Confidentiality of Tax Information

The confidentiality of information obtained in the course of a tax official's duties is a crucial issue within a tax administration. Failure to properly manage the responsibility of confidentiality can challenge the integrity of the Host Administration, whose audit capacity the Expert is working to build. Additionally, breaches of confidentiality may potentially give rise to litigation by taxpayers for (alleged) breach of the obligation.

It is therefore crucial that all parties of a TIWB programme consider and address confidentiality in the TIWB programme Terms of Reference. First, an understanding is needed of the source(s) and scope of the confidentiality duties imposed on tax officials in the Host Administration. It is the responsibility of the Host Administration to bring the obligations of confidentiality to the attention of the Expert. The Host Administration should also provide guidance on the proper handling of tax information (for example, clean desk policy) to ensure that its tax confidentiality obligation is upheld.

The second aspect is to ensure that the Expert, to the extent possible, will be subject to the same or equivalent obligations as the local officials. The Host Administration needs to determine how the same or equivalent confidentiality obligations that apply to local tax officials will apply to the Expert. For example, the obligations may apply directly to the Expert because the Expert falls within the definition of persons subject to those obligations under the relevant legislation. Alternatively, the Terms of Reference may ensure that equivalent obligations are imposed on the Expert. This may also involve the Expert taking the same oath or making an affirmation of secrecy as local tax officials.

On a practical level, Experts must fully understand the nature and scope of their obligations of confidentiality and the possible consequences and appropriate management process in case of a breach.

The parties should have a clear understanding of how an alleged breach of tax confidentiality will be addressed. Any such issue involving an Expert who is a currently serving official is likely to require some involvement of the Partner Administration, and this procedure should be determined in advance and defined in the TIWB programme Terms of Reference.

It is important to ensure that investigations on breach of confidentiality are appropriately carried out before a determination is made on whether a breach has in fact occurred and the circumstances of that breach. During that investigation process, appropriate support for the Expert should be provided from the Host Administration and any Partner Administration, if the Expert is a currently serving official. The obligation of confidentiality of tax information is perpetual, extending beyond the end of the TIWB programme. In this regard, Partner Administrations must also note that, upon returning, Experts cannot share any confidential tax information obtained in the course of their duties as an Expert in the Host Administration.

Experts must also appreciate that the obligations of confidentiality to which they were or are subject as an official of the Partner Administration or their former administration, will continue to apply during the TIWB Programme.

There is a direct link between issues of confidentiality and the potential liability of the Expert if an issue of a breach of confidentiality arises.

Confidentiality of taxpayer information has always been a cornerstone of tax systems. In order to have confidence in their tax system and comply with their obligations under the law, taxpayers need to also be confident that the often sensitive financial information is not disclosed inappropriately, whether intentionally or by accident.

Keeping it Safe (GFEOI/OECD, 2012)

Legal provisions and other rules establishing tax information confidentiality

Specific provisions in a country's tax legislation commonly protect confidentiality of taxpayer information. In general, these provisions make it a criminal offence for tax officials to disclose information relating to a taxpayer that was obtained in the course of the performance of their duties. There is no universal definition of what constitutes tax information; however, in general, it covers all information obtained in the course of a person's duties as a tax official. The obligation to maintain confidentiality applies even after the official has ceased to work for the tax administration.

In addition to a tax law requirement, an obligation of confidentiality may arise from broader laws or regulations that apply to all civil servants. These may be obligations contained in the country's constitution or obligations arising from international agreements, such as double taxation agreements. Obligations of confidentiality, as well as other aspects of a tax official's conduct and duties, may also be founded in codes of conduct issued to tax officials or to all civil servants. This may include an oath or affirmation of secrecy that tax officials make before assuming their duties, or it may form part of the employment contract offered by the tax administration. An Expert may be required to take an equivalent oath of conduct before participating in the TIWB audit assistance programme.

In addition to the tax administration, other state institutions may be charged with monitoring how tax confidentiality is dealt with in practice. This could include supervision by Courts of accounts, internal audits, and investigations by anti-corruption agencies or tax police, and may have capacity to apply sanctions in cases of breach of tax confidentiality. The Expert must be made aware by the Host Administration of all the legal provisions governing confidentiality and spelling out sanctions for breach as part of any signed confidentiality agreement/oath of secrecy.

