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									             United Nations                                                                                E/ C.18/ 2005/ 10/Add .2
             Economic and Social Council                                                   Dist r.: Gen eral
                                                                                           15 Nov ember 2005

                                                                                           Orig in al: En g lish




Committee of Expe rts on Inte rnational Coope ration
in Tax Matte rs
Firs t sessi on
Genev a, 5-9 December 2005


             OECD’s work on improving exchange of information *

  Summary
                   At the req uest o f the UN Secretariat, th e OECD Secret ariat has prepared th e
             presen t note wh ich s ets o ut the issues th at the OECD M ember count ries h ave been
             discuss ing in th e area of exch ange of informat ion and also p rov id es o ne o f the
             produ cts th at the OECD has recent ly co mp leted in th is area.
             The rev is ion o f A rt icle 26 o f th e OECD Mod el Tax Conv ent ion is the first
             co mprehens iv e rev is ion s in ce th e ad opt ion o f the 1977 M odel (except fo r the
             extens ion o f exch ange o f informat ion to “taxes of every kind and descript ion” in
             2000). The rev is ion is intended to ensure th at Art icle 26 refle cts cu rrent count ry
             pract ices and also takes into account th e wo rk the OECD h as undertaken with non
             OECD Eco no mies to imp rove access to ban k in fo rmat ion and in d evelop ing the
             2002 Model Ag reement on Exchang e of In fo rmat io n in Tax M atters.
             Art icle 26 o f the UN Model Tax Con vent io n is st ill largely b ased on the 1977 v ers ion
             of A rt icle 26 of the OECD Mod el. Sect ion A General cons id erat ions o f the
             Co mmentary o f A rt icle 26 o f the UN Model states th at it rep rodu ces “the substance
             of all th e p rov is ions o f A rt icle 26 of th e OECD Mod el Conv ent ion ”. The Co mmittee
             of Exp erts on Internat ional Co -op erat ion in Ta x M atters may th erefo re wish to
             consid er wh ether it is t imely t o upd ate th e A rt icle 26 o f th e UN Mod el and
             Co mmentary to take into account recent dev elop men ts and cu rrent cou nt ry p ract ices .




           * T he present paper was prep ared by the Secr etariat of the Or gan isation for E cono mic Co-op eration
             an d Dev elop ment . T he v iews an d opin ion s expressed ar e those of th e OE CD Secretar iat an d do
             not necessarily represent those o f the United Nation s.
E/C.18/2005/10/Add.2


Contents
                                                                                                                            Paragraphs   Page

            I.   The impo rtance o f in fo rmat ion e xchange in tax matt ers . . . . . . . . . . . . . . . . . . . . . .         1-3      3
           II.   Imp rov ing th e legal framewo rk fo r in fo rmat ion exch ange: New A rt icle 26                                4-8      3
          III.   Imp rov ing th e Operat ional Aspects o f Exchange o f In fo rmat ion . . . . . . . . . . . . . . .            9-14       5
          I V.   Conclusion                                                                                                    15-16       6
           V.    Annex                                                                                                                     7




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    I.    The importance of information exchange in tax matters
    1.    The past decades hav e witnessed an unp reced ented lib eralisat io n o f nat ional
    econo mies . OECD member co unt ries and an increas ing nu mber o f non OECD
    econo mies h ave removed o r limited con tro ls o n fo reign invest ment and relaxed o r
    eliminat ed fo reign exchang e cont ro ls. At t he same t ime p rog ress in in fo rmat ion and
    teleco mmu n icat ion t echn o logy has made the wo rld in to a s maller p lace. As a resu lt
    business h as b eco me in creas ing ly g lobal.
    2.      Count ries ’ tax ad min istrat ion and en fo rcement act iv it ies, h o wev er, remain
    confined by th eir n at ion al bo rders. The exercise o f sov ereign po wers, inclu d ing
    aud it ing and in fo rmat ion gath ering po wers, is gen erally limited to persons,
    in fo rmat ion o r act iv it ies with in a jurisd ict ion ’s territo ry. As a resu lt , a t ax exa miner
    might on ly see a s mall part o f th e overall act iv it ies o r in vest ments o f a g iv en
    taxpay er. To close th is informat ion gap , count ries increasin g ly rely on exchang e o f
    in fo rmat ion.
    3.     Ov er the last few y ears, th e OECD’s Co mmitt ee on Fiscal A ffairs h as b een
    wo rkin g to imp ro ve th e legal framewo rk and th e operat ional aspects o f exchang e o f
    in fo rmat ion so as to ensure th at e xch ange o f in fo rmat ion remains an effect ive t ax
    ad min istrat ion too l. Th is not e h igh lig hts so me o f ou r recent wo rk in these areas and
    the OECD Co mmitt ee on Fiscal A ffairs loo ks fo rward to work with the UN
    Co mmittee o f Experts o n Int ernat ion al Co -op erat ion in Tax Mat ters on th ese issues.


II. Improving the legal framework for information exchange:
    New Article 26
    4.    Prov is ions modelled on A rt icle 26 of the OECD M odel Tax Conv ent ion are by
    far th e most frequen t ly used mechan is ms fo r exchang ing in fo rmat io n. Mo re th an
    2000 b ilateral in co me tax conv ent ions are based on t he OECD Model Tax
    Convent ion. Art icle 26 sets fo rth th e ru les und er wh ich in fo rmat ion may be
    exchan ged bet ween tax au tho rit ies . Art icle 26 o f th e UN Model Tax Conv ent ion no
    long er rep roduces th e substance o f all th e p rov is ions o f A rt icle 26 in th e 2005
    update o f the OECD M odel Tax Conv ent ion .
    5.     It first estab lish es the o b ligat ion to prov ide in fo rmat ion to a treaty partn er and
    the circu mstances und er wh ich th is ob ligat ion exists. It then go es on to d escribe
    certain limit at ions on the o b ligat ion to p rov ide info rmat ion . Finally, it contains ru les
    that ensure t hat any in fo rmat io n p rov ided to a treaty p art ner is sub ject to strict
    confident iality ru les that p rot ect th e leg it imate p rivacy rights o f a ny person to who m
    the in fo rmat ion relat es.
    6.     To ensure th e cont inu ed relevance o f A rt icle 26, t he Co mmitt ee undertoo k a
    co mprehens iv e rev iew of A rt icle 26. Th is wo rk has no w been co mp let ed and t he
    Co mmittee ad opted in Ju ly 2004 a rev ised A rt icle 26 wh ich is included in t he 2005
    update o f t he Mod el Conv ent ion (see Ann ex 1 fo r the text o f A rt icle 26 and
    Co mmentary in Eng lish and French ). The rev is ion brings A rt icle 26 in line with
    current cou ntry p ract ices and inco rpo rates the wo rk the Co mmittee on Fiscal Affairs
    has und ertaken with respect to access to ban k informat ion and in dev elop ing t he
    2002 OEC D Model Ag reemen t on Exch ange o f In fo rmat ion in Tax M atters (fo r
    fu rther in fo rmat ion see www.oecd.org/ ctp ).


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E/C.18/2005/10/Add.2


                7.    With th e co mp let ion o f the wo rk on A rt icle 26, th e Co mmit tee on Fiscal
                Affairs has no w develop ed up -to -dat e mechan is ms fo r exchan ge o f in fo rmat io n both
                as stand alone ag reements and in the conte xt o f co mp rehens ive inco me t ax
                convent ions. In d evelop ing th ese models th e Co mmitt ee focused on p rov id ing
                different models th at fit d ifferent s ituat io ns wh ile ensuring th at the key standards o f
                exchan ge are co nsisten t irrespect ive o f wh ich mo del is used . There has been
                consid erab le input fro m Non OECD Eco no mies in th is wo rk and 25 non OECD
                count ries have already endo rsed the rev ised A rt icle 26.
                8.      The key chang es t o the prev ious v ers ion of A rt icle 26 can be su mmarised as
                fo llo ws :
                Cha nges to t ext of t he A rticl e:
                      The stand ard o f “necessary” has been ch anged t o “fo rseeab ly relev ant .”
                       Rev ised A rt icle 26 no w p rov id es t hat Cont ract ing St ates shall e xchange
                       in fo rmat ion t hat is “fo reseeab ly relevant ” fo r carry ing out the Con vent io n o r
                       fo r the ad min istrat ion o r en fo rcement o f th eir d o mest ic tax laws. The
                       “fo reseeab ly relevant ” standard is also found in the Jo int OECD/ C oun cil o f
                       Eu rope Conven t ion on M utual A d min istrat ive Assistan ce in Tax M atters and
                       the 2002 OECD Mod el Ag reement . Th e Co mment ary exp lains that th e change
                       was mad e to ach iev e cons istency across exch ange inst ru ments and was not
                       int ended to alter the effect o f the p rov is ion .
                      A n ew paragraph 4 has been add ed to deal exp licit ly in the t ext o f t he A rt icle
                       with qu est ions o f do mest ic ta x int erest requ irements. A do mest ic t ax interest
                       requ irement refers t o laws o r p ract ices that wou ld p roh ib it th e co mpet ent
                       autho rity of a Cont ract ing St ate fro m exchang ing in fo rmat ion requested by the
                       other Cont ract ing St ate u n less the requested Cont ract ing Stat e h ad an interest
                       in su ch in fo rmat ion fo r its o wn tax pu rposes. Th e new parag raph clarifies t hat
                       Cont ract ing St ates shou ld obt ain and e xchange in fo rmat ion irrespect ive o f
                       wh ether th ey also need the in fo rmat ion fo r th eir o wn t ax pu rposes . Th e same
                       standard was alread y inco rpo rat ed in the 2002 OECD Mod el Ag reement an d, as
                       described in th e 2003 p ro gress repo rt , Imp rov ing Access t o Ban k In fo rmat ion
                       fo r Ta x Pu rposes , all OECD cou nt ries h ave no w add ressed the issue (fo r fu rther
                       in fo rmat ion see www.oecd .org/ ctp ).
                      A new p arag raph 5 h as been added dealing with o wnersh ip in fo rmat ion and
                       in fo rmat ion held by b an ks, fin ancial inst itut io ns, no min ees, agents and
                       fidu ciaries . New p arag rap h 5 p rov ides th at a Cont ract ing State canno t decline
                       to p rov ide in fo rmat ion so lely because it is held by su ch a person o r solely
                       because it is o wn ersh ip in fo rmat io n. Th is is cons istent with the p ract ice o f the
                       vast majority o f OECD co unt ries and reflects the stand ard also cont ained in the
                       2002 Mod el Ag reement . The most impo rtant consequ ence of t h is chang e is t hat
                       do mestic ban k secrecy ru les by themselves can no longer b e used as a bas is fo r
                       declin in g to p rov ide in fo rmat ion .
                      The con fiden t iality ru les in A rt icle 26 hav e been ch anged so as to permit
                       disclosu re o f informat ion to overs ight autho rit ies. Th is change reflects a
                       gro win g t rend in OECD coun tries. Overs ight autho rit ies are au tho rit ies t hat
                       superv ise tax ad min ist rat ion and en fo rcement autho rit ies as p art o f the gen eral
                       ad min istrat ion o f the govern ment o f a Cont ract ing State.
                Cha nges to t he t ext of t he Co mmenta ry :


