OECD heralds 'end of era' for offshore secrecy

The Organisation for Economic Cooperation and Development (OECD) proclaims an end to banking secrecy as it unveils an enforcement mechanism to ensure countries keep their promises about tax evasion.

The OECD plans to introduce a global process to monitor member jurisdictions' implementation of tax information exchange agreements (TIEAs).

The move, which was agreed at the OECD's global forum on tax information in Mexico this week, is in response to wide-spread critisicm of the effectiveness of TIEAs as OECD members have rushed to sign agreements under the threat of sanctions from more powerful rivals.

The OECD says it is looking at speeding up the signing of TIEAs by allowing countries to sign multilateral treaties and offering technical support to smaller jurisdictions.

The Mexico forum's findings will be debated by G20 finance ministers in London this weekend and then submitted to the G20 leaders' summit in Pittsburgh later this month.

Angel Gurria, secretary general at the OECD, says the agreement to monitor jurisdictions marks "a revolution that confirms the end of the era of banking secrecy as a shield for tax havens".

"What has happened in the tax area over the past 10 months is nothing less than a revolution," he says.

He believes OECD member jurisdictions' "courageous decisions" and political leadership of the G20 has spurred progress towards better transparency and exchange of information.

Taxpayers have been able to hide income and assets from the taxman for decades by abusing bank secrecy and exploiting impediments to information exchange, according to Gurria.

"This will no longer be the case," he adds.

Gurria believes cooperation between tax administrations is fast becoming the rule and the threshold for tax evasion has fallen to zero.

"In the context of the crisis, governments need tax revenue and citizens need to be reassured that the tax burden is being fairly shared," he says.

"We have delivered more in 10 months than we achieved in more than 10 years."