Consequences of OECD Initiatives on EU Financial Markets

This article discusses the possible consequences of new OECD anti-tax evasion and anti-tax avoidance initiatives for the development of EU financial markets. It explores the impact of improved cooperation between anti-corruption authorities and tax authorities, the use of technology in detecting tax fraud and evasion, and the suppression of electronic sales on tax evasion. It also examines the influence of the BEPS Action Plan and the Common Reporting Standard on the exchange of information on tax matters.

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Running Head: EU AND GLOBAL FINANCIAL MARKETS
EU and Global Financial Markets
Student’s Name
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EU AND GLOBAL FINANCIAL MARKETS
Introduction
OECD has been a major [player of the global tax architecture, the main objective of this
body is to fight against the evasion of tax. Moreover, it is committed to ending bank secrecy as
well as tax haves and addressing the multinational corporation massive tax avoidance. The
OECD global transparency and intentional conference are aimed at the exchange of tax
information. The tax transparency and exchange global forum has been a critical tool in the
achievement of the remarkable progress of the information exchange international and tax
transparency (Common Reporting Standard (CRS) - Organisation for Economic Co-operation
and Development, n.d). The OECD global forum kin response to G20 request was restructured in
September 2009, with an aim of strengthening the implementation anti-tax evasion standards.
Furthermore, the restructure was aimed at ambitious peer review process launch of
national tax transparency registration. The cross border tax evasion fight and Tax transparency,
have been the major topics of more than seven G20 summit including summits in Cannes,
London, and Washington. OECD has developed several anti-tax evasion initiatives which have
been crucial in the fight against cross-boarders tax evasion as well as tax transparency in more
than a hundred and thirty countries (OECD International Academy for Tax Crime Investigation,
n.d.). Among the initiatives includes; improving corporation between anti-corruption authorities
and anti-tax authorities, interagency corporations in the fight against tax crimes, embracing
technology tools in fighting tax fraud and tax evasion and suppression of electronic sales.
On the other hand, (CRS) common reporting standard and BEPS Action Plan have an
influence on the information sharing and exchange on tax matters. The Common reporting
standard is committed to proving cross border tax information. The CRS includes; the common

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reporting standard, the common reporting standard XML Schema user guide, the commentaries
on CRS and CAA and finally a conceptual legal framework of competent authority agreement
(Base erosion and profit shifting, n.d.). The base erosion and profit shifting (BEPS), is a strategy
on tax planning which is multinational applicable (Common Reporting Standard (CRS) -
Organisation for Economic Co-operation and Development, n.d). This strategy is used in shifting
profits from the jurisdictions of higher tax to the jurisdictions of lower tax. The influence of this
strategy is the erosion of the tax base.
1. Possible consequences of new OECD anti-tax evasion and anti-tax avoidance
initiatives for the European Union financial markets development
One of the OECD's initiatives is to improve the corporation between anti-corruption
authorities and tax authorities and in suppressing tax crime and corruption. Although tax and
corruption crimes are viewed as distinct crimes, they are linked intrinsically.ie criminals evade
the income reporting and filing income reports which are gained from corrupt activities for tax
purposes. Also, a society where corruption is prevalent, tax evasion is fostered. The increased
corporation of the tax authority and anti-corruption authority will reduce the hidden financial
information which most business cartels use to evade their tax obligations. Moreover, the
tracking of income and corruption cases will enable the recovery of evaded tax as well as
corrupted money.
Technology is becoming an indispensable tool in the reduction of tax evasion as well as
corruption for both tax authority and anti-corruption authority, the OECD has embraced the use
of the recent technology as a tool to detect tax fraud and evasion cases. Although the new
technology can be an easier way for taxpayers to develop sophisticated tax evasion methods, it

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has been implemented by several countries and as a result, more tax evasion cases have been
detected and billions of Euros recovered in tax revenues.
At some point in the sale system, the use of electronic sales suppression techniques is a
threat to tax evasion development. The use of electronic sales supplies technique has got certain
problems in relation to tax evasion. This is due to the sales and profits under-
reporting .suppression can be achieved through the failure of cash sale ringing in the cash
register with the owner kept cash, or through, the diversion of cash sales to another cash register
kept “off the book” (Tax and crime, n.d.). The consequence of this suppression is that tax
authority will be able to recover and track the income of every taxpayer and avoid tax evasion
and also allow the flow of information.
2. Influence of BEPS Actions Plan and Common Reporting Standard (CRS) on the
exchange of information on tax matters
CRS is one of the major influences in OECD; this is because the body is mandated in the
provision of tax balances between the higher tax jurisdictions to lower tax jurisdictions. This
body was approved in July 2014 with an aim of comparing and fighting for financial information
exchange among jurisdictions. All the financial institution of OECD complied countries are
required by the common reporting standard to give a report of all their taxpayers covered as well
as the different type of accounts covered (Common Reporting Standard (CRS) - Organisation for
Economic Co-operation and Development, n.d). This body also provides for common due
diligence which the taxpayers are expected to follow.
Base erosion and; profit shifting is also a great influence of the operations of OCED, this
is because the strategy seeks the tax balance for all jurisdictions of the European Union. The

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strategy seeks at the elimination of tax havens which exist in several nations of the European
Union. BEPS tools are in most cases associated with the United States technology as well as
multinational life science (Base erosion and profit shifting, n.d.). BEPS seeks at the elimination
of tax report sharing by the European Union nation this is achieved through the setting of stiff
rules which allows country by country reporting and also the introduction of public accounts
filling by the tax havens in the multinational.
Conclusion
In conclusion, the OECD tax avoidance and anti-tax compliance initiatives have got
several consequences which are positive and negative in nature. Among the consequences of the
initiatives includes; the corporation of the tax authority and anti-corruption authority which will
help in the avoidance of tax in all manner. Moreover, the use of technology as an initiative will
be of great value as countries will be able to track all the avoidance cases as well as corruption.
Finally, both CRS and BEPS are of great impact to the OECD as they seek to provide for
financial information sharing as well as tax balancing and the elimination of tax heavens.

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References
Base erosion and profit shifting. (n.d.). Retrieved from http://www.oecd.org/tax/beps/
CommonReporting Standard (CRS) - Organisation for Economic Co-operation and
Development. (n.d.). Retrieved from
http://www.oecd.org/tax/automatic-exchange/common
reporting-standard/
OECD International Academy for Tax Crime Investigation. (n.d.). Retrieved from
http://www.oecd.org/ctp/crime/tax-crime-academy.htm
Tax and crime. (n.d.). Retrieved from http://www.oecd.org/ctp/crime/