UK and International Tax news

OECD Issues Condoc On Mandatory Rules For Addressing CRS Avoidance Arrangements

Wednesday 13th December 2017

The OECD has recently issued a consultative document on mandatory disclosure rules intended to target promoters and service providers with a material involvement in the design, marketing or implementation of Common Reporting Standard avoidance arrangements or offshore structures.

Whilst there have been dramatic improvements in tax transparency over the past decade, challenges still remain. High profile leaks, such as the release of the ‘Panama’ and the ‘Paradise’ papers by the International Consortium of Investigative Journalists, underscore the widespread use of offshore structures to hide beneficial ownership of assets and income.

The rapid and widespread adoption of the CRS for automatic exchange of financial account information is limiting taxpayers’ ability to hide their income and assets offshore. However, the experience of a number of tax administrations and the information disclosed through the OECD’s CRS disclosure initiative show that a number of advisers and service providers are actively marketing schemes designed to circumvent the CRS reporting requirements.

In light of these ongoing challenges, G7 Finance Ministers, in the Bari Declaration issued on 13 May 2017, called on the OECD to start “discussing possible ways to address arrangements designed to circumvent reporting under the Common Reporting Standard or aimed at providing beneficial owners with the shelter of non-transparent structures.” The Declaration states that these discussions should include consideration of “model mandatory disclosure rules inspired by the approach taken for avoidance arrangements outlined within the BEPS Action 12 Report.”

In OECD’s condoc, proposed rules would require intermediaries to disclose information on their schemes to their national tax authority. The rules contemplate that information on those schemes, including the identity of any user or beneficial owner, would be made available to other tax authorities in accordance with the requirements of the applicable information exchange agreement.

Public input is sought on all aspects of these model rules by 15 January 2018, including

  • Definition of a CRS avoidance arrangement,
  • Definition of an offshore structure,
  • Disclosure requirements on intermediaries,
  • Information reporting, and
  • Penalties.

Submissions on the condoc will be taken into account in preparing the report that will to be sent to the G7 Finance Ministers under the Canadian Presidency.

If you would like further information on the OECD condoc, please contact Keith Rushen on 0207 486 2378.

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