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ENQUIRE PROJECT DETAILS BY GENERAL PUBLIC |
| Project Details |
| Funding Scheme : | General Research Fund | ||||||||||||||||
| Project Number : | 14612220 | ||||||||||||||||
| Project Title(English) : | Mandatory Disclosure Rules: Development, Policy Analysis, and Implications for Financial Centers | ||||||||||||||||
| Project Title(Chinese) : | 強制披露規則：發展，政策分析，及對金融中心的影響 | ||||||||||||||||
| Principal Investigator(English) : | Prof Noked, Noam | ||||||||||||||||
| Principal Investigator(Chinese) : | N/A | ||||||||||||||||
| Department : | Faculty of Law | ||||||||||||||||
| Institution : | The Chinese University of Hong Kong | ||||||||||||||||
| E-mail Address : | noam.noked@cuhk.edu.hk | ||||||||||||||||
| Tel : | 39431605 | ||||||||||||||||
| Co - Investigator(s) : |
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| Panel : | Humanities, Social Sciences | ||||||||||||||||
| Subject Area : | Social and Behavioural Sciences | ||||||||||||||||
| Exercise Year : | 2020 / 21 | ||||||||||||||||
| Fund Approved : | 475,000 | ||||||||||||||||
| Project Status : | Completed | ||||||||||||||||
| Completion Date : | 31-8-2023 | ||||||||||||||||
| Project Objectives : |
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| Abstract as per original application (English/Chinese): |
該專案旨在探究強制披露規則（“披露規則”）的發展，分析在設計披露規則時所應進行的稅務政策考量，以及評估歐盟和經合組織近期制定的披露規則，同時，亦會闡述披露規則對香港及其他金融中心的影響。 該專案的第一部分將探討披露規則的擴展及變革，披露規則要求報告某些稅務計畫，在過去的四十年裡，披露規則已經從針對大眾避稅手段的國內措施演變成適用於各類中介機構的一般國內及國際報告準則。在一九八零年代，美國及加拿大採取了針對性措施，要求對大眾避稅手段進行登記。本世紀初，美國以及其他幾個國家開始要求報告某些特定交易。披露規則最引人矚目的擴展現時正在進行：歐盟近期通過，以及經合組織近期提議：披露規則應大幅擴大報告義務，將其適用於多類型的跨境安排，並要求各國間彼此分享相關資訊。香港以及其他未制定披露規則的金融中心可能面臨採取披露規則的壓力，而這將為稅務顧問、律師、金融機構以及其他中介機構設定重要義務。 專案的第二部分將分析在設計披露規則時應進行的稅務政策考量。考量因素包括：應予報告的稅務計畫，以及為金融機構及其他中介機構設定更多報告義務的大趨勢下披露規則的發展。相關報告義務包括以下國際自動交流機制：資訊制度、反洗錢法律規則、對超出某一閾值的交易的報告要求、以及實益所有權的登記。該專案將檢驗披露制度以及其他報告機制的既定目標是否能有效達成。 在分析完披露規則的設計考量後，該專案將從稅務政策角度評估歐盟和經合組織的披露規則。特別是，從披露規則對金融中心的影響方面考慮。金融中心，如香港，所舉辦的眾多活動以及眾多產業均可能受到披露規則的影響。這篇分析旨在促進就該等近期發展的稅務政策討論，以及香港和其他金融中心可能採取的披露規則。 |
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| Realisation of objectives: | The discussion below explains how these objectives were achieved in the research outputs of this project. 1. Noam Noked, Zachary Marcone & Alison Tsang, The Expansion and Internationalization of Mandatory Disclosure Rules, 13 COLUMBIA JOURNAL OF TAX LAW 122-163 (2022) This publication analyzes the development of MDRs over the past four decades as a global phenomenon with three distinct phases beginning in the 1980s. The analysis reveals several trends: expansion in the types of schemes that are reportable, extension of reporting obligations to a great diversity of intermediaries, and increasing multilateralism in the effort to curb intermediary-enabled tax avoidance and evasion. This publication shows how developments in international tax policy have affected, and will likely continue to affect, the expansion and internationalization of MDRs. The publication covers the first objective of this research project by analyzing the development of mandatory disclosure rules (“MDRs”) in different jurisdictions over time from a comparative legal perspective. By examining the policy considerations and trends in the design and spread of MDRs, this article contributes towards the second and third objectives of the project. This article was published in the Columbia Journal of Tax Law, a prominent specialized tax law journal in the United States (it is ranked 3/45 in Taxation in the Washington & Lee Law Journal Rankings). This publication was authored by the PI, Zachary Marcone (then-Research Assistant at CUHK Law), and Alison Tsang (a tax lawyer in an international law firm in Hong Kong). The journal is available online (open access), which increases its visibility and potential impact. 