The OECD has outlined a series of objective criteria that it claims will help it to determine whether a country is a “non-cooperative” tax jurisdiction with respect to tax transparency.
Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, announced the measures during an OECD webinar on July 12th.
Under the scheme, which will soon be presented to the G20 for consideration, developing countries that do not have financial centres will not be deemed non-cooperative.
In other cases, a country looking to avoid the tag will have to meet certain conditions.
For instance, if the country receives a rating by the Global Forum on Transparency and Exchange of Information for Tax Purposes of “largely compliant” or higher in regards to information exchanges, it will not be labelled "non-cooperative".
Similarly, countries will avoid the label if they commit to adopting the automatic exchange of financial account information standard, and agree to apply the common reporting standard and begin exchanges by 2018.
Countries will also be exempt if they have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, or indeed if they have provided a sufficiently broad information network that provides exchange of data on request and automatically.
However, Mr Saint-Amans says that outside of such criteria, a country will still be considered non-cooperative if it is rated as non-compliant at phase one.
He added that the OECD is also poised to recommend that the list of non-compliant countries not be published until July 2017 in order to allow extra time in order to correct their practices.
Finance ministers from across the G20 are set to meet in Chengdo, China, on July 22nd and 23rd, with discussions likely to revolve around how to create tax policies that promote growth while combating inequality.
Other topics will include increasing tax certainty in order to promote growth, trade, and investment.
Meanwhile, Mr Saint-Amans said a discussion draft on interest deductions in the banking and insurance sectors will be released on July 28th, with a draft on branch mismatch arrangements due for the week of August 8th.
The final round of negotiations for the multilateral instrument to introduce the OECD/G20 base erosion profit shifting (BEPS) plan agreements will take place at some point in September, with much of the text ready to be adopted by November.
Mr Saint-Amans therefore expects the new document to be ready for signature by the end of the year.