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                                                                                                    E/C.18/2005/10/Add.2


         Opt ional langu age has b een includ ed in the Co mmentary for cou ntries wish ing
          to share informat ion for non -t ax pu rp oses (i.e. to count eract money lau ndering
          or co rrupt ion ). It p ro v ides t hat Cont ract ing Stat es may use the in fo rmat ion fo r
          other p urp oses p rov id ed the in fo rmat io n may be used for such pu rposes under
          the laws o f b oth co unt ries and the use is autho rized b y the co mpet ent autho rity
          of the supp ly in g count ry.

         Langu age has been ad ded to clarify a nu mber of terms and con cepts used in
          Art icle 26. The rev ised Co mment ary cont ains mo re detailed exp lanat io ns on (i)
          the p rin cip le o f recip rocit y, (ii) t rad e, bus iness an d oth er secrets, (iii) the
          atto rney -client and s imilar p riv ileg es and (iv ) the t erm “p ub lic po licy/o rd re
          public.”

III. Improving the Operational Aspects of Exchange of
     Information
     Th e New OEC D Manu al o n th e Implementation o f Exchan ge o f In formation
     Provi sion s for Tax Pu rpo ses
     9.     The pu rpose o f th is Man ual is t o p ro v ide tax o fficials d ealin g with exchang e o f
     in fo rmat ion fo r t ax purposes wit h an overv iew of th e operat ion o f exch ange o f
     in fo rmat ion p rov is ions and so me techn ical an d pract ical gu idance to imp rove t he
     efficiency o f such exchang es.
     10. In d esign ing the Man ual th e ob ject ive has been to be as pract ical as poss ib le
     and as g lo bal as possib le. Non OEC D Econo mies and reg ional tax org an isat ions
     were inv ited to co mment on the earlier d ra fts o f the Manu al.
     11. The Manu al fo llo ws a modu lar app ro ach as so me mod u les may not be relevant
     to all count ries depend in g on the typ e of exch ange count ries are engag ed in and as it
     facilitat es updat es and add it ions of new modu les . The p resent modu les are t he
     fo llo wing :
     •   General modu le gen eral and leg al aspects o f exch ange o f in fo rmat io n.
     •   Modu le 1 Exchange o f in fo rmat ion on requ est.
     •   Modu le 2 Spont aneous exchang e o f in fo rmat ion.
     •   Modu le 3 Aut o mat ic (o r rout ine) exchan ge o f informat ion .
     •   Modu le 4 Simu ltaneous tax exa minat io ns.
     •   Modu le 5 Tax examin at ions ab road.
     •   Modu le 6 Co unt ry profiles regard ing in fo rmat ion exch ange.
     •   Modu le 7 In fo rmat ion e xchange inst ru ments and models .
     •   Modu le 8 Indust ry -wide e xchange o f informat ion .

     12. CIAT is cu rrent ly using the OECD M anua l as a b asis fo r d evelop ing its o wn
     man ual on e xchange wh ich will b e more tailored to the CIAT model ag reement on
     exchan ge o f informat ion .
     Imp ro ving the t echni cal asp ect s o f exchange
     13. An increasing nu mb er o f count ries are en gaged in auto mat ic exch ange o f
     in fo rmat ion. In fo rmat ion suitab le fo r au to mat ic exchang e is typ ically bu lk
     in fo rmat ion co mp ris ing man y ind iv idu al cases o f the same t ype, usually consist ing
     of details o f in co me aris ing fro m sou rces in the supp ly ing state where such



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E/C.18/2005/10/Add.2


                in fo rmat ion is availab le period ically und er that state’s o wn system and can be
                trans mitt ed auto mat ically on a ro ut ine bas is. Auto mat ic exchang e o f in fo rmat ion
                requ ires stand ard isat ion o f fo rmats to be efficient. The OECD h as d evelop ed and
                cont inues to d evelo p standards fo r auto mat ic exch ange t aking int o account th e lat est
                techno lo g ical dev elop ments . Th e new fo rmat is called t he Stand ard Trans miss ion
                Fo rmat (STF) and is based o n extens ib le markup lan guag e (XM L), a do cu ment
                marku p lang uage widely used in today ’s in fo rmat ion t echn o lo gy fo r its many
                advant ages.
                14. In o rder to speed up exch ange o f in fo rmat ion on requ est o r spontan eous
                exchan ge in app rop riat e cases, the OECD has also reco mmend ed p ro cedu res for
                secure elect ro n ic exchang e (i.e. t he trans miss ion o f co mmun icat ions o f co mp etent
                autho rit ies in encryp ted files attached to email messages).

                Conclusion
                15. The Co mmittee o f Experts on Int ernat ion al Co -o perat io n in Tax M atters may
                wish to cons ider wh ether it is not t imely t o up date th e A rt icle 26 o f the UN Model
                and Co mmentary to take into account recent d evelo p ments an d cu rrent count ry
                pract ices. Issues to cons ider are in part icu lar:
                      Rep lacing in fo rmat ion “necessary” by informat ion “fo rseeab ly relev ant” in
                       parag raph 1 of t he A rt icle. Th is stand ard o f “fo reseeab le relev anc e” is inten ded
                       to p rov id e exch ange to the wid est poss ib le ext ent wh ile exclud ing fish ing
                       exped it ions.
                      Bro aden ing A rt icle 26 to cover ta xes o f ev ery kind and d escript ion imp osed on
                       the b ehalf o f the con tract in g stat es.
                      Add ing a n ew p arag raph to stat e th e p rincip le already fo rmerly ackno wled ged
                       in p arag raph 24 d ) of the Co mment ary to Art icle 26 in th e UN Model that the
                       requ ested St ate shall use its informat ion gath ering measu res to obt ain the
                       requ ested in fo rmat ion, even though th at oth er St ate may not need such
                       in fo rmat ion fo r its o wn tax p urposes (p arag raph 4 o f A rt icle 26 o f th e OECD
                       Model)
                      Add ing a new parag raph stat ing that the limitat ions to exch ange p rov ided by
                       the Art icle shall not be const rued to permit a Con tract in g Stat e to decline to
                       supply in fo rmat io n so lely b ecause th e in fo rmat ion is held by a ban k, other
                       financial instit ut ion , no minee o r person act ing in an agency o r a fidu ciary
                       capacity o r b ecause it relates to o wnersh ip int erests in a person . (parag raph 5 o f
                       Art icle 26 o f the OECD M odel) . The Prev ious vers ion o f A rt. 26 already
                       autho rised the exchang e o f ban k and other in fo rmat io n id ent ified in parag raph
                       5 b ut th e add it ion o f p arag rap h 5 reflects cu rrent p ract ice o f vast majo rity o f
                       OECD memb er count ries an d h as h igh er v isib ility.
                16. Another issue t he Co mmittee may wish to cons id er is the possib ility to permit
                the use o f in fo rmat ion exchang ed for no n t ax pu rposes (e.g . law en fo rcement
                purposes ). Parag raph 12.3 o f t he Co mmentary to A rt icle 26 in the OECD Mo del
                now co ntains opt ion al languag e fo r inclusio n in A rt icle 26 to p ermit th e use o f
                in fo rmat ion e xchan ged fo r tax p urp oses, fo r law enforcement pu rposes if
                Cont ract ing St ates so wish p rov id ed both States may use tax in fo rmat ion fo r law
                enfo rcemen t pu rposes under their do mest ic law and p rov id ed t he co mpet ent
                autho rity o f t he supp ly ing State autho rises such use.


