Global forum on transparency and exchange of information for tax purposes peer reviews : the Former Yugoslav Republic of Macedonia2011 : phase 1.

86 Pages·2011·2.107 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: FORMER
YUGOSLAV REPUBLIC OF MACEDONIA
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the Peer Review Report
multilateral framework within which work in the area of tax transparency and exchange P
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of information is carried out by over 100 jurisdictions which participate in the work of the er R Phase 1
Global Forum on an equal footing. e
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The Global Forum is charged with in-depth monitoring and peer review of the w Legal and Regulatory Framework
implementation of the standards of transparency and exchange of information for tax Re
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purposes. These standards are primarily refl ected in the 2002 OECD Model Agreement o
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on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the t P FORMER YUGOSLAV REPUBLIC
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OECD Model Tax Convention on Income and on Capital and its commentary as updated in as
e OF MACEDONIA
2004, which has been incorporated in the UN Model Tax Convention. 1
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The standards provide for international exchange on request of foreseeably relevant eg
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information for the administration or enforcement of the domestic tax laws of a requesting l a
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information nd
must be provided, including bank information and information held by fi duciaries, Re
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regardless of the existence of a domestic tax interest or the application of a dual u
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criminality standard. to
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as relevant to its work, are being reviewed. This process is undertaken in two phases. ra
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Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for ew
the exchange of information, while Phase 2 reviews look at the practical implementation of ork
that framework. Some Global Forum members are undergoing combined – Phase 1 plus F
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Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the R
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international standards of transparency and exchange of information for tax purposes. E
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All review reports are published once approved by the Global Forum and they thus Y
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represent agreed Global Forum reports. G
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For more information on the Global Forum for Transparency and Exchange of S
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Information for Tax Purposes and for copies of the published review reports, please visit V
www.oecd.org/tax/transparency and www.eoi-tax.org. RE
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Please cite this publication as: LIC
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer O
F
Reviews: Former Yugoslav Republic of Macedonia 2011: Phase 1: Legal and Regulatory Framework, M
A
Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviews, C
E
OECD Publishing. D
O
http://dx.doi.org/10.1787/9789264117792-en N
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23 2011 41 1 P
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Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
The Former Yugoslav
Republic of Macedonia
2011
PHASE 1
October 2011
(reflecting the legal and regulatory framework
as at May 2011)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.
This document and any map included herein are without prejudice to the status of
or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
Reviews: The Former Yugoslav Republic of Macedonia (FYROM) 2011: Phase 1: Legal and Regulatory
Framework, Global Forum on Transparency and Exchange of Information for Tax Purposes:
Peer Reviews, OECD Publishing.
http://dx.doi.org/10.1787/9789264117792-en
ISBN 978-92-64-11778-5 (print)
ISBN 978-92-64-11779-2 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)
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3
TABLE OF CONTENTS –
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Information and methodology used for the peer review of the Former Yugoslav
Republic of Macedonia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A.1.Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A.2.Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
A.3.Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. Access to information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
B.1.Competent Authority’s ability to obtain and provide information. . . . . . . . 48
B.2.Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 55
C. Exchanging information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
C.1.Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
C.2.Exchange-of-information mechanisms with all relevant partners. . . . . . . . 66
C.3.Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
C.4.Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 69
C.5.Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 70
PEER REVIEW REPORT – PHASE1 – THE FORMER YUGOSLAV REPUBLIC OFMACEDONIA © OECD 2011
4
– TABLE OF CONTENTS
Summary of Determinations andFactorsUnderlyingRecommendations. . . . 73
Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 77
Annex 2: List of all Exchange-of-Information Mechanisms inForce. . . . . . . . 79
Annex 3: List of all Laws, Regulations andOtherRelevantMaterial . . . . . . . 81
PEER REVIEW REPORT – PHASE1 – THE FORMER YUGOSLAV REPUBLIC OFMACEDONIA © OECD 2011
5
ABOUT THE GLOBAL FORUM –
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 100 jurisdic-
tions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of
the implementation of the international standards of transparency and exchange
of information for tax purposes.These standards are primarily reflected in the
2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article26 of the OECDModel Tax Convention on
Income and on Capital and its commentary as updated in 2004. These stand-
ards have also been incorporated into the UNModel Tax Convention.
The standards provide for international exchange on request of foreseeably
relevant information for the administration or enforcement of the domestic
tax laws of a requesting party. Fishing expeditions are not authorised but all
foreseeably relevant information must be provided, including bank information
and information held by fiduciaries, regardless of the existence of a domestic
tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed. This process is
undertaken in two phases. Phase1 reviews assess the quality of a jurisdiction’s
legal and regulatory framework for the exchange of information, while Phase2
reviews look at the practical implementation of that framework. Some Global
Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews.
