handbook-tb

Diane Ring4.3.4.3.1 ReciprocityThe CAA is premised on reciprocity between or among signatories.Although countries may sign a CAA in advance of being ready to participate,the agreement takes effect only when they are in fact preparedto share information reciprocally. 51 The only option for non-reciprocalparticipation in the CRS and CAA is provided for countries which do“not need to be reciprocal” (for example, because one of the jurisdictionsdoes not have an income tax). 52 This has been characterized bysome commentators as intended to facilitate automatic exchange ofinformation from tax havens. There is no current model or provisionallowing for non-reciprocal automatic exchange of information with(or more precisely, to) a developing country (that is to say, providinginformation to that developing country without receiving informationin return). The absence of such an alternative may render the currentCRS and CAA out of reach of developing countries that cannotcurrently commit to or meet the standards for domestic collectionof the required tax information (that is, the domestic law provisionsand enforcement of data collection from reporting financial entities)and the processing and transmission of the information (inside thetax administration). These developing countries could benefit fromthe receipt of information under automatic information exchange,however. The only requirement they would need to meet would bethe protection of taxpayer data. Even if the developing country werenot yet able to make maximum use of the bulk data it receives, thecountry could nonetheless begin to improve tax enforcement withthe information.If non-reciprocity with developing countries were permitted, itcould be managed in a gradual manner. The country could committo meeting established benchmarks for domestic information collectionand processing. While the country was meeting the benchmarks,it could receive information under the CRS and CAA, with the goalbeing full and reciprocal participation. The loss for the other countryduring this period of time would likely be minimal. Developing countriesare typically not the financial destinations of major tax evaders,51See, for example, OECD, Standard for Automatic Exchange of FinancialAccount Information in Tax Matters, supra note 47, at 27.52Ibid., at 223.550