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                                                                                                          E/C.18/2005/10/Add.2


ANNEX 1 : Article 26 and Commentary in the 2005 edition of the
OECD Model Tax Convention

                                                      Article 26
                                       EXCHANGE OF INFORMATION


         1.     The co mpet ent autho rit ies o f the Cont ract ing St ates shall exchang e such
         in fo rmat ion as is foreseeab ly relevant fo r carry ing out t he pro v isions o f th is
         Convent ion o r to the ad min istrat ion o r en fo rcement o f th e do mest ic laws concern ing
         taxes o f every kind an d d escript ion imposed on b ehalf o f th e Cont ract ing St ates, o r
         of t heir p o lit ical subd iv is ions o r local autho rit ies , inso far as the taxat ion thereunder
         is not cont rary to th e Convent ion . The exchan ge o f informat ion is no t rest ricted by
         Art icles 1 and 2.
         2.     Any in fo rmat ion receiv ed under parag raph 1 by a Cont ract ing State shall be
         treated as secret in the same manner as in fo rmat ion obt ained un der the d o mest ic
         laws o f t hat St ate and shall be d isclosed on ly to persons o r autho rit ies (inclu d ing
         courts an d ad min ist rat iv e b od ies ) concerned with th e assess ment o r co llect io n o f,
         the en fo rcement o r p rosecut ion in respect of, the d eterminat ion of appeals in relat ion
         to th e t axes referred to in parag raph 1, o r the ov ersig ht of th e abov e. Such p ersons
         or au tho rit ies shall use t he in fo rmat ion on ly fo r such purposes. They may d isclose
         the in fo rmat ion in pub lic cou rt p roceed ings or in jud icial d ecis ions.
         3.   In no case shall th e p ro v isio ns o f parag raphs 1 and 2 b e const rued so as to
         impose on a Cont ract ing St ate the ob ligat ion :
           a) to carry out ad min ist rat ive measu res at v arian ce with the                    laws and
              ad min istrat ive p ract ice o f th at o r o f the oth er Cont ract ing St ate;
           b) to supp ly in fo rmat ion wh ich is not obtain ab le und er t he laws o r in th e no rmal
              course o f the ad min istrat ion o f that o r o f th e other Con tract in g Stat e;
           c) to supp ly in fo rmat ion wh ich wou ld d isclose an y t rade, bus i ness, indust rial,
              co mmercial o r p ro fessio nal secret o r t rad e p rocess, or in fo rmat ion the
              disclosu re o f wh ich wou ld be con trary to p ub lic po licy (ordre pub lic).
         4.     If in fo rmat ion is request ed by a Con tract in g State in acco rdance wit h t h is
         Art icle, the oth er Cont ract ing Stat e shall use its in fo rmat ion gathering measu res to
         obtain t he requested in fo rmat ion, ev en th ough that other St ate may not n eed such
         in fo rmat ion fo r its o wn tax pu rposes . The ob ligat ion con tained in t he preced ing
         sentence is sub ject to the limit at ions o f parag raph 3 but in n o case shall su ch
         limit at ions b e co nstru ed to permit a Cont ract ing St ate to d eclin e to supp ly
         in fo rmat ion so lely because it has n o do mest ic interest in such in fo rmat io n.
         5.    In no case shall th e p rov is ions o f parag raph 3 b e const rued to permit a
         Cont ract ing Stat e to d eclin e to supp ly in fo rmat ion so lely because t he in fo rmat ion is
         held by a ban k, oth er finan cial instit ut ion , no min ee o r p erson act ing in an agen cy o r
         a fidu cia ry capacit y o r because it relates to o wnersh ip interests in a p erson.




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E/C.18/2005/10/Add.2


                                       COMMENTARY ON ARTICL E 26
                                CONCERNIN G THE EXCHANGE OF INFORMATION

                I.     Preli mi nary remarks
                1.     There are good g rounds fo r includ ing in a conv ent ion fo r the avo idance
                of doub le ta xat ion p rov is ions co ncern in g co -o perat io n bet ween the tax ad mi-
                nist rat io ns of the t wo Cont ract ing Stat es. In t he first p lace it app ears to b e des irab le
                to g iv e ad min ist rat ive assist ance fo r the p urpose o f ascertain ing facts in relat ion to
                wh ich the ru les of the convent ion are t o be app lied . M oreover, in v iew of t he
                in creas ing int ernat ion alisat ion o f econo mic relat ions , the Cont ract ing St ates hav e a
                gro win g int erest in the recip rocal supp ly o f in fo rmat ion o n th e b asis o f wh ich
                do mestic taxat ion laws have to be ad min istered , even if there is no qu estion o f t he
                app licat ion o f any part icu lar art icle of th e Conv ent ion .
                2.     Therefo re the present A rt icle embod ies t he ru les un der wh ich in fo rmat ion may
                be exchang ed to th e widest poss ib le extent , wit h a v iew to lay ing th e p roper b asis
                fo r the imp lementat ion of th e do mest ic tax laws o f the Cont ract ing St ates and fo r t he
                app licat ion o f specific pro v isions o f th e Conv ent ion . Th e text o f th e A rt icle makes it
                clear that the exchang e o f in fo rmat ion is not rest rict ed by A rt icles 1 and 2, so t hat
                the in fo rmat ion may inclu de part icu lars a bout non -res idents and may relate to t he
                ad min istrat ion o r en fo rcement o f t axes not referred to in A rt icle 2.
                3.    The matter of ad min ist rat ive assistan ce fo r the pu rpose o f tax co llect ion is
                dealt with in A rt icle 27.
                4.     In 2002, the Co mmitt ee o n Fiscal Affa irs undertoo k a co mp reh ens ive rev iew
                of A rt icle 26 to ensure that it reflects cu rrent count ry p ract ices . That rev iew also
                took into account recen t dev elop ments such as th e Mod el Ag reement on Exchan ge
                of In fo rmat io n on Tax M att ers 1 d evelo ped by the OECD Glob al Fo ru m Wo rking
                Group on Effect ive Exchang e o f In fo rmat ion and t he id eal stand ard o f access to
                ban k in fo rmat ion as d escribed in the repo rt " Imp rov in g A ccess to Ban k In fo rmat ion
                fo r Tax Pu rposes". 2 As a resu lt , several chang es t o both the text o f th e A rt icle and
                the Co mment ary were mad e in 2005.
                4.1 Many o f the chang es th at were th en mad e to the A rt icle were not intended to
                alter its substance, bu t instead were made to remove do ubts as to its p roper
                int erpretat ion. Fo r instance, th e ch ange fro m “n ecessary ” to “fo reseeab ly relevant”
                and the insert io n of t he wo rds “to th e ad min ist rat ion o r en fo rcement ” in parag raph 1
                were made to ach ieve cons istency with the Mo del Ag reement on Exchang e o f
                In fo rmat io n on Tax Mat ters and were not in tended to alter t he effect o f t he
                prov is ion . New parag raph 4 was ad ded to inco rpo rate int o the t ext o f t he A rt icle t he
                general und erstand ing p rev iously exp ressed in the Co mmentary (cf. p arag rap h 19.6).
                New p arag raph 5 was add ed to reflect current pract ices among the vast majo rity o f
                OECD me mber co unt ries (cf. parag raph 19.10). The insert ion o f the words “or t he
                overs igh t of th e abov e” into n ew parag raph 2, on the o ther hand , constitutes a
                rev ersal o f th e p rev ious ru le.
                4.2 The Co mment ary also has been e xpand ed considerab ly. Th is e xp ans ion in part
                reflects the ad d it ion o f new parag raphs 4 and 5 to th e A rt icle. Other chang es were
                mad e to the Co mment ary to take into account recent d evelop ments and cu rrent
          __________________
        1.      Av ailable o n www.o ecd.or g/tax atio n.
        2.      OE CD, Paris, 200 0. Available on www. oecd. or g/t axat ion.



8
                                                                                                E/C.18/2005/10/Add.2


count ry p ract ices and mo re g enerally to remove do ubts as to th e p roper
int erpretat ion of th e A rt icle.
II.            Commentary on the provisi ons of the Arti cle
Paragra ph 1
5.      The main ru le con cern ing the exch ange o f in fo rmat io n is cont ained in th e first
sentence o f the paragraph . The co mpet ent autho rit ies o f the Cont ract ing Stat es shall
exchan ge such in fo rmat ion as is fo reseeab ly relevant to secu re t he co rrect
app licat ion o f the p rov is ions o f the Conven t ion o r o f the do mest ic laws o f t he
Cont ract ing Stat es co ncern ing t axes o f ev ery kin d and d escript ion imposed in these
Stat es ev en if, in th e latter case, a p art icu lar Art icle o f the Conven t ion need not be
app lied . Th e standard o f “fo reseeab le relevan ce” is inten ded to p rov id e fo r exchan ge
of informat ion in t ax matters to the widest possib le extent and , at t he same t ime, to
clarify that Co ntract ing States are not at lib ert y t o engag e in “fish ing exp ed it ions” o r
to requ est in fo rmat ion that is un likely to be relevant to the ta x affairs of a g iv en
taxpay er. Cont ract ing Stat es may ag ree to an alternat ive fo rmu lat ion o f th is standard
that is cons istent wit h the sco pe o f th e A rt icle (e.g . by rep lacin g, “fo reseeab ly
relevant ” with “necessary” o r “relev ant”). The scop e o f exchan ge o f in fo rmat ion
covers all tax matters without p rejud ice to the general ru les and legal p rov is ions
govern ing the rights o f defendants and witn esses in ju d icial p ro ceed ings. Exchan ge
of in fo rmat ion fo r crimin al t ax matt ers can also be based o n b ilat eral o r mu lt ilat eral
treat ies on mutu al leg al ass istance (to the extent they also app ly t o tax crimes ). In
order to keep t he exch ange of in fo rmat ion with in the framewo rk of the Conv en tion ,
a limitat ion to the exchan ge o f in fo rmat ion is set so that in fo rmat ion shou ld be
giv en on ly insofar as the t axat ion und er the d o mest ic t axat ion laws co ncern ed is not
cont rary to the Con vent io n.
5.1 The in fo rmat ion cov ered b y parag raph 1 is not limited to taxp ayer-sp ecific
in fo rmat ion. The co mpetent autho rit ies may also exchang e other sensit ive
in fo rmat ion related t o tax ad min ist rat io n and co mp liance i mp rovement, for examp le
ris k analys is tech n iques o r t a x avo id ance o r ev asion schemes .
5.2 The possib ilit ies o f assistan ce p rov id ed by t he A rt icle do not limit , no r are they
limit ed by, those contain ed in exist in g intern at ional ag reements or other
arrangemen ts bet ween the Cont ract ing States wh ich relat e to c o -op erat ion in t ax
matt ers. Sin ce the exchang e o f in fo rmat ion concern ing th e app licat ion o f custo m
duties h as a leg al bas is in oth er int ernat io nal instru ments, th e p rov is io ns o f these
mo re specialised instru ments will g enerally p rev ail and the e xchange o f in fo rmat ion
concern ing custo m d ut ies will not , in p ract ice, b e govern ed b y t he A rt icle.
6.   The fo llo wing e xamp les may clarify t he p rin cip le d ealt with in p ara graph 5
above. In all su ch cases informat ion can be exchang ed under paragraph 1.
7.       App licat ion of th e Conv ent ion
     a) When app ly in g Art icle 12, St ate A wh ere t he beneficiary is res ident asks St ate
        B wh ere the p ayer is res id ent, fo r in fo rmat io n concern ing the amo unt o f roy alty
        trans mitt ed.
     b) Conversely, in o rd er to grant t he exempt ion p rov ided fo r in A rt icle 12, State B
        asks St ate A whet her the recip ient o f the amo unts p aid is in fact a resident o f
        the last-ment ioned State and the b eneficial o wner o f the royalt ies.