2. Noam Noked & Zachary Marcone, Targeting Tax Avoidance Enablers, 13 U.C. IRVINE LAW REVIEW 1355-1397 (2024) How can a government counter the activities of professional enablers located in other countries? This has proven to be a formidable challenge. This publication proposes a novel solution: a new international reporting standard, referred to as Global Mandatory Disclosure Rules (GMDR), which will impose reporting obligations on intermediaries assisting taxpayers with designing and implementing cross-border tax schemes. This proposal builds on MDRs currently deployed in several countries, the European Union, and the OECD. Drawing upon these reporting regimes, this article proposes GMDR as a comprehensive standard. This article explains the need for GMDR, explores the relevant design options, and proposes an implementation strategy. By exploring the policy considerations in the design of MDRs, this publication covers the second objective of the project. The publication also evaluates the MDRs developed by the OECD and the EU and the implications of these MDRs for financial centers and various jurisdictions. This analysis covers the third objective of the project. This article was published in the UC Irvine Law Review, a reputable general law review journal in the United States. It is ranked 39/1,557 (top 2.5%) among all law journals in the Washington & Lee Law Journal Rankings. The journal is available online (open access), which increases its visibility and potential impact. We note the following concerning the potential impact of this publication: a. The article was cited in A study prepared at the request of the European Parliament’s Economic and Monetary Affairs Subcommittee on Tax Matters cited this article. See Regulation of intermediaries, including tax advisers, in the EU/Member States and best practices from inside and outside the EU, at 48 (July 2022). b. We submitted the proposal in this article to the European Union as part of a public consultation in October 20222 on “Proposal for a Council Directive to tackle the role of enablers that facilitate tax evasion and aggressive tax planning in the European Union.” This publication was authored by the PI and Zachary Marcone (then-Research Assistant at CUHK Law). 3. Eliza Mik & Noam Noked, Blockchain and Tax Administration: A Critical Assessment, 50 AUSTRALIAN TAX REVIEW 180-1397 (2021) This publication contributes to the emerging literature on blockchain and tax administration. In particular, it responds to recent publications proposing ways to use blockchain and distributed ledger technologies to improve tax administration and compliance. These changes could substantially impact the mandatory reporting obligations and disclosure requirements of intermediaries and taxpayers. This article assesses these proposals and evaluates their purported benefits for tax administration and reporting. It finds that these technologies are not a panacea for tax administration challenges. It shows that many of the problems that blockchains purportedly solve exist off-chain, in the real world, and cannot be addressed by a blockchain. This article also claims that the main benefit from several proposed use cases derives from digitalization in general, not from the deployment of any specific type of database. It remains to be determined whether blockchains are, in fact, superior to other digitalized systems that perform comparable functions in tax administration. This analysis contributes to the project's second and third objectives. This article was published in December 2021 in the Australian Tax Review, a reputable peer-reviewed journal rated “A” in the Australian Business Deans Council (ABDC) Journal Quality List. This publication was authored by the PI and Eliza Mik (Assistant Professor specializing in law and technology at CUHK Law). | ||||||||||||||||
| Summary of objectives addressed: |
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| Research Outcome | |||||||||||||||||
| Major findings and research outcome: | The Panama Papers, other leaks, and investigative reporting have exposed how tax advisers, lawyers, bankers, and other professionals have helped the world’s economic elites hold their wealth through corporations and trusts organized in tax havens. In response, mandatory disclosure rules (MDRs), which require that intermediaries report their clients’ tax schemes, are becoming prominent tools in the international fight against tax avoidance and evasion. This project analyzes the development of MDRs over the past four decades as a global phenomenon with three distinct phases beginning in the 1980s. The analysis reveals several trends: expansion in the types of schemes that are reportable, extension of reporting obligations to a great diversity of intermediaries, and increasing multilateralism in the effort to curb intermediary-enabled tax avoidance and evasion. This project shows how developments in international tax policy have affected, and will likely continue to affect, the expansion and internationalization of MDRs. It also analyzes the policy considerations for the design