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8.

1 ACCESS TO BANK
INFORMATION FOR EOI
PURPOSES
EOI SeminarJakarta November 2012

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Bank secrecy
Legitimate for ordinary third parties

Contractual relationship between banks and


their clients

Tax administrations are not ordinary third


parties

Privileged access required:


to counteract illegal activities
for tax purposes

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Adverse implications of bank secrecy

Difficult to determine and collect the


right amount of tax
Inequity between taxpayers who can take
advantage of bank secrecy and those who
cannot
Discourages voluntary compliance
Hampers international co-operation
Not a level playing field

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Conditions for access to bank information by tax administrators

The information is used only for tax


purposes
The information is subject to strict
confidentiality
Access concerns both private and
business accounts and transactions on
those accounts

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Exchange of bank information under Tax Treaties

OECD Model Article 26(5) provides as follows:


In no case shall the provisions of paragraph 3 be
construed to permit a Contracting State to decline to
supply information solely because the information is
held by a bank, other financial institution, nominee or
person acting in an agency or a fiduciary capacity or
because it relates to ownership interests in a person.

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Exchange of bank information under
Tax Treaties
Article 26(5) overrides paragraph 3 of the same
article to the extent that paragraph 3 would
otherwise permit a requested Party to decline to
supply information on the grounds of bank
secrecy.
Article 26(5) also provides that an information
request cannot be declined solely because the
information is held by persons acting in an
agency or fiduciary capacity.

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Exchange of bank information
under Tax Treaties
The international standard for exchange of information
requires the requested country to provide bank
information as provided in Article 26(5) of the OECD
Model
Global Forum Peer Reviews
A.3 Banking information should be available for all
accountholders
B.1.1 Competent authorities should have the power to
obtain and provide information held by banks
C.1.2 Exchange of information mechanisms should
provide for effective exchange of information and
should not permit the requested jurisdiction to
decline to supply information solely because the
information is held by a financial institution 7
Exchange of bank information under
Mutual Legal Assistance Treaties

Mutual Legal Assistance Treaties (MLATs )


can be used to obtain bank information from
a foreign country but only in connection with
the types of criminal violations listed in the
MLAT
Some MLATs do not provide for criminal tax
violations, and in that case, such information
would have to be requested under a bilateral
tax treaty
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Country Practice: Summons procedure in the United States to
obtain/provide bank information to treaty partners

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Country practices: Summons
procedures in the United States

The Internal Revenue Service (IRS) has


authority to issue a summons in the
United States for bank information related
to a tax matter
The summons should identify the taxpayer
to whom the summons relates and provide
other information that will enable the
person summoned to locate the records

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Summons procedures in the
United States

The IRS must give notice to any person


mentioned in the summons, who would
then have a right to filing a proceeding in
Court to quash the summons
The taxpayer does not have a right to file a
proceeding to quash if the summons was
issued in connection with his tax liability

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John Doe Summons

A John Doe summons may be issued for


information if the identity of the person
with respect to whose liability the
summons is issued is not known
The summons may be issued for one
taxpayer or for many taxpayers whose
identity is not known, but special rules
have to be followed

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John Doe summons

A John Doe summons can be served only


after a court proceeding in which the IRS
establishes:
the summons relates to the investigation of a
particular person or ascertainable group or
category of persons
there is a reasonable basis to believe that such
persons may have failed to comply with the tax
laws
the information is not readily available from other
sources

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Some countries have a data base of bank
accounts
France FICOBA (Fichier Informatis des
Comptes Bancaires):
Data base of all bank accounts opened and closed in
France
Access granted to tax authorities, judicial authorities
Information only on opening and closing of accounts
FICOBA does not include information on the
transactions that take place on the accounts
The tax auditors have to request information on
transactions to the banks

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Some countries have a data base of
bank accounts

Spain
Tax authority receives information returns yearly
from banks that reports for all account holders
Information returns contain the name of
accountholder, account number, tax identification
number, and account balance
The tax auditors have to request information on
transactions and any other information to the
banks

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