                                                                                                                  9
E/C.18/2005/10/Add.2


                     c) Similarly, in fo rmat ion may b e needed with a v iew t o the proper allo cat ion o f
                        taxab le p ro fits bet ween associated co mp an ies in d ifferent States o r the
                        ad just ment o f the profits sho wn in the acco unts o f a perman ent estab lish ment
                        in on e St ate and in th e accounts o f the head office in the ot her St ate (A rt icles 7,
                        9, 23 A and 23 B).
                     d) In fo rmat io n may be needed fo r th e pu rposes o f app ly ing A rt icle 25.
                     e) When app ly in g Art icles 15 and 23 A , Stat e A, wh ere th e emp loy ee is res ident ,
                        in fo rms St ate B, wh ere the emp loy ment is exercised fo r mo re th an 183 d ays, o f
                        the amount exe mpted fro m taxat ion in St ate A .
                8.       Imp lementat ion of th e d o mest ic laws
                     a) A co mp any in St ate A supp lies goods to an ind epend ent co mpany in Stat e B.
                        Stat e A wishes to kn o w fro m State B what p rice the co mpany in St ate B p aid
                        fo r the goods with a v iew to a co rrect app licat ion o f the p rov is ions o f its
                        do mestic laws.
                     b) A co mp any in St ate A sells goo ds th rough a co mp any in Stat e C (poss ib ly a
                        lo w-t ax coun try ) to a co mpany in St ate B. The co mp an ies may o r may n ot be
                        associated . There is no co nvent io n bet ween St ate A an d State C, no r bet ween
                        Stat e B and Stat e C. Under th e convent ion bet ween A and B, State A , with a
                        view to ensuring t he co rrect app licat ion o f the p rov is ions o f its do mest ic laws
                        to th e pro fits mad e by the co mp any s ituat ed in its t errit ory, asks St ate B what
                        price the co mp any in St ate B paid fo r the go ods.
                     c) Stat e A , fo r the pu rpose o f t axing a co mp any s ituat ed in its t errito ry, as ks St ate
                        B, u nder th e conv ent ion bet ween A and B, fo r in fo rmat ion ab out th e p rices
                        charged by a co mpany in St ate B, o r a gro up o f co mp an ies in St at e B with
                        wh ich the co mpany in Stat e A h as no bus iness contacts in o rder t o enab le it to
                        check the p rices charged by t he co mpan y in St ate A by d irect co mparison (e.g .
                        prices ch arg ed by a co mpany o r a group o f co mpan ies in a do min ant pos it ion ).
                        It shou ld b e bo rn e in mind t hat the exch ange o f info rmat ion in th is case might
                        be a d ifficu lt and d elicate matter o wing in part icu lar to th e p rov is ions o f
                        subparag raph c) o f parag raph 3 relat ing to bus iness and other secrets.
                     d) Stat e A , fo r the pu rpose o f verify ing VAT input tax cred its claimed by a
                        co mpany sit uated in its territo ry fo r serv ices perfo rmed by a co mp any resid ent
                        in St ate B, requests confirmat ion t hat t he cost o f serv ices was p roperly ent ered
                        into th e boo ks and reco rds o f th e co mpany in State B.
                9.    The ru le laid do wn in parag raph 1 allo ws in fo rmat io n to be exch anged in th ree
                different ways:
                     a) on req uest, wit h a sp ecial case in mind , it being und erstood that the regu lar
                        sources of in fo rmat ion av ailab le un der th e int ernal taxat ion p ro cedu re shou ld
                        be relied upon in th e first p lace befo re a request fo r in fo rmat ion is mad e to the
                        other Stat e;
                     b) auto mat ically, fo r examp le when in fo rmat ion about on e o r various catego ries o f
                        in co me hav ing their sou rce in one Co nt ract ing St ate an d received in th e other
                        Cont ract ing St ate is t rans mitted systemat ically to the other State (cf. th e OECD
                        Council      Reco mmendat ion         C(81)39,    dated      5 May     1981,      ent it led
                        "Reco mmendat ion o f th e Coun cil con cern ing a standard ised fo rm fo r auto mat ic



10
                                                                                                       E/C.18/2005/10/Add.2


            exchan ges o f in fo rmat ion und er int ern at ion al ta x ag reements" , the OECD
            Council Reco mmendat ion C(92)50, dated 23 Ju ly 1992, ent it led
            "Reco mmendat ion o f the Council concern ing a standard magnet ic fo rmat fo r
            auto mat ic exch ange of t ax in fo rmat ion", th e OECD Council Reco mmend at ion
            on the use o f Tax Ident ificat ion Nu mb ers in an internat ional cont ext
            C(97)29/ FINA L d ated 13 M arch 1997, the OECD Co uncil Reco mmend at ion
            C(97)30/ FINA L dat ed 10 Ju ly 1997 ent it led “Reco mmendat ion o f t he Coun cil
            of th e OECD on th e Use o f the Rev ised St andard Mag net ic Fo rmat fo r
            Auto mat ic Exchang e o f In fo rmat ion ” an d the OECD Co uncil Reco mmend at ion
            on th e use o f th e OECD Mod el Memo randu m o f Understand ing on Auto mat ic
            Exch ange o f Informat ion fo r Tax Pu rposes C(2001)28/ FINA L); 3
        c) spontaneous ly, fo r examp le in the case o f a State h av ing acq u ired through
           certain in vest igat io ns, in fo rmat io n wh ich it supposes to be o f interest to the
           other Stat e.
      9.1 These t hree fo rms o f exch ange (o n requ est, auto mat ic and spontaneous ) may
      also be co mb ined. It shou ld also be st ressed t hat the Art icle do es no t r estrict t he
      possib ilit ies o f exch ang ing in fo rmat ion t o th ese methods and that th e Cont ract ing
      Stat es may use oth er t echn iq ues t o o btain in fo rmat ion wh ich may b e relev ant to both
      Cont ract ing Stat es such as s imu lt aneous examin at ions, tax examin at ions abroad and
      indust ry -wid e exch ange o f in fo rmat io n. Th ese tech n iques are fu lly describ ed in t he
      publicat ion " Tax In fo rmat ion Exch ange bet ween OEC D Member Co unt ries : A
      Su rvey o f Cu rrent Pract ices" 4 and can be su mmaris ed as fo llo ws :
           a s imu ltan eous examin at ion is an arrangement bet ween t wo o r mo re part ies to
            examine s imu lt aneous ly each in its o wn t errito ry, the ta x affairs o f (a)
            taxpay er(s ) in wh ich t hey have a co mmo n o r relat ed in terest, with a v iew o f
            exchan g ing any relevant in fo rmat ion wh ich th ey so obtain (see the OECD
            Council Reco mmendat ion C(92)81, d ated 23 Ju ly 1992, on an OECD Mo del
            agreement fo r the und ertakin g o f s imu ltan eous examin at ions );
           a t ax examinat ion ab road allo ws fo r th e possib ilit y to obtain in fo rmat ion
            throug h t he p resen ce o f rep resentat ives of th e co mp etent au tho rity o f the
            requ est ing Co ntract ing St ate. To the e xtent allo wed by its do mest ic law, a
            Cont ract ing St ate may permit au tho rised rep resent at iv es o f th e other
            Cont ract ing State t o enter t he first Cont ract ing Stat e to interv iew ind iv iduals o r
            examine a p erson ’s boo ks and reco rds — or to b e p resent at su ch int erv iews o r
            examinat ions carried out by th e ta x auth orit ies o f th e first Con tract in g State —
             in acco rd ance with p ro cedu res mut ually ag reed upon b y the co mpet ent
            autho rit ies . Such a requ est might arise, fo r examp le, where th e t axpay er in a
            Cont ract ing Stat e is p ermitted to keep reco rds in the other Cont ract ing State.
            Th is ty pe o f assistan ce is g ranted on a recip rocal bas is. Count ries ’ laws and
            pract ices d iffer as to the scop e of rights g rant ed t o fo reign t ax officials. Fo r
            instan ce, t here are St ates where a fo reign t ax official will b e p revent ed fro m
            any act ive part icipat io n in an inv est igat io n o r e xamin at ion o n the territo ry of a
            count ry; there are also St ates where su ch part icipat io n is o n ly possib le with the
            taxpay er ’s co nsent. Th e Jo int Council o f Eu rope/ OECD Conven t ion on Mut ual
            Ad min ist rat ive Ass istance in Ta x Matt ers specifically add resses tax
            examinat ions abroad in its Art icle 9;

