On 28.10.2016, in the OECD headquarters in Paris, Mr. Andrew Haig who is Cook Islands Internal Tax Collector, signed the multilateral convention as for mutual administrative assistance in tax matters.
As of today, this Convention is the most powerful instrument for international tax cooperation.
It provides all forms of administrative assistance in tax matters such as exchange of information on request, spontaneous exchange, automatic exchange, the ability to conduct tax audits abroad, simultaneous tax audits and assistance in tax collection. It guarantees the protection of taxpayers’ rights.
This convention, along with the Multilateral Agreement on the Automatic Exchange of Tax Information that the Cook Islands signed in October 2015, will enable the Cook Islands to meet its obligations to exchange such information by 2018.
The convention can also be used as a prompt implementation of the OECD/G20 transparency measures under the BEPS – Base Erosion Profit Shifting project. The essence of it is the definition of 15 criteria for income generation, on the basis of which it can be concluded whether there has been a non-payment or partial erosion of the tax base.
The project provides the exchange of tax information from country to country, as well as collaborative decision making in accordance with the BEPS project. The Convention is also a powerful tool in the fight against illegitimate financial flows.
The convention was developed jointly by the OECD and the Council of Europe in 1988 and amended in 2010 in response to a bidding from the G20 to bring it in line with international standards for the exchange of information and open it up to all countries, thus ensuring the development of the country and enabling them to benefit from more transparent environment.