of MDRs. Drawing upon this analysis, the project explores an important tax policy question: How can a government counter the activities of professional enablers located in other countries? Addressing this problem has proven to be a formidable challenge. This project proposes a novel solution: a new international reporting standard, referred to as Global Mandatory Disclosure Rules, which will impose reporting obligations on intermediaries assisting taxpayers with designing and implementing cross-border tax schemes. This proposal builds on the legal mechanisms currently deployed in several countries, including the multilateral MDRs of the European Union and the Organization for Economic Cooperation and Development. The project further examines the potential impact of emerging technologies (blockchain and distributed ledgers) on intermediaries and taxpayers’ mandatory reporting obligations and disclosure requirements. It evaluates several proposals for using blockchain in tax administration and finds that blockchain is not a panacea for tax administration challenges. It shows that many problems that blockchain purportedly solves exist off-chain and cannot be addressed by blockchain. This project also claims that the main benefit from several proposed use cases derives from digitalization in general, not from the deployment of any specific type of database. | ||||||||||||||||
| Potential for further development of the research and the proposed course of action: |
This research could be further developed in several ways. More research is needed on the optimal regulation and deterrence of professional enablers of tax abuse. The regulation and deterrence of professional enablers of tax abuse attract increasing attention from policymakers, tax authorities, academics, and tax professionals. The European Union is considering adopting a new directive focusing on this matter. Such regulation could expand the existing MDRs and impose additional obligations. Research into this field should consider the costs and benefits of possible regulatory approaches, the effectiveness of different measures, privacy considerations, and other issues. The PI intends to build on this project to analyze the regulation of professional enablers in future publications. The PI is exploring writing a monograph on the regulation of professional enablers of cross-border tax abuse, which will draw on the work in this project and expand it further. | ||||||||||||||||
| Layman's Summary of Completion Report: | The Panama Papers, other leaks, and investigative reporting have exposed how tax advisers, lawyers, bankers, and other professionals have helped the world’s economic elites hold their wealth through corporations and trusts organized in tax havens. To address this problem, governments have been adopting mandatory disclosure rules (MDRs), which require that professional enablers report their clients’ tax schemes. This project analyzes the development of MDRs over the past four decades as a global phenomenon with three distinct phases beginning in the 1980s. The analysis reveals several trends: expansion in the types of schemes that are reportable, extension of reporting obligations to a great diversity of intermediaries, and increased multilateralism. The project also explores an important tax policy question: How can a government counter the activities of professional enablers located in other countries? To address this problem, this project proposes a new international reporting standard, referred to as Global Mandatory Disclosure Rules. This standard will impose reporting obligations on intermediaries assisting taxpayers with designing and implementing cross-border tax schemes. The project further examines the potential impact of blockchain and distributed ledgers on intermediaries and taxpayers’ reporting obligations and disclosure requirements. | ||||||||||||||||
| Research Output | |||||||||||||||||
| Peer-reviewed journal publication(s) arising directly from this research project : (* denotes the corresponding author) |
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| Recognized international conference(s) in which paper(s) related to this research project was/were delivered : |
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| Other impact (e.g. award of patents or prizes, collaboration with other research institutions, technology transfer, etc.): |
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| SCREEN ID: SCRRM00542 |