 __________________
3.    OE CD Reco mm en dation s ar e av ailable o n www. o ecd.or g/tax ation .



                                                                                                                        11
E/C.18/2005/10/Add.2


                      an indust ry -wid e exchan ge o f in fo rmat ion is the exc hang e o f tax in format ion
                       especially concern ing a who le econo mic secto r (e.g. th e o il o r pharmaceut ical
                       indust ry, the ban king secto r, et c.) and n ot t axpayers in p art icu lar.
                10. The manner in wh ich t he e xchange o f in fo rmat ion agreed to in the Conv ent ion
                will finally be effected can b e decided upon b y the co mpetent autho rit ies o f t he
                Cont ract ing Stat es. Fo r examp le, Cont ract ing St ates may wish to use elect ron ic o r
                other co mmun icat ion and in fo rmat ion t echn o log ies , includ in g app rop riat e secu rity
                systems, to imp rov e the t imeliness and qualit y of exch anges o f in fo rmat ion .
                Cont ract ing St ates wh ich are req u ired , accord ing to their law, to observe d ata
                prot ect ion laws, may wish to in clude prov is ions in their b ilateral conv ent ions
                concern ing th e p rot ect io n o f personal dat a exch anged . Dat a p rot ect ion co ncerns t he
                rights and fund ament al freedo ms o f an ind iv id ual, and in part icu lar, th e right to
                priv acy, with reg ard to auto mat ic p ro cessing o f p ersonal d ata. See, fo r exa mp le, t he
                Council o f Eu ro pe Conven t ion fo r th e Protect ion o f Ind iv iduals with reg ard to
                Auto mat ic Processing o f Personal Dat a of 28 Janu ary 1981 . 5
                10.1 Befo re 2000, th e parag raph on ly autho rised th e exch ange of in fo rmat ion , and
                the use o f t he in fo rmat ion exchang ed , in relat ion to t he taxes cov ered by t he
                Convent ion und er the gen eral ru les o f A rt icle 2. As d raft ed , the parag raph d id not
                oblige the req uested State t o co mp ly with a request fo r informat ion co ncern in g t he
                impos it ion of a sales tax as such a t ax was not covered by th e Conv ent ion . The
                parag raph was then amen ded so as t o app ly to th e exch ange o f in fo rmat ion
                concern ing any tax imp osed on behalf o f the Cont ract ing St ates, o r o f their po lit ical
                subdiv is ions o r local autho rit ies , and to allo w the use o f the in fo rmat ion exchang ed
                fo r pu rposes o f the app licat ion o f all such taxes . So me Cont ract ing Stat es may not ,
                however, b e in a pos it ion to exchan ge in fo rmat io n, o r to use the in fo rmat ion
                obtained fro m a t reaty p artner, in relat ion to t axes that are not co vered by t he
                Convent ion under the g eneral ru les o f A rt icle 2. Such States are free t o restrict t he
                scope o f parag raph 1 o f the A rt icle to the taxes covered by th e Conv ent ion .
                10.2 In so me cases , a Con tract in g State may need to receive in fo rmat ion in a
                part icu lar fo rm t o sat isfy its ev ident iary o r other lega l requ irements . Such forms
                may inclu de d epos it ions o f witn esses and authent icat ed co p ies o f o rig in al reco rds.
                Cont ract ing Stat es shou ld endeavou r as far as possib le to acco mmod ate such
                requ ests. Under parag raph 3, the requ ested Stat e may d eclin e t o p rov ide t he
                in fo rmat ion in the specific fo rm requested if, fo r instance, the requested fo rm is not
                kno wn o r permitted under its law o r ad min ist rat iv e pract ice. A refusal to p rov ide t he
                in fo rmat ion in the fo rm requ ested do es not affect the o b ligat ion to p rov ide t h e
                in fo rmat ion.
                 10.3         Not h ing in th e Co nvent io n p revents t he ap p licat ion o f th e p rov is ions o f
                the A rt icle to th e exchang e o f in fo rmat ion that existed p rio r to th e ent ry into fo rce o f
                the Conv ent ion , as lo ng as th e assistan ce with respect to th is in fo rmat ion is p rov id ed
                aft er the Co nvent io n has entered int o fo rce and the p rov is ions o f t he A rt icle have
                beco me effect ive. Cont ract ing Stat es may fin d it usefu l, ho wever, to clarify t he
                extent to wh ich th e prov isions o f th e A rt icle are app licab le to such informat ion , in
                part icu lar wh en t he p rov is ions o f that co nvent ion will have effect with respect to
                taxes aris ing o r lev ied fro m a certain t ime.

          __________________
        4.      OE CD, Paris, 199 4.
        5.      See http://conv ention s.co e. int.



12
                                                                                              E/C.18/2005/10/Add.2


Paragra ph 2
11.    Recip rocal ass istance bet ween t ax ad min istrat ions is feas ib le on ly if each
ad min istrat ion is assured that th e other ad min istrat ion will treat wit h p roper
confiden ce th e in fo rmat ion wh ich it will receive in th e cou rse o f their co -op erat ion .
The con fident iality ru les of parag raph 2 app ly to all typ es of in fo rmat ion receiv ed
under p arag raph 1, in clud ing both in fo rmat ion p rov id ed in a request and in fo rmat ion
trans mitt ed in response to a requ est. Th e mainten ance o f secrecy in th e receiv ing
Cont ract ing Stat e is a matter o f do mest ic laws. It is therefore p rov id ed in paragraph
2 that in fo rmat io n co mmu n icated under the p rov is ions o f the Conv en tion shall be
treated as secret in th e receiv ing State in th e same mann er as in fo rmat ion obtain ed
under the do mest ic laws o f that St ate. San ct ions fo r th e v io lat ion o f such secrecy in
that State will be gov erned by the ad min istrat ive and penal laws o f that Stat e.
12. The in fo rmat ion obtained may b e d isclosed on ly to p ersons and autho rit ies
invo lved in th e assessment o r co llect io n o f, th e en fo rcemen t o r p rosecut ion in
respect o f, th e determin at ion o f app eals in relat ion to the ta xes with respect to wh ich
in fo rmat ion may be e xchan ged acco rd ing to th e first sentence o f parag raph 1, o r t he
overs igh t o f t he above. Th is means th at th e in fo rmat ion may also be co mmu n icat ed
to the taxp ayer, h is p ro xy o r to th e witnesses. Th is also means t hat in fo rmat io n can
be d isclosed to gov ern mental or ju d icial autho rit ies charged with decid ing wh ether
such in fo rmat ion shou ld b e released to the t axpay er, h is pro xy o r to the witnesses.
The in fo rmat ion receiv ed by a Co ntract ing Stat e may b e used by such persons o r
autho rit ies on ly fo r th e pu rposes men t ioned in p arag raph 2. Fu rthermo re,
in fo rmat ion cov ered by p arag rap h 1, wheth er t axpayer -specific o r not , shou ld no t be
disclosed to persons o r au tho rit ies not ment ion ed in p arag rap h 2, regard less o f
do mestic informat ion d isclosu re laws such as freedo m o f informat ion o r other
leg islat ion that allo ws g reat er access t o g overn mental docu ments.
12.1 In fo rmat io n can also b e d isclosed to ov ersig ht bod ies. Su ch ov ersig ht bod ies
in clude autho rit ies that superv ise t ax ad min ist rat ion and en fo rcemen t autho rit ies as
part of the g eneral ad min ist rat io n o f the Govern ment o f a Cont ract ing Stat e. In their
bilateral n egot iat ions, ho wever, Cont ract ing St ates may dep art fro m th is p rincip le
and ag ree to exclud e th e d isclosu re o f in fo rmat ion to such superv isory b od ies.
12.2 Th e informat ion receiv ed by a Con tract in g State may not b e d isclosed to a
third coun try un less there is an exp ress p rov is ion in th e b ilateral t reaty b et ween t he
Cont ract ing St ates allo win g such d isclosure.
12.3 Similarly, if the in fo rmat ion appears to b e o f value to the receiv ing State fo r
other pu rp oses than th ose referred to in p arag rap h 12, that Stat e may not use t he
in fo rmat ion fo r such oth er pu rp oses but it must reso rt to means specifically d esign ed
fo r those pu rposes (e.g. in case o f a non -fiscal crime, to a t reat y con cern ing jud icial
assistance). Ho wev er, Cont ract ing Stat es may wish to allo w the sh aring o f t ax
in fo rmat ion by t ax auth orit ies with other law en fo rcemen t agen cies and jud icial
autho rit ies on certain h igh p rio rit y matters (e.g ., to co mb at money lau ndering ,
corrup t ion , terro ris m fin ancin g). Cont ract ing States wish ing to broaden the pu rposes
fo r wh ich th ey may use in fo rmat ion exchan ged u nder th is Art icle may d o so by
add ing the fo llo wing text to the end o f p arag raph 2:
     “Not withstan d ing the fo reg o ing , in fo rmat ion receiv ed by a Co ntract ing St at e
     may be used fo r oth er pu rposes when such in fo rmat io n may b e used fo r such




                                                                                                               13
E/C.18/2005/10/Add.2


                       other pu rposes under the laws o f both States an d the co mpetent autho rit y o f the
                       supply in g Stat e autho rises such use.”
                13. As stated in p arag raph 12, the in fo rmat ion obtain ed can b e co mmu n icat ed to
                the persons and autho rit ies ment ion ed and on the bas is o f the last senten ce o f
                parag raph 2 o f the A rt icle can b e d isclosed by them in co urt sessions held in pub lic
                or in decisions wh ich reveal the name o f t he taxp ayer. On ce in fo rmat ion is used in
                public cou rt p roceed ings o r in cou rt d ecis ions an d thus rend ered pub lic, it is clear
                that fro m that mo ment such informat ion can b e quot ed fro m the cou rt files o r
                decis ions fo r ot her pu rp oses even as possib le ev iden ce. But th is does n ot mean t hat
                the p ersons and au tho rit ies ment ion ed in parag raph 2 are allo wed t o p rov ide on
                requ est add it ional in fo rma tion received . If eit her o r bo th o f th e Co ntract in g States
                object to th e in fo rma tion being made pub lic b y co urts in th is way, o r, on ce t he
                in fo rmat ion has been mad e pub lic in th is way, to th e in fo rmat ion being used fo r
                other pu rposes , b ecause th is is n ot th e no rmal p ro cedu re und er th eir do mest ic laws ,
                they shou ld stat e th is exp ressly in th eir conven t ion .

