What measures are Denmark taking to prevent capital flight and support tax mobilisation? Presentation by Steen Lohmann Poulsen – Danish Ministry of Finance

The problem of capital flight and tax evasion Estimates of proceeds from criminal activities, corruption and tax evasion in developing and transition economies range from 500-800 billion US dollars per year . Of this, roughly 250 billion US dollars per year is from tax evasion.

Estimates of proceeds from criminal activities, corruption and tax evasion in developing and transition economies range from 500-800 billion US dollars per year .

Of this, roughly 250 billion US dollars per year is from tax evasion.

The Legal Framework – OECD and UN OECD’s Global Forum on Transparency and Exchange of Information: Exchange of information on request No restriction on information exchange due to bank secrecy 2 OECD models – double taxation and exchange of information (TIEA) UN model double taxation convention follows OECD standards to a large extent targeted bilateral agreements between developed and developing countries

OECD’s Global Forum on Transparency and Exchange of Information:

Exchange of information on request

No restriction on information exchange due to bank secrecy

2 OECD models – double taxation and exchange of information (TIEA)

UN model double taxation convention

follows OECD standards to a large extent

targeted bilateral agreements between developed and developing countries

The EU framework Savings Tax Directive (2003) Coverage: only taxation of savings income – interest payments Automatic exchange of information. Transition period for Luxembourg, Austria and Belgium Corresponding agreements with Switzerland, Liechtenstein, Monaco, San Marino and Andorra (withholding tax)

Savings Tax Directive (2003)

Coverage: only taxation of savings income – interest payments

Automatic exchange of information. Transition period for Luxembourg, Austria and Belgium

Corresponding agreements with Switzerland, Liechtenstein, Monaco, San Marino and Andorra (withholding tax)

Progress in G20 G20 declarations call for: the end of bank secrecy adherement to international standards for information exchange - expanding the OECD Global Forum to also include developing countries countermeasures against tax havens from March 2010

G20 declarations call for:

the end of bank secrecy

adherement to international standards for information exchange

- expanding the OECD Global Forum to also include developing countries

countermeasures against tax havens from March 2010

Multilateral initiatives OECD: multilateral negotiations of bilateral agreements on exchange of information opening the Convention on Mutual Administrative Assistance in Tax Matters to developing country participation - multilateral agreement drawn up by Council of Europe and OECD which covers: information exchange on request indirect and direct taxation all legal persons (both individuals and companies) upcoming revision: remove restrictions on bank secrecy

OECD:

multilateral negotiations of bilateral agreements on exchange of information

opening the Convention on Mutual Administrative Assistance in Tax Matters to developing country participation - multilateral agreement drawn up by Council of Europe and OECD which covers:

information exchange on request

indirect and direct taxation

all legal persons (both individuals and companies)

upcoming revision: remove restrictions on bank secrecy

OECD – ”White” list, October 20th, 2009 San Marino Japan Denmark Russian Federation Italy Czech Republic Portugal Israel Cyprus US Virgin Islands Poland Isle of Man China United States Norway Ireland Cayman Islands United Kingdom New Zealand India Canada United Arab Emirates Netherlands Antilles Iceland British Virgin Islands Turkey Netherlands Hungary Bermuda Switzerland Monaco Guernsey Belgium Sweden Mexico Greece Barbados Spain Mauritius Gibraltar Bahrain South Africa Malta Germany Austria Slovenia Luxembourg France Australia Slovak Republic Korea Finland Aruba Seychelles Jersey Estonia Argentina Jurisdictions that have substantially implemented the internationally agreed tax standard

OECD – ”Grey” list, October 14th, 2009 (0) – (2) (0) (0) – (11) (0) – (2) 2009 2009 2009 2009 Malaysia Phillipines Singapore Uruguay (5) – (6) (0) (0) (0) 2009 2009 2009 2009 Brunei Chile Costa Rica Guatemala Other Financial Centres (0) (0) (0) (1) – (5) (0) (0) – (5) (0) – (3) (0) – (5) (0) 2003 2002 2002 2002 2002 2002 2002 2002 2003 Nauru Niue Panama St Kitts and Nevis St Lucia St Vincent and the Grenadines Samoa Turks and Caicos Islands Vanuatu (0) – (5) (4) (7) – (9) (1) – (3) (0) (0) – (1) (1) (1) (0) (1) – (10) (1) (0) 2009 2002 2002 2002 2002 2002 2002 2002 2007 2009 2007 2002 Andorra Anguilla Antigua and Barbuda Bahamas Belize Cook Islands Dominica Grenada Liberia Liechtenstein Marshall Islands Montserrat Tax havens Number of agreements Year of commitment Jurisdiction Number of agreements Year of commitment Jurisdiction Jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented

What measures have Denmark taken? Bilaterally - recent revision of agreements with Switzerland, Austria, Luxembourg and Singapore in accordance with the OECD standards Nordic cooperation - bilateral information exchange agreements within a multilateral framework. Agreements with Jersey, Guernsey, Isle of Man, Cayman Islands, Bermuda, the Virgin Islands, Aruba og the Dutch Antilles. EU - pushing for speedy adoption of a revised Savings Tax Directive and anti-fraud agreements with Liechtenstein and other third countries OECD - supports work in the Global Forum

Bilaterally - recent revision of agreements with Switzerland, Austria, Luxembourg and Singapore in accordance with the OECD standards

Nordic cooperation - bilateral information exchange agreements within a multilateral framework. Agreements with Jersey, Guernsey, Isle of Man, Cayman Islands, Bermuda, the Virgin Islands, Aruba og the Dutch Antilles.

EU - pushing for speedy adoption of a revised Savings Tax Directive and anti-fraud agreements with Liechtenstein and other third countries

OECD - supports work in the Global Forum

The international work program: EU Anti-fraud agreements with third countries Revision of the Savings Tax Directive to increase coverage OECD - responding to G20 call to make it easier for developing countries to benefit from tax cooperation – report expected prior to G20 Finance Ministers meeting in November Denmark – continuing to push for progress in the EU and work for more tax agreements within the Nordic framework

EU

Anti-fraud agreements with third countries

Revision of the Savings Tax Directive to increase coverage

OECD - responding to G20 call to make it easier for developing countries to benefit from tax cooperation – report expected prior to G20 Finance Ministers meeting in November

Denmark – continuing to push for progress in the EU and work for more tax agreements within the Nordic framework

The way forward for developing countries? Proposals: Country-by-country reporting? Multilateral agreements?

Proposals:

Country-by-country reporting?

Multilateral agreements?