Exchange of Information for Tax Purposes

1. S. 177Introduction

Administrative co-operation in tax matters on a treaty basis can be dated back to the work of the Committee of Technical Experts on Double Taxation and Tax Evasion of the League of Nations in developing a Draft Treaty on Mutual Administrative Assistance on Matters of Taxation in 1927. The International Chambers of Commerce, however, dismissed this Draft Treaty as ‘an extension beyond national frontiers of an organised system of fiscal inquiry’ and as ‘an organised plan of attack on the taxpayer’

Most of the treaties nowadays which deal also with exchange of information for tax purposes are bilateral agreements. Both the OECD and the UN Model provide in Article 26 for a widely accepted legal basis for bilateral exchange of information for tax purposes. More than 3,000 bilateral treaties are based on these two model conventions. Article 26 OECD Model was amended in 2005 to ensure an effective exchange of information in a changing world by stating that the requested state cannot refuse a request for information solely because it has no domestic interest in the information (paragraph 4) or solely because the information is held by a bank, other financial institution, nomi...