Leveraging ownership information to improve taxation

Conclusion

BO is a core concept in tax, and tax authorities have been using information about the BO of legal vehicles and assets in some form for decades. The implementation of central BO registers for legal vehicles in most jurisdictions over the past decades provides additional opportunities for tax authorities to use this information systematically, proactively incorporating the use of the information into their processes to more effectively achieve their aims.

BO information can help tax authorities close the tax gap through improving compliance, allowing them to identify and understand risk, conduct audits and investigations, and change behaviour. It can also help shape evidence-based tax policy and contribute indirectly to tax authorities’ objectives by improving broader systemic integrity.

To achieve these aims, jurisdictions should take a whole-of-government approach to implementing central BO registers for legal vehicles, pooling government resources for a shared and single view of high-quality information on ownership and control networks behind legal vehicles. BO disclosure regimes should contribute to a comprehensive understanding of the networks of relationships between individuals, legal vehicles, and assets – BO networks – along with other complementary measures and information. This means legal arrangements should be subject to registration and disclosure requirements, and information should be combined with shareholder and nominee information where possible. To leverage progress with BO registers for legal vehicles, asset registers should focus on direct ownership and interests, collecting a common set of minimum information and including reliable identifiers so this information can be combined at scale. Finally, legal and technical frameworks for accessing information within and across borders should be developed.

Better understanding better how individuals, legal vehicles, and assets relate to each other – within and across borders – will help ensure governments collect the right amount of tax and can tax fairly in order to reinvest in social infrastructure and public services.