BERLIN:More than 80 countries signed an agreement in Berlin on Wednesday (Oct 29) that could end banking secrecy in the global battle against tax evasion and fraud, even though critics pointed to shortcomings in the deal. Among the signatories were EU countries but also previously staunch proponents of banking secrecy such as Liechtenstein and tax havens like the Cayman or Virgin Islands.
The deal – known as the Multilateral Competent Authority Agreement – crowned two days of talks by the Global Forum on Transparency and Exchange of Information for Tax Purposes. The meeting was hosted by German Finance Minister Wolfgang Schaeuble.
Fifty-one countries signed one agreement to put in place an automatic exchange of information between the participating countries beginning in September 2017. The agreement designates the national authority in each country which will be responsible for collating the data and transferring it to the other countries. The aim is for every country to be kept fully informed about the offshore holdings of its citizens.
Around 30 other countries – including Austria and Switzerland, the Bahamas and the United Arab Emirates – pledged to join the agreement from 2018. “Banking secrecy, in its old form, is obsolete,” Schaeuble told the mass-circulation daily Bild in an interview. The danger of being caught is now “very high”, Schaeuble said.
The forum was set up under the auspices of the Organisation for Economic Cooperation and Development in Paris, which estimates that “offshore tax evasion is a serious problem for jurisdictions all over the world”. Economist Gabriel Zucman, a specialist in fiscal fraud, has calculated that about 5.8 trillion (US$7.4 trillion) is stashed away in tax havens, depriving authorities all over the world of around 130 billion in revenue each year.
US ACT AGAINST EVASION
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. FATCA 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. However, a number of financial centres remained a “source of concern”, he said. Panama, for example, still had not set a concrete date for its exchange of information.
Saint-Amans said the OECD will compile a list of countries that do not automatically exchange information, a measure which could act as a disincentive for investment funds and international organisations looking to invest in those countries. But experts in fiscal fraud, such as Andres Knobel of Tax Justice Network, believe such a “blacklist” would prove a rather feeble deterrent.
See original here:
80 countries back deal that could end banking secrecy