In August 2020, more than 2,500 bilateral exchanges were activated for jurisdictions that committed to exchange CBC reports, and the first automatic exchange of CBC reports took place in June 2018. These include exchanges between the signatories of the Convention on Multilateral Competent Authorities (CBC MCAA), between eu Member States, in accordance with the EU Directive 2016/881/EU, and between signatories of bilateral agreements for the exchange of competent authorities under double taxation agreements or exchange of tax information, including 41 bilateral agreements with the United States. Legal systems continue to negotiate CBC reporting agreements and the OECD will issue regular updates to clarify things for MNE groups and tax administrations. Since more than 100 legal systems have committed to exchange information within the IRS, exchanges between legal systems are generally based on the multilateral convention on mutual tax assistance (convention), in which more than 100 jurisdictions participate, and the Multilateral Competent Authority`s (CRS MCAA) IRS Convention (CRS MCAA), which is based on Article 6. Legal systems can be based on a bilateral agreement, such as a double taxation agreement or an agreement on the exchange of tax information. In addition, some IRS exchanges will be organised on the basis of the relevant EU directive, agreements between the EU and third countries and bilateral agreements such as the agreements between the UK and the CDOT. The CRS MCAA provides details of the information that will be exchanged and when. It is a multilateral framework agreement. A specific bilateral relationship under the MCAA CRS only comes into force when the two jurisdictions have implemented the convention, submitted the necessary notifications in accordance with Section 7 and presented themselves to each other. For example, the implementation of an agreement between the Government of the Republic of South Africa and the Government of the United States of America on the implementation of the U.S. Account Compliance Act (FATCA) is an important step for South Africa in preparing for the automatic exchange of information within the meaning of the IRS.
With respect to fatca, South African financial institutions are required to provide important financial information to SARS for transmission to the United States of America. The MCAA implements the OECD standard for the automatic exchange of financial information. It is based on Article 6 of the OECD Multilateral Convention on Mutual Tax Assistance (multilateral convention), which stipulates that two or more parties can agree on the automatic exchange of information. Even if the MCAA is signed on a multilateral basis, effective exchange of information will take place bilaterally. The MCAA requires the competent authorities of the participating jurisdictions to automatically collect and exchange tax information imposed by OECD IRS. OECD initiatives have made it clear that the international community will not tolerate harmful tax practices in tax havens that deplete countries` tax bases. This is done naturally when the people of this country invest in tax havens. The hope is that the implementation of the MCAA and the various sanctions and sanctions will lead to the decline of many circumvention measures in practice. On 4 June 2015, 61 countries signed the MCAA, with a number of others committed to the agreement to ensure that the majority of the international community strongly supports the OECD in the fight against tax evasion.