On October 7, 2016 the OECD released the OECD Secretary General Report that was presented to the Ministers of Finance of the so-called G20 during their meeting of October 7, 2016. The report consists of two parts. Part I is a Progress Report to the G20 by the Global Forum on Transparency and Exchange of Information for Tax Purposes. Part II is an update report by the OECD Secretary-General regarding tax transparency, with a focus on beneficial ownership information. Also on October 7, 2016 the Financial Action Task Force (Hereafter: FATF) released a report on beneficial ownership that was presented to the Ministers of Finance of the so-called G20 during the same meeting, which is to be seen in connection with the report of the OECD Secretary-General.
OECD Report
Initial proposals on ways to improve the implementation of the international standards on transparency
Part I of the report delivers the initial proposals on ways to improve the implementation of the international standards on transparency made by the OECD-hosted Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). They are complemented by the proposals also to be made at this October meeting by the Financial Action Task Force (FATF).
The proposals are built around three pillars:
1. Peer reviews with a particular focus on the effective implementation of the beneficial ownership standard: Peer reviews against the Global Forum standards will ensure a level playing field and drive forward their effective implementation, including in relation to legal and beneficial ownership information and its international exchange for tax purposes.
2. Enhanced cooperation between the FATF and the Global Forum to further ensure coherence and mutual reinforcement of our work: This is to maximise the opportunities to ensure our work is mutually supportive and promote clear and consistent recommendations to improve implementation by our members.
3. Engage with relevant bodies (e.g. the FATF and the OECD) to compile and disseminate examples of effective implementation and providing assistance: Examples of effective implementation for ensuring the availability, timely access to and exchange of accurate and reliable legal and beneficial ownership information for tax purposes will be identified and disseminated, and technical assistance will be provided as necessary.
Subjects discussed in this part of the report include a.o.:
· Background and introduction
· The state of play on the implementation of the EOIR Standard and on beneficial ownership
o Peer reviews improving the implementation of the EOIR Standard
o Mounting evidence of further improvement needed in the implementation of legal and beneficial ownership requirements
§ Deficiencies found by the Global Forum
§ Deficiencies found by the FATF
o New and updated Global Forum standards: an opportunity to drive further improvements
o Initial proposals to improve transparency with a focus on beneficial ownership
§ Pillar 1: Improving effective implementation through peer reviews
§ Pillar 2: Closer institutional cooperation between the FATF and the Global Forum
§ Pillar 3: Facilitating effective implementation through compiling and disseminating examples of effective implementation and providing assistance
· Conclusion and next steps
Update on tax transparency: beneficial ownership information
Part II of the report provides an outline of the OECD’s expertise on tax transparency developed through its establishment of the international standards, including to ensure the integration of the FATF beneficial ownership standard in the tax area. It also sets out a number of complementary areas of tax work relating to beneficial ownership information which the OECD, together with G20 countries and drawing on its in-depth experience, could undertake, working alongside the Global Forum and the FATF.
The areas of work of which the OECD says it could undertake in the tax area relating to beneficial ownership information for legal entities and arrangement that are mentioned this second part of the report include a.o.:
1. Gap analysis;
2. Designing structured and electronically searchable data sets of ownership information;
3. Domestic access to beneficial ownership information;
4. Improving international access to beneficial ownership information.
Click here to be forwarded to the OECD Secretary-General Report that was presented on October 7, 2016 to the Ministers of Finance of the G20.
FATF Report
Also on October 7, 2016 the FATF presented a report on beneficial ownership to the G20. The FATF is an inter-governmental body comprised of 37 members which sets internationally recognised standards (the FATF Recommendations) to combat money laundering, and the financing of terrorism and proliferation. The FATF leads a global network of 198 jurisdictions which have all committed to implementing the FATF Standards and undergoing peer reviews to evaluate their level of technical compliance and the effectiveness of their implementation. Beneficial ownership is a core aspect of the FATF Standards, and an important focus of its peer review and related follow-up processes.
In April 2016, the G20 Finance Ministers and Central Bank Governors called on the FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) to make initial proposals on ways to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information, and its international exchange.
In their October report the FATF announces that it will work on the following proposals on reinforcing implementation of the existing international standards relating to transparency and beneficial ownership:
· Ensure the emphasis on beneficial ownership in the FATF peer review follow-up processes is effective to apply peer pressure to countries to accelerate their implementation of the FATF Standards in this area.
· Deliver clear and consistent recommendations to countries on how to improve implementation of the beneficial ownership requirements during assessment processes.
· Enhance cooperation between the FATF and the Global Forum to further ensure the coherence and mutual reinforcement of work to improve transparency in relation to beneficial ownership, including through identifying examples of effective implementation.
In addition, the FATF proposes the G20 to lead by example by issuing a public commitment by G20 members to meet the FATF Standards on beneficial ownership
Click here to be forwarded to the report that was released by FATF on October 7, 2016.
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