STEP: OECD push for more TIEAs may increase risk of tax data abuse
Sourced from International Adviser
An OECD effort to dramatically expand the number of countries exchanging tax data, in the interests of greater transparency, could increase the risk of detailed personal details being improperly used, a STEP policy briefing says.
According to the Society of Trust and Estate Practitioners (STEP) briefing, as the network of nations that have signed tax information exchange agreements (TIEAs) with one another grows, countries with poor human rights records and weak data security increasingly will gain access to detailed personal financial data on individuals.
This, it says, could leave law abiding taxpayers and their families vulnerable to concerns such as threats from criminal gangs who have gained access to tax data.
“Without fresh safeguards, the result [of the OECD’s recent efforts to extend tax information exchange agreements to many developing countries] could be detailed data on individuals being provided to countries with poor records in areas such as respect for human rights, or protecting personal data from abuse”, the report says.
STEP is a global association representing trust and estate planning professionals.
David Harvey, STEP Chief Executive, said: “Most TIEAs so far have been agreed between major economies, such as the UK, and other well run countries. There is now strong political pressure to expand the list of countries accessing tax data via TIEAs, bringing in countries where it is harder to be confident that personal tax data will be secure.
“It is very worrying, therefore, that so far there are no clear plans to ensure minimum standards are in place to protect the public.”
Harvey said it seemed “extraordinary” that the current OECD review process for TIEAs “only looks at a country’s performance in providing tax data”.
“There is no check whatsoever to ensure countries receiving data on taxpayers’ financial affairs protect that data and respect personal confidentiality,” he said.
STEP has proposed a set of minimum standards that countries must meet before getting access to tax data from other countries, including minimum standards of good governance, basic data protection measures and a right of redress for taxpayers if things go wrong.
G20 summit
An OECD initiative to promote greater international tax transparency, which intensified in the lead-up to the G20 summit in London in April 2009 and has continued at a steady pace ever since, has seen the number of agreed TIEAs soar to more than 300. Until now these have tended to be between OECD members and what the STEP report calls “small financial centres”, such as Jersey, Guernsey, Gibraltar and the Isle of Man.
Increasingly, though, those signing TIEAs are expected to be OECD candidate countries, such as Estonia, Israel, Russia, Slovenia, Brazil, China and India, and countries in sub-Saharan Africa, STEP points out.
STEP’s recommendations
In its briefing paper, STEP sets out a set of what it calls "guaranteed minimum standards" that it says are necessary "to protect taxpayers before any data is made available to countries under TIEAs or similar agreements". These are:
• "Only countries meeting agreed minimum standards on objective measures of quality of national governance (such as those provided by the World Bank data) can have access to personal data on individuals from other jurisdictions
• "Clear mechanisms are in place to ensure that only ‘relevant and necessary data’ are exchanged
• "Requests for data are assessed by a public judicial authority, in line with the current EU legal framework for data protection
• "Clear measures are in place to ensure that the legitimate rights of individuals are made explicit, and effectively enforceable if data exchanged under TIEAs is abused
• "Independent oversight and supervision mechanisms for TIEAs are in place, with regular public reporting [provided for]"