Tax law obligations to maintain confidentiality of tax information

Some examples of domestic tax law obligations to maintain confidentiality of tax information are presented below. Each of these obligations to maintain confidentiality of tax information is coupled with a penalty provision to support the enforcement of the obligation.


Tax Procedures Code, Article L103

Original text

L'obligation du secret professionnel, telle qu'elle est définie aux articles 226-13 et 226-14 du code pénal, s'applique à toutes les personnes appelées à l'occasion de leurs fonctions ou attributions à intervenir dans l'assiette, le contrôle, le recouvrement ou le contentieux des impôts, droits, taxes et redevances prévus au code général des impôts.

Le secret s'étend à toutes les informations recueillies à l'occasion de ces opérations. Pour les informations recueillies à l'occasion d'un examen contradictoire de la situation taxe personnelle, l'obligation du secret professionnel nécessaire au respect de la vie privée s'impose au vérificateur à l'égard de toutes personnes autres que celles ayant, par leurs fonctions, à connaître du dossier.

English translation

The professional secrecy obligation, as it is defined in articles 226-13 and 226-14 of the penal code, applies to all persons who, as a result of their functions or responsibilities, participate in the determination, assessment, recovery of or litigation relating to taxes, customs duty, tax charges, and royalties as provided for in the general tax code.

The obligation of secrecy extends to all information received as a result of carrying out these operations. Where information is received in the course of carrying out an independent audit of a taxpayer's personal tax situation, the professional secrecy obligation necessary to ensure the right to privacy is imposed on the tax auditor with regard to all other persons who, due to their official functions, may have knowledge of the tax file.

New Zealand

Tax Administration Act 1994, s81

For the purposes of subsection (1), before an Inland Revenue officer performs their first official duty as an officer, they must make a declaration of secrecy and fidelity in the form prescribed by the Commissioner.


Tax Ordinance Act

Under the Tax Ordinance Act, Poland makes all information received by the tax authorities subject to tax secrecy. Tax officials must affirm in writing that they will maintain tax secrecy, and undue disclosure of tax secrets is a criminal offence punishable by up to five years imprisonment under Article 306 of the Tax Ordinance Act.

South Africa

Tax Administration Act 2011, s67(2)

An oath or solemn declaration undertaking to comply with the requirements of this Chapter in the prescribed form, must be taken before a magistrate, justice of the peace or commissioner of oaths by

      1. a South African Revenue Service official and the Tax Ombudsman, before commencing duties or exercising any powers under a tax Act; and
      2. a person referred to in section 70 who performs any function referred to in that section, before the disclosure described in that section may be made.

United States

Section 6103 of the Internal Revenue Code provides

a) General rule

Returns and return information shall be confidential, and except as authorized by this title

1) no officer or employee of the United States,
2) no officer or employee of any State, any local law enforcement agency receiving information under subsection (i)(7)(A), any local child support enforcement agency, or any local agency administering a programme listed in subsection (l)(7)(D) who has or had access to returns or return information under this section or section 6104 (c), and
3) no other person (or officer or employee thereof) who has or had access to returns or return information under subsection (e)(1)(D)(iii),subsection (k)(10), paragraph (6), (10), (12), (16), (19), (20), or (21) of subsection (l), paragraph (2) or (4)(B) of subsection (m), or subsection (n), shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section. For purposes of this subsection, the term "officer or employee" includes a former officer or employee.

Under the Internal Revenue Code, wilful unauthorised disclosure of returns or return information is a felony punishable by a fine of up to USD 5 000 or imprisonment of up to five years, or both (I.R.C. § 7213). These penalties apply not only against the government employee who committed the unauthorised disclosure but also against a person who receives the information and knowingly publishes it. In addition, wilful unauthorised access to or inspection of returns or return information is a misdemeanour punishable by a fine of up to USD 1 000 or imprisonment of up to one year, or both (I.R.C. § 7213A). A federal employee convicted of any of these crimes is discharged from employment. The taxpayer may bring a civil action for damages under I.R.C. Section 7431 for any wilful or negligent unauthorised disclosure of a return or return information. Damages payable in such civil actions are the greater of USD 1 000 for each act of disclosure or actual damages sustained (increased by punitive damages in cases of wilful or gross negligence). The plaintiff may also collect court costs.