                Paragra ph 3
                14. Th is p arag raph co ntains certain limit at ions t o th e main ru le in favou r o f the
                requ ested St ate. In the first p lace, the parag raph contains the clarificat ion th at a
                Cont ract ing St ate is n ot bound to go beyond its o wn internal laws and ad min ist rat ive
                pract ice in putt ing in fo rmat ion at th e d isposal o f the o ther Co nt ract ing St ate.
                Ho wever, inte rnal prov isions concern ing ta x secrecy shou ld not b e interp reted as
                constit ut ing an obstacle to the e xchange o f in fo rmat ion under th e p resent A rt icle. As
                men t ioned above, th e auth orit ies o f the request ing Stat e are ob liged to observe
                secrecy with reg ard to in fo rmat ion received und er t h is A rt icle.
                14.1 So me co unt ries’ laws include p rocedu res fo r not ify ing the p erson who
                prov id ed the informat ion and/o r the t axpay er that is sub ject to the enqu iry p rio r to
                the supp ly of in fo rmat io n. Such not ificat ion p ro cedu res may b e an impo rt ant asp ect
                of the righ ts p rov id ed und er do mest ic law. They can help p revent mistakes (e.g . in
                cases o f mistaken ident ity) and facilitat e exch ange (by allo wing t axpay ers wh o are
                notified t o co-operat e v o luntarily with th e t ax autho rit ies in t he request ing State).
                Not ificat io n p rocedu res shou ld not , ho wever, b e app lied in a mann er that , in t he
                part icu lar circu mstances o f the requ est, wou ld frust rat e the effo rts o f th e req uest ing
                Stat e. In ot her wo rds, they shou ld not p rev ent o r undu ly delay effect ive exchan ge o f
                in fo rmat ion. Fo r inst ance, not ificat ion proced ures shou ld permit except ions fro m
                prio r not ificat ion , e.g. in cases in wh ich th e in fo rmat ion request is o f a very urg ent
                natu re o r th e n ot ificat ion is likely t o un dermine th e chan ce of su ccess o f t he
                inv estigat ion cond ucted by th e req uest ing Stat e. A Cont ract ing St ate that u nder its
                do mestic law is requ ired to not ify th e person who p rov ided th e in fo rmat ion and/o r
                the t axpay er t hat an exchang e of in fo rma t ion is p roposed shou ld in fo rm its t reaty
                part ners in writ ing t hat it h as th is requ irement and what th e co nsequen ces are fo r its
                obligat ions in relat ion to mut ual assistance. Such in fo rmat ion shou ld be p rov ided to
                the other Cont ract ing State when a conv ent ion is con clud ed and th ereaft er when ever
                the relevant ru les are mo d ified .
                15. Fu rthermo re, th e requ ested St ate do es n ot need to go so far as t o carry out
                ad min istrat ive measu res th at are no t permitt ed u nder th e laws o r p ract ice o f t he
                requ est ing St ate o r to supp ly items of in fo rmat ion t hat are not obtainab le un der t he
                laws o r in the no rmal cou rse of ad min ist ra tion o f the req uest ing State. It fo llo ws t hat



14
                                                                                                E/C.18/2005/10/Add.2


a Cont ract ing St ate cannot take adv antag e o f th e informat ion system of th e other
Cont ract ing St ate if it is wider th an its o wn system. Th us, a Stat e may refuse to
prov id e in fo rmat ion where the request ing St ate wo u ld be preclu ded by law fro m
obtain ing or prov id ing t he in fo rmat ion o r wh ere th e requ estin g St ate’s
ad min istrat ive p ract ices (e.g., failu re to p rov id e sufficient ad min istrat ive resou rces)
resu lt in a lack of recip rocit y. Ho wev er, it is recogn is ed t hat too rigo rous an
app licat ion o f the p rincip le o f recip rocity cou ld frustrate effect ive exchang e o f
in fo rmat ion and that recip rocity shou ld be int erp reted in a b ro ad a nd p rag mat ic
man ner. Different co unt ries will necessarily hav e d ifferent mechan is ms fo r
obtain ing and p rov id ing in fo rmat ion . Variat ions in pract ices and p rocedu res shou ld
not b e used as a bas is fo r den y ing a requ est u n less th e effect o f these v ariat ions
wou ld be to limit in a s ign ificant way th e requ est ing Stat e’s o verall ab ility to obt ain
and p rov id e th e in fo rmat ion if the requ esting Stat e itself received a leg it imate
requ est fro m the requ ested St ate.
15.1 The p rincip le o f recip rocity has no app licat ion wh ere the legal system o r
ad min istrat ive p ract ice o f on ly on e count ry prov ides fo r a specific p rocedu re. Fo r
instan ce, a count ry requ ested to p ro v ide in fo rmat ion cou ld not po int to the absen ce
of a ru ling reg ime in th e count ry request ing in fo rmat ion and decl ine to p rov ide
in fo rmat ion on a ru ling it has g rant ed, b ased on a recip ro city argu ment. Of cou rse,
wh ere th e requested in fo rmat ion itself is n ot obtainab le under th e laws o r in t he
normal cou rse o f the ad min ist rat ive pract ice o f the request ing St ate, a req u ested
Stat e may decline such a request .
15.2 Most count ries recogn ise u nder th eir do mest ic laws that in fo rmat ion cann ot be
obtained fro m a p erson to the e xtent th at such person can claim the p riv ilege against
self-incrimin at ion . A requ ested St ate may, therefo re, decline to p rov id e in fo rmat ion
if t he request ing State wou ld have been p recluded by its o wn self -incrimin at ion
ru les fro m ob tain ing the informat ion under s imilar circu mstan ces. In p ract ice,
however, the p riv ilege ag ainst self -incrimin at ion shou ld hav e litt le, if any,
app licat ion in con nect ion with most in fo rmat ion req uests. Th e p riv ileg e against self -
in criminat ion is p ersonal an d cannot be claimed by an ind iv idual who h imself is not
at ris k o f criminal p rosecut ion . The overwhelming majo rit y o f in fo rmat ion requ ests
seek to obt ain informat ion fro m th ird part ies such as b an ks, int ermed iaries o r t he
other party t o a cont ract and not fro m the ind iv id ual un der inv estig at ion .
Fu rthermo re, the p riv ileg e ag ainst self -incrimin at ion g enerally do es not attach to
persons other than n atu ral persons.
16. In fo rmat io n is deemed to be obtainab le in the normal cou rse o f ad min is trat ion
if it is in th e possession o f the ta x autho rit ies o r can be obt ained by th em in t he
normal p rocedu re of tax det erminat io n, wh ich may inclu de special invest ig at ions o r
special examin at ion o f th e b usin ess accounts kept b y th e t axpay er o r other persons,
prov id ed t hat the tax autho rit ies wou ld make s imilar invest ig a tions o r examin at ions
fo r their o wn pu rposes .
17. The requested Stat e is at lib erty to refuse t o g iv e in fo rmat ion in th e cases
referred to in th e parag raphs abo ve. Ho wever if it do es g ive t he requ ested
in fo rmat ion, it remains with in the framewo rk o f th e agreement on th e exchan ge
of in fo rmat ion wh ich is laid do wn in the Conv ent ion; co nsequent ly it cannot be
object ed t hat th is State has failed to observe th e ob ligat ion to secrecy.
18. If th e st ructu re o f the in fo rmat ion systems o f t wo Co ntract in g Stat es is very
different , th e cond it ions under subparagraphs a) and b) o f p arag raph 3 will lead to


