At the OECD Headquarters in Paris, Biljana Peranović, Director General of the Directorate for Tax and Customs of Montenegro, signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters (the BEPS Convention). Montenegro is the 130th jurisdiction to join the Convention. The Convention enables jurisdictions to engage in a wide range of mutual assistance in tax matters: exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers’ rights.
The Convention is the primary instrument for swift implementation of the Standard for Automatic Exchange of Financial Account Information in Tax Matters (CRS). The CRS – developed by the OECD and G20 countries – enables more than 100 jurisdictions to automatically exchange offshore financial account information.
Beyond the exchange of information on request and the automatic exchange pursuant to the Standard, the Convention is also a powerful tool in the fight against illicit financial flows and is a key instrument for the implementation of the transparency standards of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.
View the 130 jurisdictions participating in the Convention: www.oecd.org/tax/exchange-of-tax-information/Status_of_convention.pdf
- Base erosion and profit shifting
Tax planning strategies that exploit loopholes in the international tax system to artificially shift profits to places where there is little or no economic activity or taxation, resulting in little or no overall corporate tax being paid.
- Tax avoidance
Using legal instruments in order to pay the lowest amount of tax possible. It is different from tax evasion, which consists of illegal and deliberate acts to pay less in taxes or even no taxes at all.
- Tax ruling
A written statement issued by a tax authority, setting out in advance how a corporation’s tax will be calculated and which tax provisions will be used. They are legal but may, under the EU rules, involve state aid and thus be subject to scrutiny from the European Commission. Tax rulings have sometimes been criticized when multinationals are found to pay less in taxes than ordinary tax payers.
- Tax havens
Countries or jurisdictions allowing foreign companies and individuals who simply register there to pay little or no taxes. Tax havens also guarantee not to divulge the identity of their “customers”.