The crackdown was launched in the wake of the global financial crisis in 2009 and has since brought in EUR14 billion in additional tax revenues, according to information from 20 countries.
According to the Organization for Economic Cooperation and Development (OECD), which developed the agreement with the Council of Europe, the deal could provide cash-strapped G20 governments with up to US$100 billion in tax revenue.
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Those among the G20 countries to have signed the Multilateral Convention on Mutual Administrative Assistancein Tax Matters were Argentina, Australia, Brazil, Canada, Germany, Indonesia, Japan, Mexico, Russia and Turkey. It had already got approval from France, Italy, Korea, Mexico, UK and the US.
The agreement offers a wide range of tools for cross-border tax co-operation. It includes automatic exchange of information, multilateral simultaneous tax examinations and international assistance in the collection of tax due.
At the same time, the Convention imposes safeguards to protect the confidentiality of the information exchanged.
Switzerland holds US$2 trillion, or 27% of the world’s offshore wealth, according to a study last year by the Boston Consulting Group.
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By GlobalDataA global tax cooperation convention is a welcome dvelopment, however we are of the opnion that it lacks to teeth to tackle the menace as increasing number of countries are signing bilateral deals that allow tax havens to keep their secrets safe.
Already, the US, Britain and Germany have signed bilateral deals with Switzerland, which allow some repatriation of tax revenue, but still guarantees Swiss banking secrecy.
T o effectivelt tackle the menace and fight against opaque structures like anonymous banking accounts or shell companies, transparency should be at the forefront of cooperation between countries which have signed this deal.
It is important to build a consensus on applying the standards to past information, including banking information, so that earlier evasion is also investigated.
Tthe limited stenghth of the signatories does not inspire much confidence and raises some serious questions over all effectiveness of the deal. Many smaller tax havens, which have used secrecy to attract large amounts of tax dodging money, are not part of the this deal.
