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EOIR is an exchange of information on a specific case Countries continue to negotiate arrangements for the
being requested of one Competent Authority from another exchange of CbC reports.
Competent Authority because the information is clearly
related to the tax laws and regulations of the requesting Off-shore centers before & after AEOI?
country. The requesting country might ask an information
i.e. financial, legal (substance), accountancy or ownership In recent years, offshore financial centers have increased and
(beneficial owners). Even if the requesting country these centers continue to grow. According to BCG's Global
already has the information, the requesting country in Wealth Report 2018, global off-shore wealth amounted to US
no circumstances can deny it on the grounds of banking $ 8.3 trillion in 2017 with a growth of 6% compared to the
secrecy. However, the requesting country should guarantee previous year. In the next 5 years, the average of offshore
full confidentiality in the handling of the information that wealth is expected to grow by around 5%.
transmitted by EIOR. 139 members have committed to
implementing the international standard on EOIR. The comparative data of year 2015 and 2018 are as follows:

On the other hand, AEOI is an automatic way of chancing 2015 - 2018 Offshore Center Comparison
information and means a periodic and systematic exchange (Trillion USD)
of information on a nonspecific case being requested of one 3.0
Competent Authority from another Competent Authority 2.5
based on international treaties and other agreements. In this 2.0
case, paying entities or institutions collect the information at 1.5
the source and transmit it in accordance with standardized 1.0
and secure protocols between Competent Authorities. On the 0.5
other hand, 100 countries and jurisdictions have committed 0.0 Switzerland Channel UK Singapore USA Luxembourg Hong Kong
to implementing the standard (Common Reporting Standard) Islands
on AEOI. & Dublin
2015 2018
For AEOI purpose, OECD developed and approved the According to the report, historically offshore centers have
Common Reporting Standard (“CRS”) to meet the G20 been preferred for tax advantages. However, the regulations
request. CRS covers a variety of “financial institutions” that entered into force in the last 10 years have reduced
including not only traditional banks but also custodial offshore interest. “Tax transparency regulations” are the
institutions, certain insurance companies and investment most important factor in decreasing this interest.
vehicles i.e. funds.
The above table explains why the German government in the
Additionally, the standard also covers variety of customers past years had purchased the financial account information
i.e. individuals, entities, trusts and a requirement to look- of German citizens in Swiss banks. After AEOI, the wealth
through certain entities to report the beneficial owners. in major offshore centers decreased around 27% from 8,4
Finally, the information subject to exchange includes variety trillion USD in 2015 to 6,1 trillion USD in 2018 and AEOI
of financial account information for those customers i.e. as may have an impact on this decrease.
account balances and investment income.
Expectations from automatic exchange of
According to the OECD Secretary’s General Report of
December 2018 to the G20 Finance Ministers in Buenos information
Aires, more than 85 countries have initiated more than 4500
reciprocal “AEOI” exchanges under CRS. AEOI will globally contribute to the integrity of the
international financial and tax systems. In addition to that it
Transparency in transfer pricing: CbC reporting will also support other global transparency agendas i.e. anti-
money laundering and anti-corruption.

BEPS actions covers to “automatic exchange in transfer According to the OECD Secretary’s General Report of
pricing”, which the action 13 called “Country-by-Country December 2018 to the G20 Finance Ministers in Buenos
Reporting”. According to the action 13, the participating tax Aires, countries have already collected approximately 93
authorities will automatically exchange key indicators i.e. billion EUR in unbudgeted tax revenue because of voluntary
such as profits, taxes paid, employees and assets of each disclosure programs and other similar initiatives from 2009
entity of Multinational Enterprise Groups with each other.
to June 2018 due to the first exchanges with AOEI.
By using these key indicators, tax authorities can make risk
assessments not only for the transfer pricing arrangements How can tax functions respond?
but also BEPS-related risks to evaluate a tax audit basis.
Action 13 is one of the minimum standards of BEPS and The ancient Chinese curse is “May you live in interesting
Turkey committed to implement the minimum standards of times” and the meaning of “interesting” is used for
the BEPS including the action 13. “volatility, turbulence and uncertainty”. In today’s
environment, taxpayers live in interesting times and they are
According to OECD, there are over 2000 bilateral exchange surrounded by “transparency”, “regulation”, “anti avoidance
relationships activated with respect to jurisdictions rules” and “disclosures” in everywhere.
committed to exchanging CbC reports as of April 2019.

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