                                                                                                                 15
E/C.18/2005/10/Add.2


                the resu lt that the Cont ract ing Stat es exch ange v ery litt le in fo rmat ion or perhaps
                none at all. In such a case, the Cont ract ing Stat es may find it app rop riat e to b road en
                the sco pe o f th e exchang e o f in fo rmat ion.
                18.1 Un less ot herwise agreed to by t he Cont ract ing Stat es, it can be assu med that
                the requ ested in fo rmat ion cou ld b e obt ained by th e requ est ing Stat e in a s imilar
                situat ion if th at State has not ind icated to the cont rary.
                19. In ad d it ion to th e limitat ions referred to ab ove, subparag raph c) o f parag raph 3
                contains a reservat io n con cern in g the d isclosure o f certain secret in fo rmat ion .
                Secrets ment ion ed in th is subparag raph shou ld not b e taken in too wide a sense.
                Befo re invo king th is p rov is ion , a Cont ract ing St ate shou ld carefu lly weig h if t he
                int erests o f th e taxp ayer really just ify its app licat io n. Otherwise it is clear th at too
                wid e an interp ret at ion wou ld in many cases rend er ineffect ive th e exchang e o f
                in fo rmat ion p rov id ed fo r in th e Co nvent io n. The observat ions made in p arag rap h 17
                above app ly here as well. The requested St ate in p rot ect in g the interests o f its
                taxpay ers is g iven a certain d iscret ion to refuse th e request ed in fo rmat ion , but if it
                does supp ly the in fo rmat ion deliberat e ly the taxp ayer cannot alleg e an infract ion o f
                the ru les o f secrecy.
                19.1 In its d eliberat ions regard ing th e app licat ion o f secrecy ru les, th e Cont ract ing
                Stat e shou ld also take into account the co nfident iality ru les o f p arag raph 2 o f t he
                Art icle. The d o mest ic laws and p ract ices o f th e requ esting Stat e tog ether with t he
                obligat ions imposed u nder paragraph 2, may ensure that th e in fo rmat ion canno t be
                used fo r th e typ es of unauth orised pu rposes ag ainst wh ich the t rade o r ot h er secrecy
                ru les are int ended to p rot ect . Thus , a Cont ract ing State may d ecid e to supp ly t he
                in fo rmat ion where it fin ds that th ere is no reasonab le b asis fo r assu ming t hat a
                taxpay er invo lved may suffer an y adverse consequen ces inco mp at ib le with
                in fo rmat ion exch ange.
                19.2 In most cases o f in fo rmat ion exchan ge no issue o f t rad e, bus iness o r other
                secret will arise. A t rade o r bus iness secret is g enerally understood to mean facts and
                circu mst ances th at are o f cons iderab le econo mic impo rt ance and that can be
                exp lo ited p ract ically and the unauth orised use o f wh ich may lead to serious damage
                (e.g . may lead to severe fin ancial hardsh ip ). The det ermin at ion , assess ment o r
                co llect ion o f taxes as such cou ld n ot b e cons id ered t o resu lt in serious damage.
                Financial in format ion , includ ing boo ks and reco rds , does not by its n atu re co nstit ute
                a t rade, busin ess or other secret . In certain limited cases , ho wever, the d isclosure o f
                financial in fo rmat ion might rev eal a t rade, business o r other secret. Fo r instan ce, a
                requ est fo r in fo rmat io n on certain pu rchase reco rds may raise such an issue if t he
                disclosu re o f such in fo rmat ion revealed the proprietary formu la used in t he
                man ufactu re o f a p roduct. Th e p ro tect ion o f such in fo rmat ion may also ext end to
                in fo rmat ion in th e possess ion of th ird persons . Fo r instance, a b an k might ho ld a
                pend ing patent ap p licat ion fo r safe keep ing o r a secret t rad e p rocess or formu la
                might be described in a lo an app licat ion o r in a cont ract h eld by a b an k. In such
                circu mst ances, det ails o f the t rade, business o r other secret shou ld b e excised fro m
                the d ocu men ts an d th e remain in g fin ancial informat ion exchang ed acco rd ing ly.
                19.3 A requ ested State may d ecline t o d isclose in fo rmat ion relat ing to con fid ent ial
                co mmu n icat ions b et ween atto rn eys, so licito rs o r other ad mit ted leg al rep resent at ives
                in their ro le as such and t heir clients t o th e ext ent that the co mmun icat ions are
                prot ected fro m d isclosure und er do mest ic law. Ho wev er, th e scop e o f p rotect ion
                affo rded to such co nfident ial co mmun icat ions shou ld be narro wly d efined . Su ch


16
                                                                                               E/C.18/2005/10/Add.2


prot ect ion d oes not att ach to docu ments o r reco rds deliv ered to an atto rn ey, solicito r
or other ad mit ted leg al rep resent at ive in an attempt to p rotect su ch docu ments o r
reco rds fro m d isclosu re requ ired by law. A lso , in fo rmat io n o n th e ident ity o f a
person such as a d irecto r o r beneficial o wner o f a co mpany is typ ically n ot protect ed
as a con fident ial co mmun icat ion . Wh ilst the sco pe o f p rot ect ion affo rd ed to
confident ial co mmun icat ions mig ht d iffer among stat es, it shou ld not be o verly
broad so as to h amper effect ive exchang e o f in fo rmat ion . Co mmun icat ions b et ween
atto rneys, so licito rs o r other ad mitted legal rep resent at ives an d their clients are on ly
confident ial if, and to the ext ent th at, such rep resent at ives act in their capacity as
atto rneys, so licito rs o r other ad mitted legal rep resent at ives and not in a d ifferent
capacity, such as no min ee shareho lders , t rustees , sett lo rs, co mp any d irecto rs o r
under a po wer o f atto rn ey to rep resent a co mpany in its bus iness affairs . An
assert ion that in fo rmat ion is p rot ected as a con fident ial co mmun icat ion b et ween an
atto rney, so licito r or oth er ad mitted leg al representat ive and its client shou ld be
ad jud icated exclusiv ely in the Cont ract ing St ate under th e laws o f wh ich it arises.
Thus, it is not inten ded that the courts o f th e requested Stat e shou ld ad jud icate
claims b ased on t he laws o f t he request ing Stat e.
19.4 Cont ract ing St ates wish ing to refer exp ress ly to the protect ion afforded to
confident ial co mmun icat ions bet ween a client and an atto rne y, so licito r o r other
ad mitted legal rep resentat iv e may do so by add ing the fo llo wing t ext at th e end o f
parag raph 3:
     “d) to obt ain or p rov id e informat ion wh ich wou ld reveal con fident ial
     co mmu n icat ions b et ween a client and an at torney, so licito r or oth er a d mitted
     legal rep resent at ive wh ere such co mmun icat io ns are:
      (i) produ ced fo r the pu rposes o f seeking o r p rov id ing leg al adv ice o r
     (ii) produ ced fo r t he pu rposes o f use in exist ing o r contemp lated legal
          proceed ings.”
19.5 Paragraph 3 also includes a li mitat ion with regard to in format ion wh ich
concerns th e v ital interests o f the St ate itself. To th is end , it is st ipu lated t hat
Cont ract ing Stat es do not h ave t o supp ly informat ion t he d isclosure o f wh ich wou ld
be cont rary to pu b lic po licy (o rd re pub lic). Ho wev er, th is limitat ion shou ld on ly
beco me relev ant in ext reme cases . Fo r instance, such a case cou ld arise if a t ax
inv estigat ion in t he request ing St ate were mo t ivat ed by po lit ical, racial, o r relig ious
persecut ion . The limit at ion may also be invo ked where the in fo rmat ion co nstit utes a
state secret , fo r instance sens it ive in fo rmat ion held by secret serv ices the d isclosu re
of wh ich wo u ld be cont rary to th e v ital interests o f th e requ ested Stat e. Thus, issues
of pu b lic p o licy (o rd re pub lic) rarely arise in the conte xt o f in fo rmat ion exchan ge
bet ween t reaty partn ers.
Paragra ph 4
19.6 Paragraph 4 was add ed in 2005 to deal exp licit ly with the ob ligat ion to
exchan ge in fo rmat io n in s itu at ions where th e requested in fo rmat ion is n ot need ed by
the requested St ate fo r do mest ic tax pu rp oses. Prio r to the add it io n o f parag raph 4
this o b ligat io n was not exp ressly stated in t he Art icle, but was clearly ev idenced by
the p ract ices fo llo wed by M ember co unt ries wh ich sho wed that , wh en co llect ing
in fo rmat ion requested by a t re aty partner, Cont ract ing States often use th e special
examin ing o r in vest igat ive p o wers p rov ided by th eir laws fo r pu rposes of lev y ing
their do mest ic taxes even thoug h they do not th ems elves need th e in fo rmat ion fo r




                                                                                                                17
E/C.18/2005/10/Add.2


                these pu rposes. Th is p rin cip le is also s tated in t he repo rt " Imp rov ing Access to Ban k
                In fo rmat io n fo r Tax Pu rp oses". 6
                19.7 Acco rd ing to parag raph 4, Cont ract ing Stat es must use their in fo rmat ion
                gathering measu res , ev en t hough invo ked so lely to prov ide in fo rmat ion to the other
                Cont ract ing State. The term “in fo rmat ion gathering measu res” means laws and
                ad min istrat ive o r jud icial pro cedu res that enab le a Co ntract in g State to obt ain and
                prov id e the requ ested in fo rmat ion .
                19.8 The second sent ence o f paragraph 4 makes clear th at t he ob ligat ion cont ained
                in parag raph 4 is sub ject to the limit at ions of p arag rap h 3 but also p rov ides t hat such
                limit at ions can not be const ru ed to fo rm th e bas is fo r declin ing to supp ly in fo rmat ion
                wh ere a count ry ’s laws o r p ract ices includ e a do mest ic t ax int erest requ iremen t .
                Thus, wh ilst a request ed State cannot in vo ke parag raph 3 and argue t hat u nder its
                do mestic laws or p ract ices it on ly supp lies in fo rmat ion in wh ich it has an int erest fo r
                its o wn t ax pu rposes, it may, for instance, d eclin e to supp ly th e in fo rmat ion to t h e
                extent that th e prov is ion of th e informat ion wou ld d isclose a t rade secret .
                19.9 Fo r man y count ries the co mb inat ion o f parag raph 4 and th eir do mest ic law
                prov id e a sufficient b asis fo r using their in fo rmat ion gath ering measures to obt ain
                the requested in fo rmat ion even in th e absen ce o f a do mest ic tax int erest in t he
                in fo rmat ion. Other count ries, ho wever, may wish t o clarify exp ress ly in t he
                convent ion that Cont ract ing Stat es must ensu re t hat th eir co mpetent autho rit ies have
                the n ecessary po wers to do so . Cont ract ing States wish ing to clarify th is p o int may
                rep lace p arag rap h 4 wit h th e fo llo wing te xt :
                       “4. In o rder to effectuat e the exch ange o f in fo rmat ion as prov ided in
                       parag raph 1, each Co ntract in g Stat e shall take th e necessary measures,
                       in clud ing leg is lat io n, ru le -makin g, or ad min ist rat ive arrangements, to ensu re
                       that its co mp etent autho rity has sufficient po wers under its do mest ic law to
                       obtain in fo rmat io n fo r th e exchang e o f in fo rmat ion regard less of wheth er t hat
                       Cont ract ing St ate may need such in fo r mat ion fo r its o wn t ax p urposes.”

