Monaco has this week signed the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
In November 2013 Monaco made a commitment to sign the OECD Multilateral Convention (the Convention) as part of the coordinated international effort against tax evasion and offshore tax fraud.
Monaco has now made good on its commitment and has become the 84th signatory of the OECD Multilateral Convention. Earlier in the year Monaco put in place two Sovereign Ordinances to enable the Convention to enter into force within the framework of the existing law and to implement the necessary practical procedures within the administration to give effect to the provisions of the Convention. As part of the preparations the Department of Tax Service in Monaco has reviewed the effect of the Convention on its activity and, in particular, its ongoing exchanges with France under the 1963 Treaty and the treaties entered into after 2009.
The effect of the Convention is to commit each signatory to exchange information with any other signatory, on receipt of a formal request from the other country. The request must meet certain conditions, in common with existing bilateral treaties:
• An adequate enquiry must have already been made by the requesting country that has found reasonable evidence to support an assumption of tax irregularities, ie ‘fishing expeditions’ are not permitted.
• The request must relate to an identified individual, reference to a group or class of individuals are not permitted.
• Every effort must have first been made within the requesting country’s jurisdiction to uncover the information required, before concluding a request be made to the competent jurisdiction of the other country.
There is a duty of confidentiality on the receiving state to maintain the confidentiality of any information provided by the supplying state. Confidentiality is a fundamental principal of the Convention and any state that fails to respect this obligation may find its future requests for information declined by other states, in accordance with the Convention rules.
At the signing ceremony Monaco confirmed its intention to reinforce its international tax cooperation following the numerous measures it has already taken in recent years to improve tax transparency in the jurisdiction. The signature of the Convention, announced Mr Gurria, the Secretary General of the OECD, ‘… is a new and important signal that Monaco is seriously committed to the fight against tax evasion and offshore tax fraud.’
The agreement provides for a mechanism by which countries may undertake automatic exchange of information; however this will be subject to additional bi-lateral agreements between the parties.