The Global Forum has also put in place a process for supplementary reports
to follow-up on recommendations, as well as for the ongoing monitoring of
jurisdictions following the conclusion of a review.The ultimate goal is to help
jurisdictions to effectively implement the international standards of transpar-
ency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and
they thus represent agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the published
review reports, please refer to www.oecd.org/tax/transparency.
PEER REVIEW REPORT – PHASE1 – THE FORMER YUGOSLAV REPUBLIC OFMACEDONIA © OECD 2011

7
EXECUTIVE SUMMARY –
Executive Summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in the Former Yugoslav Republic
of Macedonia (hereinafter “the Republic”).The international standard, which
is set out in the Global Forum’s Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information, is concerned
with the availability of relevant information within a jurisdiction, the compe-
tent authority’s ability to gain timely access to that information, and in turn,
whether that information can be effectively exchanged with its exchange of
information (EOI) partners.
2. The Republic was identified in September 2010 as a jurisdiction
that is relevant to the Global Forum’s work in particular because of adver-
tising itself as an investment center attracting non residents and was added
to the Global Forum’s Schedule of Reviews for the first quarter of 2011.
Subsequently invited to join the Global Forum, the Republic responded posi-
tively and in January 2011 became the Forum’s 97th member. The Republic
has participated co-operatively throughout the review process.
3. The Republic hosts a small economy, recording a real gross domes-
tic product in 2009 of about USD 9 billion. The Republic functions as an
open-market economy which is highly integrated into international trade.In
recent years, the Republic has changed its legal framework substantially in
an effort to attract foreign investment. In this context, special emphasis has
been given to taxation, with the implementation of a flat tax at 10%. Over
the past two years, the Republic also strengthened its anti-money laundering
legislative framework to address criticisms emerging from a 2008 report by
MONEYVAL.1
1. MONEYVAL is the Council of Europe’s Committee of Experts on the Evaluation
of Anti-Money Laundering Measures and the Financing of Terrorism.Third Round
Detailed Assessment Report of The Former Yugoslav Republic of Macedonia
(MONEYVAL (2008) 21); www.coe.int/t/dghl/monitoring/moneyval/Evaluations/
round3/MONEYVAL(2008)21Rep-MK3_en.pdf.
PEER REVIEW REPORT – PHASE1 – THE FORMER YUGOSLAV REPUBLIC OFMACEDONIA © OECD 2011
8
– EXECUTIVE SUMMARY
4. Generally, the Republic has an adequate legal and regulatory frame-
work for transparency and exchange of information for tax purposes.In most
cases, the Republic’s extensive registration requirements ensure that accurate,
adequate and reasonably current information concerning legal ownership and
control of legal entities is maintained in the Republic.Bank information and
accounting records are also required to be maintained. The Republic’s tax
authorities have powers to obtain bank, ownership, identity and accounting
records and have measures to compel the production of such information.
However, the Republic’s authorities are required to first approach the taxpayer
in all circumstances and this equals to an advance notification requirement.
5. Confidentiality provisions applying to notaries public, attorneys, tax
advisers and auditors do not prevent tax authorities from accessing docu-
ments held on behalf of their clients.Whilst there are no sectoral laws regu-
lating auditors and tax advisers, all these professionals are required to comply
with anti-money laundering / counter-terrorist financing (AML/CTF) laws.
6. Some parts of the Republic’s framework relevant for transparency
and exchange of information in tax matters are relatively new, particularly as
regards the customer due diligence (CDD) procedures required under current
anti-money laundering/ counter terrorist financing (AML/CTF) legislation.
The tax administration is also undergoing extensive reform to strengthen its
IT system and its capacity to collect and store tax information. This under-
lines the importance of the Phase 2 assessment of implementation of the
Republic’s legal framework for transparency and exchange of information in
tax matters.
7. The Republic has signed forty Double Taxation Conventions which
provide for international exchange of information, thirty-five of which are
in force. All but two (the agreements with Austria and Switzerland) of the
agreements that are in force provide for exchange of tax information to the
international standard. The Republic’s network of agreements covers most
of its main trading partners and neighbouring countries, namely Bulgaria,
Croatia, Germany, Italy, Montenegro, Russia, Serbia and Slovenia. In addi-
tion, a multilateral agreement between the Republic’s tax administration and
the tax authorities of Bosnia and Herzegovina, Bulgaria, Montenegro and
Serbia, concluded in 2006, provides for enhanced co-operation among the
contracting administrations, including exchange of information spontane-
ously or upon request.
8. The Republic’s response to the determinations, factors and recom-
mendations in this report, as well as the application of the legal framework
to the practices of its competent authority, will be considered in detail in
the Phase 2 Review, which has been scheduled by the Global Forum for the
second half of 2013.
PEER REVIEW REPORT – PHASE1 – THE FORMER YUGOSLAV REPUBLIC OFMACEDONIA © OECD 2011