An international comparative study of transparency and exchange of information measures
Abstract
In recent decades, globalisation and the ease of moving capital in-between countries gave individuals the opportunity to shift their assets to countries that offer low tax rates. The inflow of assets to these countries may have valid motives, but may also be motivated by the prospects of shifting income to a place where the tax burden would be lower than in the country of residence.
The Organisation for Economic Cooperation and Development (OECD), in the interest of decreasing tax evasion, conceded that enhanced tax transparency would be a deterrent for aggressive tax practices. A measure to increase tax transparency is developed in the form of the international exchange of tax and related information. This lead to the introduction of legislation and standards that enable international cooperation facilitated through the effective sharing of tax information. Tax transparency then evolved by countries signing tax information exchange agreements, disclosure of information was emphasised through the implementation of country-by-country reports and the CRS was developed, a robust multilateral agreement on the exchange of information.
In this study, the implemented exchange of information measures between South Africa, the Cayman Islands and Australia is analysed to identify similarities and differences for comparison. The study found that the measures implemented and approaches towards legislation to facilitate the disclosure of information by South Africa, and Australia are reasonably similar. The Cayman Islands followed suit by either amending existing legislation or enacting new laws that would facilitate transparency. The three countries all committed to CBCR, with only the Cayman Islands being a non- reciprocal participant. Recommendations for further studies include examining the effect that the implementation of the CRS has had on international deposits.