                Paragra ph 5
                19.10         Paragraph 1 imposes a pos it iv e ob ligat ion on a Cont ract ing State t o
                exchan ge all typ es o f in fo rmat ion. Parag raph 5 is intend ed to ensu re th at t he
                limit at ions o f paragraph 3 cannot be used to preven t th e exch ange o f in fo rmat ion
                held b y b an ks, oth er financial inst itut ions, no minees, ag ents an d fidu ciaries as well
                as o wnersh ip in fo rmat ion. Wh ilst paragraph 5, wh ich was add ed in 2005, rep resents
                a ch ange in th e st ructu re o f t he A rt icle, it shou ld not be interp ret ed as suggest ing
                that the p rev ious v ersion o f th e A rt icle d id not autho rise the e xchange o f such
                in fo rmat ion. Th e v ast majo rity o f OECD member count ries already exch anged such
                in fo rmat ion u nder the p rev ious vers ion o f th e A rt icle and th e add it io n o f pa ragraph
                5 merely reflects cu rrent p ract ice.
                19.11         Paragraph 5 st ipu lates that a Cont ract ing St ate shall n ot decline to supp ly
                in fo rmat ion to a t reaty part ner solely b ecause th e in fo rmat io n is h eld by a b an k o r
                other fin ancial inst itut ion . Thus , parag raph 5 overrides parag raph 3 to th e exten t t hat
                parag raph 3 wou ld oth erwise permit a requested Cont ract ing St ate to decline to
                supply in fo rmat ion on g rounds o f ban k secrecy. The add it ion o f th is parag raph to

          __________________
        6.      OE CD, Paris, 200 0 ( at paragrap h 21 b).



18
                                                                                                      E/C.18/2005/10/Add.2


      the A rt icle reflects the int ern at ion al t rend in th is area as reflected in the Mo del
      Agreement on Exchange o f In fo rmat io n on Tax M atters 7 and as described in the
      repo rt " Imp rov ing Access to Ban k Informat ion fo r Tax Pu rposes" .8 In acco rdance
      with t hat repo rt , access t o in fo rmat ion h eld by ban ks o r oth er fin an cial inst itut ions
      may be by d irect means o r ind irect ly th roug h a jud icial o r ad min ist rat ive p ro cess.
      The p ro cedu re for ind irect access shou ld not b e so bu rdenso me and t ime -consu ming
      as to act as an imped iment to access to b an k in fo rmat ion .
      19.12         Paragraph 5 also p rov id es th at a Con tract in g State shall not declin e t o
      supply in fo rmat ion so lely because th e in fo rmat ion is held by p ersons act in g in an
      agency o r fidu ciary capacit y. Fo r instan ce, if a Cont ract ing St ate had a law under
      wh ich all in fo rmat ion held by a fidu ciary was t reated as a “p ro fessional secret”
      merely because it was h eld by a fidu ciary, such St ate cou ld n ot use such law as a
      basis for d eclin ing to prov ide th e in format ion to th e other Cont ract ing Stat e. A
      person is gen erally said to act in a “fid uciary cap acity ” when t he bus iness wh ich t he
      person t ransacts , o r the money o r p ro perty wh ich the person hand les, is not its o wn
      or fo r its o wn ben efit, but fo r the b enefit o f an other person as to wh o m the fidu ciary
      stands in a relat ion imp ly in g and neces sitat ing con fidence and t rust o n th e o ne part
      and good faith on th e oth er part , such as a t rustee. The term “agen cy” is very bro ad
      and in clud es all fo rms o f co rpo rat e serv ice prov iders (e.g . co mp any fo rmat ion
      agents, t rust co mpan ies, reg ist ered agents, lawy ers).
      19.13         Finally, p arag raph 5 states that a Co ntract in g Stat e shall no t d eclin e t o
      supply in fo rmat ion solely because it relates to an o wn ership interest in a p erson ,
      in clud ing co mpan ies and part nersh ips, found at ions o r similar organ isat io nal
      structu res . In fo rmat ion requ ests can not be declined merely because do mest ic laws o r
      pract ices may t reat o wnersh ip in fo rmat io n as a t rad e or oth er secret .
      19.14         Paragraph 5 does not p reclud e a Cont ract ing St ate fro m invo kin g
      parag raph 3 to refuse to supp ly in fo rmat io n held by a ban k, financial instit ut ion , a
      person act ing in an agen cy o r fiduciary capacity o r in fo rmat ion relat ing to
      own ership int erests. Ho wev er, such refusal must be based on reasons un related to
      the person ’s status as a b an k, finan cial inst itut ion , agent , fid uciary o r no min ee, o r
      the fact th at th e in fo rmat ion relates to o wnersh ip interests. Fo r instan ce, a legal
      rep resentat iv e act ing for a clien t may be act ing in an agen cy capacity but fo r any
      in fo rmat ion p rot ected as a con fident ial co mmun icat ion bet ween atto rneys , so licit ors
      or other ad mit ted leg al rep resent at ives and their clients , p arag rap h 3 cont inues to
      prov id e a possib le bas is fo r declin ing to supp ly the in fo rmat io n.
      19.15         The fo llo wing examp les illust rat e the app licat ion of p arag raph 5:
        a) Co mpany X o wns a majo rity o f th e stock in a subs id iary co mp any Y, and both
           co mpan ies are incorpo rated un der t he laws of Stat e A. State B is condu ct ing a
           tax exa minat ion o f business operat ions o f co mpany Y in State B. In the cou rse
           of th is e xaminat ion t he quest ion o f b oth d irect and ind irect o wnersh ip in
           co mpany Y beco mes relevant and Stat e B makes a request to St ate A fo r
           own ership in fo rmat ion o f any person in co mpany Y's chain o f o wnersh ip. In its
           rep ly Stat e A shou ld p rov id e to St ate B o wnersh ip informat io n fo r both
           co mpany X and Y.

 __________________
7.    Av ailable o n www.o ecd.or g/tax atio n
8.    OE CD, Paris, 200 0.



                                                                                                                       19
E/C.18/2005/10/Add.2


                     b) An ind iv idual sub ject to tax in St ate A maintains a ban k account with Ban k B
                        in State B. St ate A is examin ing the inco me t ax retu rn o f th e ind iv idu al and
                        makes a request to Stat e B fo r all ban k account in co me and asset in fo rmat ion
                        held by Ban k B in o rd er to d etermin e wheth er there were dep osits o f unta xed
                        earned inco me. St ate B shou ld p rov ide the requested ban k in fo rmat ion to St ate
                        A.
                                              Ob servat io ns o n t he Co mmenta ry
                20. Japan wishes to ind icat e th at with respect to parag raph 11 above, it wou ld be
                difficu lt fo r Japan , in v iew o f its strict do mest ic laws and ad min ist ra tiv e p ract ice as
                to th e p ro cedu re to make pub lic the in fo rmat ion obtained und er th e do mest ic laws ,
                to prov ide informat ion requested un less a request ing Stat e h as co mparab le d o mest ic
                laws an d ad min ist rat iv e p ract ice as to th is p rocedu re.
                21. In connect ion with p arag raph 15.1, Greece wishes to clarify th at acco rd ing to
                Art icle 28 o f th e Greek Constitut ion intern at ion al t ax treat ies are app lied un der t he
                terms o f recip rocit y.
                22.     [Deleted ]
                                                  Reservatio ns on t he A rticl e
                23. Aust ria reserv es t he right no t to inclu de parag raph 5 in its convent ions.
                Ho wever, Aust ria is autho rised to exch ange in fo rmat ion held by a b an k o r other
                financial inst itut ion wh ere such informat ion is requ ested with in the framework o f a
                crimin al inv est igat io n wh ich is carried on in the request in g St ate concern ing t he
                co mmit ment o f tax fraud .
                24. Switzerl and reserves its p osit ion on parag raphs 1 and 5. It will p ropose to limit
                the scop e o f th is A rt icle to in fo rmat ion necessary fo r carry ing out the p rov is ions o f
                the Conv ent ion . Th is reserv at ion shall not app ly in cases in vo lv ing acts o f fraud
                subject to imp rison ment acco rd ing to the laws o f both Con tract in g Stat es.
                25. Belgiu m and Luxembou rg reserve th e righ t no t to in clude p arag raph 5 in their
                convent ions.


                             NON-MEMB ER CO UN TR IES' POS IT IONS ON ARTICLE 26
                                          AND ITS COMMENTARY

                                                    Posi tio ns o n t he Arti cle

                1.    Bra zil reserv es th e right not to in clude th e wo rd “pu b lic” in t he last sentence
                of paragraph 2 in its co nvent io ns.
                2.      [Deleted ]
                2.1 Mo rocco and Thailand reserv e th e righ t not to include the wo rds " The
                exchan ge o f informat ion is no t rest ricted by A rt icles 1 and 2" in p arag raph 1 .
                2.2 Malaysia and Thailand reserv e the right not t o includ e parag raph 4 in their
                convent ions.
                2.3 Bra zil , Malaysia , Ro mania , S erbia and Mont eneg ro and Thai land reserv e the
                right not to in clude parag raph 5 in their con vent io ns.



20
                                                                                      E/C.18/2005/10/Add.2


                             Posi tio ns o n t he Co mmentary

3.   [Deleted ]
4.    Malaysia wishes to ind icate th at with res pect t o p arag raph 11 o f the
Co mmentary, it wou ld be d ifficu lt for it, in v iew o f its strict do mest ic laws and
ad min istrat ive p ract ice as to the p ro cedu re to make pub lic certain in fo rmat ion
obtained un der the do mest ic laws, to p rov ide in fo rmat ion request ed.




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