Exchange of Information for Tax Purposes

Deborah

1. S. 55Introduction

This era of globalization is causing cross-border transactions to increase rapidly. On the one hand, such transactions have a positive effect on economic growth in the global market. However, on the other hand, these dealings can also be suspect, with respect to tax base erosion, especially when companies shift their profits to tax haven countries through aggressive tax planning and avoidance schemes.

Moreover, according to the OECD report that has recently been published ‘a number of indicators show that the tax practices of some multinational companies have become more aggressive over time, raising serious compliance and fairness issues.

It however becomes difficult to combat aggressive tax planning schemes without the aid of information exchange involving the other competent authorities. With this in mind, the OECD Global Forum Working Group on Effective Exchange of Information (“the OECD Global Forum”) focused on these issues in their discussions.

The Tax Information Exchange Agreement (“TIEA”) is the first instrument to cover information exchange in tax matters. The OECD Global Forum elaborated this agreement in 2002 outside the context of double taxation ...