Why Mandatory Disclosure Rules Are Not Working
Not a single case has been published, with no loopholes identified and no intermediaries penalised.
Participation is limited—only a handful of jurisdictions have implemented the regime beyond the EU. It excludes primary intermediaries, as non-participating entities can market freely across jurisdictions, and lawyers are carved out due to client confidentiality obligations.
The scope appears overreaching. A “reportable taxpayer” includes any actual or even potential end-user. For example, a promoter may be required to report a potential customer within 15 days, even if that customer shows no interest.
Penalties apply for non-compliance on retroactive activity dating back to October 2014, raising concerns around ex post facto criminal sanctions, which are prohibited in most jurisdictions.
Structures may be reportable even when involving non-CRS assets such as gold, property, or chattels.
The rules assert extraterritorial reach. However, most countries typically limit extraterritorial jurisdiction over residents to serious offences or specific contexts—such as treason, bribery, smuggling, crimes against minors, female genital mutilation, torture, terrorism, grave breaches of the Geneva Conventions, war crimes, crimes against humanity, and genocide.
There is also a requirement to report across the entire chain—upstream and downstream clients, intermediaries, and taxpayers—even where no direct services were provided or contact existed.
The retroactive scope extends further: if an arrangement was designed or marketed in 2015 and never revisited, upstream intermediaries may still be reportable if a third-party downstream intermediary later markets the same arrangement, even if it is never implemented.
Compared to the General Anti-Avoidance Rule (GAAR), Mandatory Disclosure Rules (MDR) provide tax authorities with a significantly broader range of information.
TIMESTAMPS:
00:00 – INTRO
00:42 – MDR Effectiveness Question Raised
01:52 – Three Core Failure Reasons
03:13 – Ex Post Facto Legal Issues
04:59 – Full Chain Reporting Requirements
06:09 – Comparison With Existing Rules
06:27 – Dutch Tax Discussion Preview
07:24 – OUTRO
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