiated the review of the effectiveness of its implementation in practice.
All Global Forum members have agreed to have their implementation of the EOIR standard be assessed by peer review. The first round of reviews was conducted from 2010 to 2016. The Global Forum has agreed that all members and relevant non-members should be subject to a second round of review starting in 2016, to ensure continued compliance with and implementation of the EOIR standard.
The Peer Review of the Automatic Exchange of Financial Account Information 2021 presents the conclusions of the peer reviews of the legal frameworks put in place by each jurisdiction to implement the AEOI standard. The results relate to the 102 jurisdictions that committed to commence AEOI from 2017, 2018 or 2019. The Global Forum has also begun reviewing the effectiveness of the implementation of the standard in practice, the results of which are expected to be published in 2022.
Issuing ratings to assessed jurisdictions is the last step of the review process. The rating issued is based on the seriousness of the deficiencies identified in the course of the review process and they are accompanied by recommendations to the jurisdictions to improve its legal framework or effectiveness in practice. Ratings can be improved over time when a jurisdiction effectively responds to the recommendations made (and could be downgraded when a step back is identified). Ratings have so far only been issued in relation to the EOIR standard.
When combined with the publication of the results of the reviews, including the ratings, there is a reputational impact encouraging any recommendations to be addressed. Furthermore, the proper implementation of the standards provides international investors with comfort that the jurisdictions in which they are investing have a sound regulatory framework to ensure tax compliance, with some development banks making their investments conditional on positive outcomes from the Global Forum’s peer review processes. The G20, the European Union and others also use the results of the Global Forum peer reviews when establishing their related policies.
Capacity building is one of the core duties of the Global Forum. It aims at supporting and enabling a rapid and effective implementation of the transparency and exchange of information standards by all members, in particular the developing ones. Beyond implementation, the objective is to ensure that developing members effectively benefit from the standards by fighting more efficiently tax evasion and other illicit financial flows and ultimately by mobilising more domestic resources to finance their development. Building capacities and a culture of exchange of information is critical to meet this goal.
Launched in 2011, the Global Forum’s capacity-building programme has expanded over the years to cover new areas and intensified to support the growing membership of developing countries. In the perspective of the 10-year mark of the programme, a new strategy has been developed to achieve the greatest impact for the benefit of developing countries.
The 2022 Capacity Building report highlights ten years of progress and provides an update on the Global Forum’s capacity-building programme and outreach activities carried out in 2021.
The capacity-building and technical assistance programme covers a range of activities that include:
Building upon its extensive experience, the Secretariat launched the new Train the Trainer global training programme in 2021. The programme seeks to create and support a highly skilled network of trainers who will effectively adapt and multiply the acquired knowledge and skills domestically, in effect creating a sustainable capacity within tax administrations.
In addition to seeking the gender balance in its activities, the Global Forum launched the Women leaders in tax transparency programme, which aims at reinforcing gender equality in tax administrations.
The Global Forum also organises meetings of the Competent Authorities for exchange of information in tax matters. These meetings facilitate practical co-operation amongst all member countries with the sharing of best practices operationally and the strengthening of relationships amongst the individuals directly involved in operationalising the international standards. In delivering its capacity-building programme around the world, the Global Forum collaborates with many of its member countries and various international organisations and development agencies. Several countries and organisations directly support the capacity-building programme.
Find out more about our technical assistance activities:
Regional capacity-building programmes are provided by the Global Forum Secretariat in collaboration with regional organisations. They are essential partners in building trust, long term relationships and capacity for transparency and exchange of information for tax purposes. Programmes are currently being run, or in preparation, for the following regions: Africa, Asia, Latin America, Pacific, Middle East and The Caribbean.
The first regional initiative launched by the Global Forum is the Africa Initiative, which is also therefore its most advanced. This has included significant engagement at ministerial level to ensure political buy-in and sustained momentum. This is reflected in the Yaoundé Declaration, which provides support to the fight against illicit financial flows from Africa.
The ministerial engagement in the Latin America initiative is demonstrated by the Punta del Este Declaration, in relation to maximising the effective use of the information exchanged under the international tax transparency standards to tackle tax evasion, corruption and other financial crimes.
Together with the Asian Development Bank and other partners, the Global Forum launched in 2020 a Pacific Initiative to raise awareness and enhance tax transparency for the benefit of developing Pacific Islands.
A new Asia Initiative, supported by Indonesia's Finance Minister and Asian Development Bank's President, was launched during the Global Forum plenary meeting on 17 November 2021.
Since 2011, the Global Forum has delivered a capacity-building programme to support the implementation and effective use of the two global standards on transparency and exchange of information by its developing members. Our activities are empowering jurisdictions in their fight against tax evasion and other illicit financial flows, and ultimately helping them increase their domestic resource mobilisation.
Our capacity-building programme has developed and expanded over the years. Today, more than half of the Global Forum members are developing countries. The programme aims to ensure that developing jurisdictions are not left behind, and fully benefit from the remarkable progress achieved in transparency and administrative co-operation in the past decade. To that end, the Global Forum Secretariat works closely with regional and global partner organisations.
Through awareness raising at political level, training of thousands of officials, the development of tools (e.g. toolkits, e-learning) and high-standard technical assistance, the dynamic of change is progressing and more developing jurisdictions are reaping the benefits of a more transparent tax world.