A wealth of information about companies and individuals registered in tax havens will be shared with the UK after nine more countries, including Luxembourg, Austria and Singapore, signed up to international tax protocols at the Organisation for Economic Co-operations’ (OECD) week-long forum at its headquarters in Paris.
More than 50 countries have, so far, agreed to automatically exchange tax information, to assist foreign nations to clamp down on tax debtors, and allow countries to conduct wide-ranging joint multiparty tax investigations.
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Maria Fekter, the Austrian finance minister, said the OECD ministerial meeting was a "huge step forward" for the country, and signing the OECD’s multilateral convention on mutual administrative assistance on tax matters would "increase Austria’s ability to actively contribute to the current international effort to tackle tax base erosion and profit shifting".
For Luxumbourg, the new tax protocols will also affect entities based there, and will eventually allow for faster transmission of data to HM Revenue and Customs and other tax authorities around the world.
After many decades of banking secrecy, which has enabled foreign account holders to hide billions in taxes, Fekter said "recent developments" had persuaded Austria of "the importance of such cross-border co-operation in order to minimise the opportunity for international tax avoidance and evasion".
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On 29 May, Fekter also set up a special committee, SoKo Offshore-Leaks, to tackle offshore tax evasion. The committee is tasked with evaluating tax evasion data, due to be passed on from the US tax authorities in connection with the offshore leaks project. SoKo Offshore-Leaks, which will be lead by Eduard Muller, compromises of offshore tax investigators, auditors, and IT experts.
On 22 May, Austria revealed it was ready to share data on foreign depositors by the end of 2013, in a meeting of EU leaders to discuss fighting tax fraud by lifting bank secrecy.
Earlier in May, the British Prime Minister David Cameron wrote to leaders of Britain’s offshore tax havens emphasising on the need to "get our own houses in order" before the G8 Summit in June, as he pushed for international action to increase transparency and tackle avoidance schemes.
The Isle of Man chief minister, Allan Bell MHK, in return welcomed the letter from Cameron, saying the country is "well ahead with this agenda and fully support the level playing field objective as a fairer and more effective solution for governments and business."
Roadblocks ahead
However, Singapore’s deputy prime minister, Tharman Shanmugaratnam, said UK overseas territories needed to come on board to ensure the convention functioned properly.
"Signing the convention reflects Singapore’s commitment to tax co-operation based on international standards, but the standards can only work if all financial centres come on board," Shanmugaratnam said.
The organisation that represents Spain’s Inspectors of Inland Revenue, IHE, also said that EU level agreements regarding combating fiscal fraud were "not enough", and called for a mechanism to isolate countries that do not automatically provide tax information.
The S-factor
Luxembourg’s Prime Minister, Jean-Claude Juncker, highlighted the importance of having Switzerland, the biggest offshore centre in the world with US$2 trillion of offshore assets, on board with the automatic tax exchange agreement.
Meanwhile, Switzerland has struck a deal with the US on, 29 May, to end a dispute over the complicity of Swiss banks in tax evasion by Americans.
