Exchange of information and disclosure of beneficial ownership - various country actions

Example country responses:
As a result of international pressure various jurisdictions have enacted legislation relaxing laws on the exchange of information, or signed additional Tax Information Exchange Agreements (TIEA), or Double Tax Treaties, committed or signed up to the OECD Convention on Mutual Administrative Assistance in Tax Matters. Other jurisdictions are consulting on the next steps to take.

Monaco – DTA with Mauritius
Monaco – TIEA with South Africa
Monaco – commits to Multilateral Convention on Mutual Administrative Assistance in Tax Matters
UK  and the disclosure of beneficial ownership
BVI Public Consultation on Beneficial Ownership Information
Cayman Islands Public Consultation on Beneficial Ownership Information
Hong Kong allows TIEAs
Jersey relaxes TIEA rules
Singapore includes tax crimes as money-laundering offences

This briefing forms part of the "Tax transparency update – detailed international update - November, 2013" found at

Monaco – DTA with Mauritius
A Double Taxation Avoidance Agreement was signed between Monaco and Mauritius on 13 April 2013.
All Monaco tax treaties can be found on the government website at:
Monaco – TIEA with South Africa
In September, 2013 the Principality of Monaco and South Africa signed an agreement to allow the exchange of information on tax matters, in line with the OECD model.

This Agreement recognises the mutual commitment of these two States to implement financial regulation systems which meet the highest international standards in order to combat money laundering, the financing of terrorism and other financial and tax crimes.

At the same time, a common declaration was also signed with the aim of continuing to examine measures that could be adopted to strengthen political and economic relations between the two States.
The Principality welcomes its excellent links with South Africa and the extension of political and economic relations between these two States.

Monaco Signs a Letter of Intention to Join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters – November 2013
As a continuation of commitments taken and adhered to by the Principality with regard to the transparency and exchange of tax information, Monaco has signed a letter of intention to join the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

When automatic exchange becomes standard for all the States involved and their banking sectors, the Principality wishes to be part of this international movement.

The letter commits the Principality to signing the Convention as soon as possible, in accordance with Monegasque law and in conformity with the provisions of the said Convention.

UK and the disclosure of beneficial ownership.
The UK Prime Minister has announced that details of beneficial ownership of UK companies will be made publicly accessible.

The government committed to implement a central registry of company beneficial ownership information at the Lough Erne G8 Conference in June. The registry will contain information on individuals with an interest in more than 25% of a company’s shares or voting rights, or who otherwise control the way it is run.
Business Secretary Vince Cable said:

“A stronger economy depends on investors, employees and the wider public having trust and confidence in companies and those that are running them. We believe a public register, listing those who really own companies makes Britain a better place to invest and do business. People have a right to know who controls UK companies and greater openness will help tackle tax evasion, money laundering and other crimes.”

Limited exemptions from public disclosure will be permitted – for example, in cases where it is necessary to protect individuals whose safety might be put at risk.

The government will also set out its plans to:

• abolish bearer shares – ie shares whose ownership is completely opaque;
• tackle the use of corporate directors – one company as a director of another;
• address situations where a front director is registered at Companies House, but the control lies concealed elsewhere.

The Prime Minister has indicated that the UK's plans for a central registry of company beneficial ownership information are unlikely to include trusts.

In a letter to the presidents of the EU Council, the European Commission and the European Parliament, Cameron said that 'it is clearly important we recognise the important differences between companies and trusts' and that 'central public registries may well not be appropriate generally', though he is willing to discuss the arguments at European level.
BVI Public Consultation on Beneficial Ownership Information
On 15th June, 2013, the British Virgin Islands (BVI) along with the other Overseas Territories (OTs) issued in London a press release outlining their commitment to continue upholding universally established standards on transparency, beneficial ownership and a host of other international cooperation issues. This followed a meeting with the Prime Minister at which the OTs leaders “had a very clear agreement and constructive exchange of views on the practical steps needed to tackle the global problem of tax evasion and how the UK and the Overseas Territories will continue to apply our high standards of regulation to address this”.

While acknowledging the high level of compliance by their Territories with established international standards and their continued commitment in fostering international cooperation, the OTs leaders recognised the need, and committed, to playing a leading role in ensuring the delivery of a fair, responsible and effectively regulated global business environment. Consequently, the OTs leaders undertook, amongst other things, “to prepare Action Plans setting out the concrete steps, where needed, to fully implement the Financial Action Task Force standards to further increase our already high standards of transparency on beneficial ownership information and to ensure that this information is available to law enforcement and tax authorities in accordance with our established mutual legal assistance cooperation regimes”.

