Oecd Mandatory Disclosure Rules

The CRS was designed with a broad scope with respect to reportable financial information, reportable account holders, and reporting financial institutions to limit taxpayers` opportunities to circumvent reporting. In addition, as part of their effective implementation of the standard, jurisdictions should introduce anti-abuse rules to prevent practices aimed at circumventing reporting and due diligence procedures. With the adoption of Council Directive (EU) 2018/822 by EU Member States, there has been significant acceptance in jurisdictions that now have binding disclosure requirements. This Directive will lead to the reporting to EU tax authorities of aggressive cross-border tax planning schemes, offshore structures and tax avoidance schemes covered by the Common Reporting Standard. The Guideline adopts the Model Rules of the 2018 OECD Report Model Mandatory Disclosure Rules for CRS Avoidance Agreements and Opaque Offshore Structures. This new law is not unprecedented. The UK already has legislation in the form of regulations implementing EU DAC6 to disclose HMRC through such cross-border agreements and schemes. However, the stated aim of introducing the new rules is to ensure that they apply globally rather than at European level after Brexit. The general thrust of HMRC`s consultation paper indicates that the guidance that HMRC will issue in relation to the new rules will follow HMRC`s current DAC 6 guidance. In practice, therefore, there may not be many changes in the types of agreements or systems that must be disclosed. The implementation of this legislation requires project promoters, consultants (service providers) and taxpayers to report to HMRC agreements or schemes that meet certain characteristics. Generally speaking, the indicators are intended to inform HMRC of the possibility of deliberate misappropriation of funds from a financial account, so that these funds are not subject to CRS reporting requirements.

10:00 – 13:00: video.oecd.org/?action=video&id=1732 In 2018, the OECD published its Model Mandatory Disclosure Rules (MDR), a model regime designed to ensure that tax authorities receive details of certain agreements that might otherwise limit their visibility of taxpayers` assets. These rules were then incorporated into a much broader disclosure regime (DAC 6) introduced by the EU. The UK`s implementation of DAC 6 was a late casualty of Brexit, with a significant reduction in UK regulation announced just before the declaration began on 1 January 2021. This last-minute pruning, which essentially removed elements of the UK`s implementation of DAC6 that were not included in the original OECD MDR Model, has always been referred to as a temporary measure. HMRC has just published a consultation (until 8 February 2022) on an alternative regulation based directly on the OECD model. Nevertheless, the organisations most affected by the rules (typically professional advisers and financial sector firms) will need to ensure that their processes are consistent with the revised scope and will also want to take advantage of the opportunity arising from the redesign to address issues that arose in the first year of application of the existing system. Enquiries about the conference should be directed to mandatorydisclosure@oecd.org. HMRC has announced that it is consulting on the introduction of legislation implementing the OECD Model Standards on Disclosure (MDR) for Common Reporting Standards (CRS) avoidance agreements and opaque offshore structures. In this article, tax lawyer Michael Fluss explains what these rules are and what developers, consultants, and taxpayers must do if the legislation is implemented. The UK and EU had agreed to maintain disclosure regimes after Brexit, with the OECD`s MDR model effectively being a “minimum standard”. The decision to more clearly align the implementation of DAC 6 in the UK with this minimum standard was widely welcomed by UK companies, as existing UK systems (e.g. DOTAS) playing a similar role raised doubts about the “added value” of other aspects of the DAC 6 rules in the UK.

The fact that the proposed new regime (as planned) is also not expected to go beyond the OECD MDR model will therefore be a source of relief, as will the repeated emphasis on continuity with existing rules during the consultation. This is reflected in a number of references to HMRC`s guidance on existing regulations, indicating the intended approach to interpreting their replacement – good news for companies that have built processes based on the current guidelines. The Action 12 Report also includes specific recommendations on rules for international tax systems and the development and implementation of more effective information exchange and cooperation between tax administrations. In order to further safeguard the integrity of the CRS, it is now possible to exchange information on potential CRS prevention systems, including anonymously. This disclosure mechanism is part of a broader structured process established by the OECD to address systems that aim to avoid CRS reporting, which is based on the following three pillars: It is important that each country receives timely information on tax compliance and the political risks posed by aggressive tax planning. Action 12 provides recommendations on the design of disclosure requirements for aggressive tax planning schemes, taking into account administrative and compliance costs for tax administrations and businesses, and drawing on the experience of countries that have implemented such rules.