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Beneficial ownership

One of the ways to discourage tax avoidance and evasion is by mandating entities to disclose who are the beneficial owners (i) in the shareholding structure; and (ii) of income transferred cross-border. That may be done through the modification of bilateral income tax treaties, and through the inclusion of anti-avoidance provisions in the domestic tax legislation. As previously discussed, at international level, the OECD has mandated the development of a beneficial ownership registry, as part of its joint G20/OECD mandate to increase transparency standards through the Global Forum. The registry would be a forum in which for tax administrations to exchange beneficial ownership information between them, and would not be publicly available for consultation.

As part of the G20 mandate to the OECD, 54 countries have committed to the initiative for automatic sharing of beneficial ownership information, announced in April 2016. The G20 requested FATF and the Global Forum to produce proposals on ways to improve the implementation international standards on transparency, including the availability of beneficial ownership information and its international exchange.  These proposals were presented to the G20 in October 2016 and further progress will be reported to the G20 in 2017.

There have been several regional and international propositions for the development of a beneficial ownership registry, the most advanced of which is the European Union’s beneficial ownership registry – a confidential database only available to tax administrations. In implementing the Directive, some European States have decided to unilaterally increase the reporting threshold and publicly disclose beneficial ownership information from the reporting institutions.

Additionally, the EU’s Anti-Money Laundering Directive (AMLD) follows the Financial Action Task Force (FATF) recommendation for countries to consider measures to facilitate access to beneficial ownership and control information by financial institutions and designated non-financial businesses and professions (DNFBPs). The main innovation brought about by the EU AMLD is the creation of beneficial owners' national central registers. The Directive foresees the basic rules for implementation of new rules by the Member States. EU Member States have until June 2017 at the latest, to implement beneficial ownership national registries. The information contained in national registers, can be exchanged with tax administrations from other Member States but is not to be made public.