Pursuant to the commitment by the OTs leaders, the BVI developed and issued in July an Action Plan to prevent the misuse of legal persons and legal arrangements. The Action Plan recognised the fact that the BVI has “established fit-for-purpose gateway provisions for the receipt and provision of assistance on a mutual legal assistance basis in the areas of law enforcement, regulation, tax and judicial” and therefore committed to lending support to international initiatives designed to ensure greater transparency on an equitable and universal basis. In that context, the Action Plan outlined the BVI’s commitment to undertake the following actions relevant to the issue of beneficial ownership information:

(a) Review its legislation and systems, in consultation with its stakeholders, to ensure that where shortcomings exist on beneficial ownership information on account of the revised FATF Recommendations 24 and 25 on legal persons and legal arrangements respectively, steps are taken to remedy those shortcomings;

(b) Develop a national risk assessment framework (considered essential for measuring effectiveness and adequately preparing for the fourth round of mutual evaluation on AML/CFT compliance)…;

(c) Further strengthen the current supervisory and inspection regime to ensure that beneficial ownership information is being maintained and properly tested in a manner that assures timely availability to competent authorities; …

Accordingly, a Consultation Paper has been published to gauge and receive opinions from members of the public, including the private sector, law enforcement agencies and other key institutions and stakeholders in the AML/CFT field, on the issues and questions raised. The consultation is for a period extending to 31st January, 2014.

The consultation considers the various options available for holding Beneficial Ownership information in the BVI, and whether the records should be public or not.

A similar consultation on Beneficial Ownership Information has been started in the Cayman Islands with similar deadlines.
Hong Kong allows TIEAs
The enactment of the new legislation allows Hong Kong to enter into tax information exchange agreements (TIEAs) with other jurisdictions. Up until the passing of this legislation, Hong Kong could only agree to exchange tax information as part of a broader DTA.

Hong Kong introduced the Bill to the LegCo following a recommendation of the OECD’s Global Forum. The Phase 1 review of Hong Kong was conducted by the Global Forum in 2011, and it strongly recommended the introduction of legislation to allow Hong Kong to enter into stand-alone tax information exchange agreements.
The Inland Revenue (Amendment) (No. 2) Bill 2013 was passed by the Legislative Council on 10 July 2013. The Bill allows Hong Kong to enter into stand-alone agreements on tax information, TIEAs. The Bill also enhances the existing exchange of information arrangements under double taxation agreements. This will allow information exchanged to be used for other non-tax related purposes provided such use is permitted under the laws of both jurisdictions and the competent authority of the supplying party authorises such use.

Jersey relaxes TIEA rules
On 6 November 2013, the Taxation (Exchange of Information with Third Countries) (Amendment No. 7) (Jersey) Regulations 2013 came into force.

The key changes include:

• Limiting the statutory scope for appeal to judicial review grounds only (so that instead of an appeal being put on the basis that the notice is outside the scope of the Regulations, the appeal will in future have to be put on the basis that the Comptroller was acting illegally, irrationally, or under some procedural impropriety).

• Removing several references to the need to act reasonably and to only demanding information that is reasonably required (presumably to make the Comptroller's decisions less susceptible to judicial review).

• Deleting the requirement for the Comptroller to provide a summary of the reasons for giving the notice (presumably for the same reasons as above).

• Reducing the time period for responding to a notice from 30 to 15 days.

• Curtailing the appeal route itself.  If an appellant loses its case before the Royal Court, the appellant can only appeal to the Privy Council (with leave), as opposed to the existing right of appeal to the Jersey Court of Appeal.

• Restricting the time period for any application for judicial review to 14 days after receipt of the notice.

• Carving certain matters out of the scope of judicial review altogether (for example it will not be possible to judicially review any decision by the Comptroller not to allow a third party recipient to disclose a third party notice to a tax payer).

• Requiring information to be provided, even when a judicial review has been commenced (however, this information will not be provided to the foreign tax authority until the judicial review has been determined unless the Royal Court grants permission).

The Jersey TIEA regime will therefore now require quicker and more decisive action from recipients of notices, in particular recipients of third party notices.

These Regulations signal a clear commitment to ensuring that tax information requests made of Jersey entities are dealt with quickly and in line with international standards.

Crucially, the amendments will apply retrospectively to existing requests, subject to certain exceptions.  The report envisages that this may allow Jersey to be removed from France's list of non-cooperative jurisdictions (see below).

Singapore includes tax crimes as money-laundering offences
From 1 July 2013, Singapore has criminalised the laundering of proceeds from serious tax offences.
Wishing to be at the forefront of global standards against money laundering and terrorism financing Financial Institutions in Singapore have been alerted since October 2011 on this new requirement.

They have been directed by the regulator (MAS) to review their existing client and asset pools to ensure compliance with this requirement. They must reject prospective clients where there are reasonable grounds to suspect that the client’s assets are the proceeds of serious crimes, including wilful and fraudulent tax evasion.

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