Ireland awarded highest Tax Transparency Rating by the OECD

By Caitlyn Buchanan, 15th Sept 2017

Ireland has received the highest international rating on tax transparency from the Organisation for Economic Co-operation and Development (OECD), according to their latest review published on 12 September 2017.

The OECD is an intergovernmental organisation founded in 1960 to stimulate economic progress and world trade. It is supporting the global clampdown on multinational tax avoidance through its Global Forum on Transparency and Exchange of Information between participating countries. This report follows up on initial assessments made in 2011 and follows the newly implemented Common Reporting Standard (CRS).

Common Reporting Standard (CRS)

Participating jurisdictions are to follow the CRS which was approved by the OECD Council on 15 July 2014. The standard calls upon the jurisdictions to collect information from their financial institutions and exchange it with other jurisdictions on an annual basis. Financial accounting information includes; the financial institutions required to report, the different types of accounts and taxpayers covered, and the common due diligence procedures to be followed by financial institutions. The CRS exchanges commenced in September 2017. (Currently, the US has not participated in the system.)

Tax Transparency Ratings of 10 Participating Countries

Ireland, Mauritius and Norway were the three jurisdictions to receive the highest possible overall rating of “Compliant” in regards to tax transparency. The OECD reported that Ireland received its high ranking because the availability of beneficial ownership information is ensured through a combination of anti-money laundering and tax laws. The report recommended that going forward, Irish banks should include information on all the beneficiaries instead of only those holding more than 25% capital of the trust. It should be noted that currently, Irish banks hold information on beneficiaries holding 10% or more in accordance with AML legislation.

Ireland’s Minister for Finance, Paschal Donohoe welcomed the rating and said, “The outcome of the Global Forum’s review is recognition of Ireland’s continued commitment to the highest international standards in tax transparency.” He also added, “Ireland continues to play an active role in global work to reform the international corporate tax system.”

According to the reports, six countries have room to improve; Australia, Bermuda, Canada, Cayman Islands, Germany and Qatar all received a rating of “Largely Compliant”. Canada and Australia’s scores have dropped since 2011 because of a failure to implement new standards on the availability of ownership identities and other accounting information.

The OECD reported that Germany’s score was partially due to delays and difficulties in communications. The organisation challenged Germany’s share-equity stock certificate for not being applied retroactively. The report highlighted practical issues with Germany’s implementation of the international standards of tax transparency.

Jamaica received the lowest rating, of “Partially Compliant”, this is a fall a previous ranking of “Largely Compliant” in 2013. The organisation cited a failure to implement recommendations from the previous report and new standards introduced since then. The OECD reported that Jamaica lacks the legal framework to ensure beneficial ownership information is maintained and made available. The report recommended that the jurisdiction take the appropriate measures to ensure beneficial ownership information is available in line with the standard for all relevant entities.