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OECD: Brunei misses mark for tax transparency framework

Publication Date : 07-01-2014

 

Brunei’s regulatory and legal framework for sharing information on tax transparency has not met the requirements set by the Global Forum, a progress report from the Organisation for Economic Co-operation and Development (OECD) shows.

A 2013 report for tax transparency compiled by Global Forum – a body under the OECD – states that Brunei is one of the economies that cannot progress to Phase 2 of the assessment until “they act on recommendations to improve their legal and regulatory framework”.

Brunei was assessed under Phase 1, which looks into the quality of an economy’s legal and regulatory framework for the exchange of information on tax transparency.

Those that pass Phase 1 are assessed under Phase 2, which reviews an economy’s practical operation of its framework.

The report, which aims to enhance transparency to prevent tax evasion globally, shows that Brunei has not yet put in place five out of nine criteria for Phase 1.

Under the category ‘Availability of Information’, Brunei has not met two out of three criteria – availability of information regarding ownership, and accounting – while meeting the third, on banking information.

According to the report, jurisdictions should ensure that the ownership and identity information for all relevant entities and arrangements is available to their own competent authorities. Jurisdictions that want to move to Phase 2 should also ensure that reliable accounting records are kept for all relevant entities and arrangements. Banking information should also be made available for all account holders.

For the second category, ‘Access to Information’, the sultanate has put in place one of two criteria: Rights and Safeguards. This criterion states at the rights and safeguards that apply to persons in the “requested jurisdiction” should be compatible with effective exchange of information.

Brunei did not meet the criterion on ‘Access Power’, which the Global Forum states gives competent authorities the power to obtain and provide information that is the subject of request under an Exchange of Information (EOI) agreement from any person within their territorial jurisdiction who is in possession, or control, of such information.

In the third category, ‘Exchange of Information’, Brunei has met two criteria: Confidentiality and Rights and Safeguards.

The Global Forum explained in the report that these two provide that the economy’s mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received and that these exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.

The report stated that Brunei has not met the requirement on mechanisms to provide for effective exchange of information. It also stated that it has not met the requirement of network of information exchange mechanisms.

Meanwhile, Brunei was not assessed for timely EOI. This criterion measures how timely economies should provide information under their network of agreements.

Brunei was assessed along with Andorra, Anguila, Antigua and Barbuda, Aruba, Barbados, Belize, Botswana, Chile, Cook Islands, Costa Rica, Curaco, Czech Republic and Dominica.

“Transparency is not beneficial only to industrialised countries. In a world where economic, financial and trade flows stretch across the globe, the Global Forum will need to continue its endeavours to spread the standards of transparency and exchange of information worldwide,” said Kosie Louw, chair of the Global Forum in his remarks published in the report.


 

 

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