On the 25th of November the OECD hosted the 10th Global Forum on Transparency and Exchange of Information for Tax Purposes. The Secretary General and Minister Bruno Lemaire delivered opening remarks. As part of the opening session, I moderated the ministerial panel with panelists Pierre MOSCOVICI, European Commissioner for Economic and Financial Affairs, Taxation and Customs, David MASONDO, Deputy Minister of Finance, Republic of South Africa (RSA), Pierre GRAMEGNA, Minister of Finance, Luxembourg, Anne MICHEL, Journalist, Le Monde, Wolfgang SCHMIDT, State Secretary at the German Federal Ministry of Finance. See my opening remarks below.
In 2009, G20 Leaders called for the end of bank secrecy and mandated the Global Forum to deliver on that objective. As we look back on these past ten years, the world has changed and spectacular advances have been made in international tax cooperation. Bank secrecy and other barriers have been removed: the international community can now effectively tackle offshore tax evasion.
Before 2009, it was possible for wealthy individuals to hide money securely in bank secrecy jurisdictions, confident that tax authorities in their country of residence could never get access to information on those assets. While exact figures are lacking, based on the amounts recovered up to now we can safely assume that over the decades billions of USD were thus being lost for public spending. Those fraudulent practices undermined public finances, eroded tax morale, jeopardised trust in governments and institutions, and became absolutely and simply intolerable in a context where citizens were going through the economic and social hardship of the 2008-2009 financial crisis.
But a quantum leap has been achieved since then. Now, nearly 70 jurisdictions reviewed by the Global Forum have eliminated banking secrecy for tax purposes, some of them making profound changes to their regulatory regimes and practices since 2009. With the beginning of the automatic exchange of information on financial accounts of non-residents in 2017 and 2018, the era of bank secrecy has been taken over by that of transparency: the Secretary-General just mentioned the impressive amounts in additional revenue that since have been collected by tax authorities.
Another important change has been the multiplication of Exchange of Information instruments allowing tax information to flow between Global Forum members. The Multilateral Convention on Mutual Administrative Assistance in Tax Matters created nearly 8’000 relationships among the 130 members of the Global Forum, tripling the number of existing instruments. This network includes all G20 and OECD countries, practically all international financial centres (IFCs), and an increasing number of developing countries. There have been many positive changes as well improving the transparency of corporate vehicles. For instance, bearer shares have been eliminated or immobilised and the use of nominees is now transparent.
These successes constitute a clear example of what can be reached when the most influential economies agree on a policy objective and put their clout behind it. The process at the Global Forum is a demonstration of effective multilateralism.
How we got to this point is one of the main issues that I would like to discuss with our distinguished panellists. Was it the circumstances of the financial crisis, the leaks in the media, the need for additional revenue and public sentiment of injustice with the wealthy and international banking? Or were these changes already on track and going to happen anyway? How do we look back on those ten years and learn lessons to ensure that the same momentum can be maintained for further progress? How can we ensure the continued success of this multilateral approach?