Convention on Mutual Administrative Assistance in Tax Matters

• Convention on Mutual Administrative assistance in Tax Matters signed already by 146 countries
• The agreement covers:
  1. Exchange of information
  2. Assistance in recovery of taxes

• Service of documents

• The agreement covers following taxes:
  1. Taxes on income or profits
  2. Taxes on capital gains

• Taxes on net wealth

• Information exchanged is information, which is foreseeably relevant for the administration or enforcement of their domestic laws concerning the taxes covered.

• Information is exchanged under one of three methods:
  1. Exchange of Information upon request – (based on specific request made)
  2. Automatic exchange of information (on matters to be determined by mutual agreement of the two parties)

• Spontaneous exchange of information (under certain conditions) 

• Spontaneous exchange of information
  1. The first state may have grounds to believe that there would be losses of taxes in the other state.
  2. A person liable to tax gets exemption/reduction from taxes in one state which could result in increased taxes in the other state

• Multiple jurisdictions are imposed between the two states which would result in savings in taxes

1. Artificial transfers of profits between group companies

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