The international community continues to make ‘tremendous progress’ in the fight against offshore tax evasion, according to the Organisation for Economic Co-operation and Development (OECD).
The Paris-based regulator said this week that implementation of transparency standards by the organisation’s Global Forum on Transparency and Exchange of Information for Tax Purposes has “moved many countries ever closer to the goal of eradicating banking secrecy for tax purposes.”
Nearly 100 countries carried out automatic exchange of information in 2019, enabling their tax authorities to obtain data on 84 million financial accounts held offshore by their residents, covering total assets of €10trn.
The tremendous achievements of our tax transparency work prove that when we work together, we all win. International co-operation is a condition for success.”
The OECD reported that this represents a significant increase over 2018 – the first year of such information exchange – where information on 47 million financial accounts was exchanged, equivalent to €5trn. The growth stems from an increase in the number of jurisdictions receiving information as well as a wider scope of information exchanged.
The OECD’s Common Reporting Standard requires countries and jurisdictions to exchange financial account information from non-residents obtained from their financial institutions automatically on an annual basis, reducing the possibility for offshore tax evasion. Many developing countries have joined the process and more are expected to join in the coming years.
“Automatic exchange of information is a game changer,” OECD secretary-general, Angel Gurría, said on the eve of a plenary meeting of the OECD/G20 Inclusive Framework on BEPS this week.
“This system of multilateral exchange created by the OECD and managed by the Global Forum is providing countries around the world, including many developing countries, with a wealth of new information, empowering their tax administrations to ensure that offshore accounts are being properly declared. Countries are going to raise much needed revenue, especially critical now in light of the current covid-19 crisis, while moving closer to a world where there is nowhere left to hide.”
Since the G20 declared an end to bank secrecy in 2009, the international community has made strong and ongoing progress in the fight against offshore tax evasion.
Under the leadership of the Global Forum, which brings together 161 countries and jurisdictions committed to OECD tax standards, countries have ramped up global co-operation, first through exchange of information on request and through automatic exchange since 2017, implemented through more than 6,000 bilateral relationships worldwide in 2019 (4,500 in 2018).
The benefits were seen even before the exchanges began. A November 2019 OECD study shows that wider exchange of information driven by the Global Forum was associated with a global reduction in foreign-owned bank deposits in international financial centres (IFC) by 24% ($410bn) between 2008 and 2019.
Voluntary disclosure programmes, offshore tax investigations and related measures before the start of automatic exchange in 2017 and since then, have already led to the identification of more than 100 billion euros of additional tax revenues worldwide.
“The discovery of previously hidden accounts thanks to automatic exchange of information has and will lead to billions in additional tax revenues,” Gurría said.
“The tremendous achievements of our tax transparency work prove that when we work together, we all win. International co-operation is a condition for success.”
Source: Christopher Copper-Ind for International Investment https://bit.ly/2Av1GOo