BERLIN: More than 80 countries signed up to a deal that could help end banking secrecy yesterday in what the sponsors hope will be a major step in the global battle against tax evasion and fraud.
A total 51 countries signed up to the Multilateral Competent Authority Agreement under which their national tax authorities will exchange information automatically from September 2017. And more than 30 other countries said they would sign up a year later in 2018.
Among the first round of signatories or “early adopters” were EU countries as well as previously staunch proponents of banking secrecy such as Liechtenstein and tax havens like the Cayman or Virgin Islands. Others, such as Austria and Switzerland, the Bahamas and the United Arab Emirates, will follow in 2018.
The signings in Berlin crowned two days of talks by the Global Forum on Transparency and Exchange of Information for Tax Purposes, hosted by German Finance Minister Wolfgang Schaeuble.
The aim is for every country to be kept fully informed about the offshore holdings of its citizens.
Tax evasion is a “scourge across the world,” British Finance Minister George Osborne told a joint news conference with his colleagues from Spain, Italy, France and Germany.
He said the signing of the deal was a “key moment” in worldwide efforts to stamp out tax evasion.
It will “reduce the places that tax evaders can hide their money,” he said, while adding that the forum’s work was “not finished”.
French Minister Michel Sapin said it was “intolerable” that taxpayers should have to feel that some people were somehow exempt and could dodge taxes.
Economist Gabriel Zucman, a specialist in fiscal fraud, has calculated that about €5.8 trillion ($7.4 trillion) is stashed away in tax havens, depriving authorities all over the world of around €130bn in revenue each year.
The international movement to end banking secrecy has gained new momentum recently with the enactment in the United States of its 2010 Foreign Account Tax Compliance Act or FATCA.
The law obliges foreign banks to report to the US Internal Revenue Service (IRS) on the offshore holdings of US clients in excess of €50,000.
The move prompted five European countries — Britain, France, Germany, Italy and Spain — to call for a generalised automatic exchange of information in 2011. Following months of talks, amid fierce resistance in countries such as Luxembourg and Austria where banks continue to uphold banking secrecy, the EU finally came up with an accord two weeks ago.
“The more countries sign up, the more difficult it will be for others to attract investment,” said the OECD’s director for tax policy and administration, Pascal Saint-Amans. AFP
