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 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. 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. The OECD announced that 31 countries have signed the Multilateral Competent Authority Agreement for the automatic exchange of country (MCAA) at a signing ceremony on 27 January 2016.
Under the MCAA, signatories may exchange cbC relationships with other signatories if they have cbC reporting obligations and are parties to the OECD Convention on Mutual Tax Assistance.