In 2019, 97 countries carried out automatic exchange of
information, sharing data with tax authorities on 84m accounts covering some 10
trillion euros of total assets – a significant increase over 2018, when
information exchange began, and where information on 47m accounts was
exchanged. The OECD reports this as evidence of ‘tremendous progress’ made by the
international community in the fight against offshore tax evasion.
Under the OECD common reporting standard, countries exchange
financial account information from non-residents obtained from their financial
institutions automatically on an annual basis, reducing the possibility for
offshore tax evasion.
Commenting on the report, Gary Ashford, partner at Harbottle
& Lewis, noted that, since the OECD’s 1998 Harmful Tax Practices
report (which formed the basis of BEPS Action 5), ‘the world has changed
dramatically with the FATCA, CRS and currently the impending introduction of
DAC6, and the requirement of intermediaries to report on cross-border
arrangements, which although the reporting has now been postponed, will still
come into force in January 2021’.
Tax authorities have implemented many of the OECD’s suggested
measures over the years, including disclosure opportunities in return for
reduced tax liabilities. Ashford points out that ‘most of those facilities are
closed, particularly in the UK, and the UK is now charging penalties of up to
200%, going back 20 years in some cases. HMRC is starting to consider criminal
investigations, and we will also see asset freezing orders and unexplained
wealth orders starting to be used.’
In 2019, 97 countries carried out automatic exchange of
information, sharing data with tax authorities on 84m accounts covering some 10
trillion euros of total assets – a significant increase over 2018, when
information exchange began, and where information on 47m accounts was
exchanged. The OECD reports this as evidence of ‘tremendous progress’ made by the
international community in the fight against offshore tax evasion.
Under the OECD common reporting standard, countries exchange
financial account information from non-residents obtained from their financial
institutions automatically on an annual basis, reducing the possibility for
offshore tax evasion.
Commenting on the report, Gary Ashford, partner at Harbottle
& Lewis, noted that, since the OECD’s 1998 Harmful Tax Practices
report (which formed the basis of BEPS Action 5), ‘the world has changed
dramatically with the FATCA, CRS and currently the impending introduction of
DAC6, and the requirement of intermediaries to report on cross-border
arrangements, which although the reporting has now been postponed, will still
come into force in January 2021’.
Tax authorities have implemented many of the OECD’s suggested
measures over the years, including disclosure opportunities in return for
reduced tax liabilities. Ashford points out that ‘most of those facilities are
closed, particularly in the UK, and the UK is now charging penalties of up to
200%, going back 20 years in some cases. HMRC is starting to consider criminal
investigations, and we will also see asset freezing orders and unexplained
wealth orders starting to be used.’
