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Organisation for Economic Cooperation and Development: New Study on Voluntary Disclosure of Offshore Assets

(Nov. 8, 2010) In September 2010, the Organisation for Economic Co-operation and Development (OECD) issued a new study on programs for the voluntary disclosure of offshore undisclosed income and/or assets under the tax administrations of various countries. (OECD, OFFSHORE VOLUNTARY DISCLOSURE: COMPARATIVE ANALYSIS, GUIDANCE AND POLICY ADVICE (Sept. 2010), As the Foreword and Introduction notes,

For years the OECD has advocated a policy of improved international tax co-operation including better information exchange and transparency to counter offshore tax evasion. At the same time the OECD has been encouraging countries to examine voluntary compliance strategies to enable non-compliant taxpayers to declare income and wealth that they have in the past concealed by means of taking advantage of strict bank secrecy jurisdictions… . These policies are now bearing fruit and are helping governments raise revenues needed perhaps more than ever to support their economies in times of crisis. The increase in the risk of detection through improved international tax co-operation and the availability of voluntary disclosure programmes has resulted in a large number of taxpayers coming forward and significant amount of tax being collected. (Id.)

The publication is divided into three parts:

  • a framework for successful offshore voluntary compliance programs, based on a number of key principles developed by the OECD and the experience of member countries;
  • guidance for tax administrations in designing voluntary compliance initiatives (reproducing a part of Chapter 5 of the 2009 OECD report “Engaging with High Net Worth Individuals on Tax Compliance”), drawing on extensive consultations with private client advisors; and
  • a comparison of the key features of offshore voluntary disclosure programs in the 39 OECD and Non-OECD countries participating in the work of the OECD's Committee on Fiscal Affairs. In a written summary and in table form, the comparison sets forth the consequences for taxpayers who make a “timely and comprehensive” voluntary disclosure of tax evasion before being detected by the tax authorities versus those who do not, with regard to the following features: taxes due, the interest rate on the tax outstanding, monetary penalties, and the risk of criminal prosecution and imprisonment. The voluntary disclosure portion of the table is subdivided into two separate sections, distinguishing whether these same features are applied under general law or under special programs.

Annex 2 is a table with more detailed information on the above-named features for each participating country. Annex 2, covering five countries (Australia, Canada, Poland, South Africa, United Kingdom), provides examples of general law and/or specific programs that “provide the taxpayer the opportunity to come forward on a no-name basis to receive an indication or binding decision on possible consequences resulting from the disclosure.” (Id.)

The 33 OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. The non-OECD participants are: Argentina, China, Estonia, India, Russia, and South Africa. (Id.; see also Luis Nouel, 2010 OECD Study on Offshore Voluntary Disclosure Released, TNS ONLINE (Oct. 28, 2010), International Bureau of Fiscal Documentation online subscription database.)