Out-Law News | 30 Apr 2014 | 9:51 am | 2 min. read
G5 leaders will sign the OECD's new global standard of automatic exchange of tax information in October at the Global Forum in Berlin, together with the other participating countries, the ministers announced following a meeting in Paris. A total of 44 countries including the UK, France, Germany, Italy and Spain have committed to early adoption of the new standard as part of an initiative first announced last year.
Participating countries will begin to automatically exchange information with each other from 2017 in respect of data collected from 31 December 2015, according to the announcement. The G5 finance ministers have also urged those global financial centres that have not committed to early adoption to now do so.
"Today we take another step to fight tax avoidance and evasion," said the UK's Chancellor of the Exchequer, George Osborne. "We're working with key international partners to promote greater transparency and co-operation, and to reform the global rules. Alongside this, we are taking tough action domestically."
"The government is on the side of the hardworking majority who pay the taxes they owe on time but there remains a minority that think they don't have to play by the rules. For those evading their responsibilities and hiding their money offshore the message is clear; time is running out. If you have something to disclose, come to us before we come to you," he said.
This week, HM Revenue and Customs (HMRC) confirmed that it had begun writing to around 2,000 taxpayers with offshore accounts as part of its offshore evasion strategy. Although no action is being taken against these accountholders yet, the response to the letters will inform HMRC's future compliance activity and ensure that it is ready to deal with the additional quantity of information that will be received under the new agreements as soon as it is shared.
The Organisation for Economic Cooperation and Development (OECD) set out its plans for a new global 'common standard of reporting' for the automatic exchange of tax information between countries earlier this year. The common reporting standard will require financial institutions and brokers to report information to authorities in their own jurisdictions, and this information will in turn be passed on to other relevant countries automatically. The standard was developed by the OECD, an international body which promotes cooperation on economic issues, and the G20 group of leading global economies.
At their meeting, the G5 ministers also reiterated their strong support of the OECD's Base Erosion and Profit Shifting (BEPS) project, through which it is developing a single set of global rules to tackle aggressive tax planning. This work focuses on preventing multinational companies from taking advantage of gaps in double taxation agreements and different tax rates in different jurisdictions to pay less tax.