17th February 2014
Sharing of company tax information between nations is to be facilitated with a new global framework unveiled by the OECD. Each country will be called on to gather information from their financial institutions and automatically share this with other jurisdictions every year.
It draws on work achieved in the European Union, as well as global anti-money laundering standards. In addition, the OECD says the implementation of the US Foreign Account Tax Compliance Act (FATCA) has acted as a “catalyst” for the automatic sharing framework.
The standard has been driven by the G20, which asked the OECD to develop the framework as part of its efforts to clamp down on international tax systems used by companies and individuals.
Included in the document is the financial account information to be exchanged, institutions that must report and the different types of accounts and taxpayers covered. The framework also includes the common due diligence procedures to be followed by financial institutions.
OECD secretary-general Angel Gurría says the new standard on automatic exchange of information will “ramp up” efforts on international tax co-operation and put governments “back on a more even footing”. Clearly the focus of the framework is to tackle certain offshore tax planning systems.
Mr Gurria added: "This is a real game changer. Globalisation of the world's financial system has made it increasingly simple for people to make, hold and manage investments outside their country of residence.”
It is to be presented for endorsement by G20 ministers at a meeting in Australia on February 22nd-23rd.
So far more than 40 countries have agreed to adopting the standard early. They are: Argentina, Belgium, Colombia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Italy, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden and the United Kingdom. In addition, the list of early adopters includes the UK's Crown Dependencies of Isle of Man, Guernsey and Jersey; as well as the UK's Overseas Territories of Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Montserrat, Turks and Caicos.