Iceland 2013 : combined, phase 1 + phase 2.

107 Pages·2013·1.296 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, COMBINED: PHASE 1 + PHASE 2
ICELAND
Peer Review Report
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 120 jurisdictions, which participate in the Global Forum on an Combined: Phase 1 + Phase 2
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 refl ected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated in 2004. The ICELAND
standards have also been incorporated into the UN Model 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 fi duciaries, 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 identifi ed by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
P
Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for ee
the exchange of information, while Phase 2 reviews look at the practical implementation of r R
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that framework. Some Global Forum members are undergoing combined – Phase 1 and vie
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Phase 2 – reviews. The Global Forum has also put in place a process for supplementary
R
reports to follow-up on recommendations, as well as for the ongoing monitoring of ep
o
jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions r
to effectively implement the international standards of transparency and exchange of t Co
m
information for tax purposes. b
in
All review reports are published once approved by the Global Forum and they thus represent ed
agreed Global Forum reports. Ph
a
s
For more information on the work of the Global Forum on Transparency and Exchange of e
1
Information for Tax Purposes, and for copies of the published review reports, please refer to +
www.oecd.org/tax/transparency and www.eoi-tax.org. Ph
a
s
e
2
Consult this publication on line at http://dx.doi.org/10.1787/9789264192003-en. IC
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and L
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statistical databases. N
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Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-19195-2 -:HSTCQE=V^V^ZW:
23 2013 08 1 P

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Iceland
2013
COMBINED: PHASE 1 + PHASE 2
March 2013
(reflecting the legal and regulatory framework
as at December 2012)
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
membercountriesorthoseoftheGlobalForumonTransparencyandExchange
ofInformationforTaxPurposes.
Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatus
oforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiers
andboundariesandtothenameofanyterritory,cityorarea.
Pleasecitethispublicationas:
OECD(2013),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer
Reviews:Iceland2013:Combined:Phase1+Phase2,OECDPublishing.
http://dx.doi.org/10.1787/9789264192003-en
ISBN978-92-64-19195-2(print)
ISBN978-92-64-19200-3(PDF)
Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews
ISSN2219-4681(print)
ISSN2219-469X(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 Iceland. . . . . . . . . . . . 9
Overview of Iceland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
B. Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
B.1. Competent Authority’s ability to obtain and provide information. . . . . . . . 54
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 61
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
C.2. Exchange of information mechanisms with all relevant partners . . . . . . . . 74
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 81
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 82
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – ICELAND © OECD 2013
4
– TABLE OF CONTENTS
Summary of Determinations and Factors UnderlyingRecommendations. . . . 89
Annex1: Jurisdiction’s Response To The Review Report . . . . . . . . . . . . . . . . . 93
Annex2: List of Exchange of Information Mechanisms . . . . . . . . . . . . . . . . . . 94
Annex3: List of all Laws, Regulations andOtherRelevantMaterial . . . . . . 101
Annex4: People Interviewed During the On-Site Visit. . . . . . . . . . . . . . . . . . 103
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – ICELAND © OECD 2013
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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 OECD Model Tax Convention on
Income and on Capital and its commentary as updated in 2004. The standards
have also been incorporated into the UN Model 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 fore-
seeably 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 under-
taken in two phases. Phase 1 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 – Phase1 and Phase2 – 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 transparency and exchange of informa-
tion 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/transparencyand www.eoi-tax.org.
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – ICELAND © OECD 2013

7
EXECUTIVE SUMMARY –
Executive Summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in Iceland as well as the practi-
cal implementation of that framework. 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 whether
that information can be effectively exchanged with the jurisdiction’s exchange
of information partners.
2. Iceland is a Nordic European island country situated at the con-
fluence of the North Atlantic and Arctic Oceans. Iceland’s economy is
predominantly based on fishing, tourism and aluminium smelting. Although
Iceland previously had an expansive financial sector, the size of this signifi-
cantly contracted following its banking and financial crisis in 2008.
3. Iceland has an extensive exchange of information (EOI) network cover-
ing 94 EOI partners. Iceland has been concluding double taxation conventions
(DTCs) since the 1970s. It has also been concluding tax information exchange
agreements (TIEAs) since 2007, mostly through Nordic co-operation in tax mat-
ters. Iceland exchanges information with its six neighbouring Nordic countries
under the regional Nordic Convention on Mutual Assistance in Tax Matters
1989. It is a founding signatory to the 2010 Protocol of the Convention on Mutual
Administrative Assistance in Tax Matters, which came into force in Iceland on
1 February 2012. Iceland’s EOI agreements in the main follow the form and
substance of the OECD Model Tax Convention or the OECD Model TIEA, and
therefore allow for EOI to the international standard. Through this EOInetwork,
Iceland effectively exchanges information upon request from its EOI partners as
well as automatically provides extensive information for tax purposes to its DTC
partners on a yearly basis. During the three year period under review (2009-11),
Iceland received and responded to 79EOI requests from 16partners.
4. The legal and regulatory framework for the availability of ownership,
identity and accounting information is in place. Iceland’s legal and regulatory
framework for the maintenance of ownership information results in such
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – ICELAND © OECD 2013
8
– EXECUTIVE SUMMARY
information being available in respect of companies and partnerships. There
are also legal and regulatory requirements to ensure that accounting records
and underlying documentation are adequately maintained for relevant entities
for a minimum period of seven years, which exceeds the five year standard.
Iceland’s peers confirmed that Iceland has satisfactorily delivered accounting
and ownership information in a timely manner whenever so requested.
5. The legal and regulatory framework for the availability of banking
information in Iceland is in place. In practice, banking information is either
already available to the Icelandic tax authorities through periodic reporting
by banks or otherwise easily accessible through the Icelandic central clearing
system for banks. Information may also be directly requested from the banks.
Iceland’s peers confirmed that Iceland has been able to satisfactorily provide
all banking information requested.
6. In terms of access to information for EOI purposes, the Directorate
of Internal Revenue (DIR) has responsibility for the day-to-day administra-
tion of all information exchange requests. The DIR has important sources of
information directly available to answer incoming requests: the DIR’s own
databases contain general information on taxpayers and their income, based
on the tax returns filed and information collected through annual third party
reporting to the tax authorities. The DIR also has direct access to various
external databases (such as the register on individuals maintained by the
National Register, the Register of Annual Accounts and a number of registers
on entities maintained by the Register of Enterprises). Access to these sys-
tems allows the Icelandic competent authority to directly answer most of the
requests received from their exchange of information partners, in particular
those related to individuals. Where information must be obtained from a
taxpayer, the DIR itself directly makes such request for information to the
taxpayer.
7. With regard to information gathering powers, the Icelandic tax
authorities have broad powers to obtain information from both taxpayers and
third parties for exchange of information purposes. These powers have been
utilised efficiently by the Icelandic authorities for EOI purposes.
8. Iceland has been able to respond to information exchange requests in
a timely manner. Iceland provided the requested information within 90days
in relation to all but three requests received. Of the rest, information was pro-
vided in one case within 180days and two cases within a year. Input received
from Iceland’s exchange of information partners suggests that the Icelandic
authorities respond to requests very quickly with responses of high quality.
Altogether, Iceland is considered by its peers to be a reliable, efficient and
cooperative partner. A follow up report on the steps undertaken by Iceland to
answer the recommendations made in this report should be provided to the
PRG within twelve months after the adoption of this report.
PEER REVIEW REPORT – COMBINED PHASE1 AND PHASE 2 REPORT – ICELAND © OECD 2013