Exchange of Information for Tax Purposes

1. S. 117Introduction

Article 26 OECD Model regulates the cross-border exchange of information between contracting states. The provision was included in the OECD Model as states have an interest in requesting, under international law, information from other states in order to exercise their taxing rights. This is because most states tax on a worldwide basis but they may not be able to enforce their domestic legislation in another state. Some taxpayers may take advantage of the discrepancies in domestic tax laws or choose to carry out transactions where there is no, or a lower level of, information exchange. Therefore, cross-border transactions represent a barrier to tax administrations that can only be removed by mutual cooperation. Effective exchange of information would give states the possibility to obtain a correct assessment of taxpayers and to combat tax evasion and tax fraud.

The obligation to provide information is imposed inter alia under Article 26 OECD Model and can be found in most double taxation conventions. This obligation is restricted since the supply information can, in certain cases, be contrary to the requested state’s domestic legislation, interest or public policy.

Exc...