Wednesday, September 9, 2020
Global Forum reveals compliance ratings from new peer review assessments for Anguilla, Chile, China, Gibraltar, Greece, Korea, Malta, Papua New Guinea and Uruguay
The Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) published today nine new peer review reports assessing compliance with the international standard on transparency and exchange of information on request (EOIR).
Despite the significant disruption caused by the COVID-19 pandemic over the past few months and the necessity to hold all meetings virtually, the Global Forum Secretariat and the Peer Review Group still managed to complete work in a timely manner for this latest set of reports. In all, 80 second round peer review reports have now been published since 2017.
The new reports relate to jurisdictions with very diverse EOIR practice and their findings are equally contrasted. Papua New Guinea, undergoing its first full peer review, was rated Largely Compliant, as were Chile, China, Gibraltar, Greece, Korea and Uruguay. Malta was issued a Partially Compliant rating and Anguilla was deemed Non-Compliant. Key findings and recommendations include:
• The revision of Anguilla’s rating from Partially Compliant to Non-Compliant was primarily due to two major deficiencies, namely concerning the practical implementation of rules requiring the availability of accounting records and significant failures by the authorities to respond to information requests from peers. The latter stems from organisational malfunction and the abrupt closure of service providers related to the 2016 leaks case involving the law firm and corporate service provider Mossack Fonseca. Read the report
• Chile’s Largely Compliant rating comes with recommendations regarding the scope of its legislation on beneficial ownership: while Chilean banks are required to identify the beneficial owner of their clients since 2016, this obligation does not cover all relevant entities and the definition of beneficial owners for legal entities and arrangements is not fully in line with the international standard. The expansion of Chile’s EOI network to 137 jurisdictions yielded a total of 61 requests received and 28 requests sent during the period under review. Peers were generally satisfied and reported a good quality of responses. Read the report
• China was attributed a Largely Compliant rating, after being found Compliant in the last review. Chinese tax authorities answered several hundred requests from partners during the period under review and their practices were confirmed to be consistent with the international standard. The main challenges relate to the availability of beneficial ownership information on companies and other relevant entities and arrangements, a new requirement in the ongoing second round of EOIR peer reviews. The supervision of financial institutions, which are primarily relied on to keep this information, is not fully commensurate to the circumstances and should be enhanced. Read the report
• Gibraltar was rated Largely Compliant overall. Its legal framework and EOI practices were generally in line with the standard. Some improvements to ensure the availability of beneficial ownership information and increased supervision in respect of accounting information will nevertheless be necessary. While Gibraltar successfully responded to the vast majority of requests from its exchange partners, there is scope for improvement in the exercise of enforcement powers in accessing information and interpreting the relevance of requested information in line with the standard, to ensure timely and effective exchanges in all cases. Read the report
• Greece’s latest peer review resulted in a Largely Compliant rating. It has made a number of improvements since the previous review in 2013, including by abolishing the issuance of bearer shares by most companies and by establishing a beneficial owner’s register. However, deficiencies in the availability of ownership and accounting information were identified, in particular for shipping companies. The practical exchange of information on request is also still hindered by some delays. Read the report
• Korea was rated Largely Compliant in this second round assessment, after being deemed Compliant in the last review. The country’s legal and regulatory framework is largely in line with the standard. Korea received almost double the number of requests compared to the last review and EOI practices have been confirmed to be consistent with the international standard. Some improvements are needed in regard to the availability of beneficial ownership information. Korea should also ensure that ownership and accounting information for inactive companies is available. Read the report
• Malta’s new peer review resulted in an overall Partially Compliant rating, whereas the first round report had concluded the jurisdiction’s EOIR practice to be Largely Compliant with the standard. The main concerns identified refer to the effectiveness of enforcement and supervision activities to ensure the availability of ownership, accounting and banking information, particularly considering the filing compliance rates. Malta also had large number of inactive companies registered during the review period, which caused delays or failures to provide information to its main EOI partners. The new report thus includes recommendations to enhance enforcement, supervision and monitoring activities in order to reduce and limit the number of inactive companies. Read the report
• Papua New Guinea, which joined the Global Forum in 2015, received a Largely Compliant rating in its first full review. From setting up a functional EOI unit to putting in place the necessary procedures and processes for effective exchanges of information, efforts have been evident. However, improvements in monitoring and supervision of the laws on availability of ownership and accounting information are necessary. Further, while Papua New Guinea is committed to signing the Convention on Mutual Administrative Assistance in Tax Matters, it should take proactive steps to expand its existing treaty network and ensure that all its exchange mechanisms are fully in line with the standard. Read the report
• Uruguay maintained its first round Largely Compliant rating. It has made significant progress since the previous review, including in ensuring that beneficial ownership information of entities is available, and becoming a party to the Multilateral Convention on Mutual Administrative Assistance on Tax Matters. It should now ensure that banking information is accessible in all cases and in a timely manner. Read the report