El Salvador signs multilateral convention to fight tax evasion

By on 02/06/2015
Signing the convention: Francisco Galindo Vélez, ambassador of El Salvador to France (left), and William Danvers, OECD deputy secretary-general (right). Standing: Carlos Cáceres, El Salvador’s minister for finance and OECD secretary-general Angel Gurria. Photo by OECD

El Salvador has become the latest country joining international efforts to fight offshore tax evasion.

The Central American nation yesterday signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.  In doing so, El Salvador has become the 86th member worldwide, the eighth Latin American country and the third member of the Central American Common Market – after Costa Rica and Guatemala – to join the convention.

The convention is an agreement designed to facilitate international co-operation among tax authorities to improve their ability to tackle tax evasion and avoidance and ensure full implementation of their national tax laws, while respecting the fundamental rights of taxpayers.

It provides for all possible forms of administrative co-operation between states in the assessment and collection of taxes. Including, automatic exchange of information, simultaneous tax examinations and international assistance in the collection of tax debts.

It was developed jointly by the Council of Europe and the OECD and opened for signature by the member states of both organisations in 1988.  It was amended in 2010 to respond to the call by the 2009 G20 Summit in London to ensure that developing countries could benefit from the new more transparent environment.

Currently more than 60 countries have signed the convention.  This includes G20 nations such as the UK, Germany and Iceland, all BRICs, almost all OECD countries, major financial centres and a growing number of developing countries.

El Salvador’s ambassador to France, Francisco Galindo Vélez, signed the document in the presence of Carlos Cáceres, El Salvador’s minister for finance, and OECD secretary-general Angel Gurría.

Gurría said that the event “sends yet another strong message to the international community about El Salvador’s commitment to fighting international tax avoidance and evasion by increasing transparency” and added that the OECD “looks forward to its rapid entry into force so that El Salvador can seize this opportunity to build trust in its institutions and reinforce the rule of law.”

Since the G20 put financial sector transparency and tax evasion on the international agenda in 2009, the convention has become a central element of international cooperation efforts.

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World – the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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