Costa Rica, 46 countries commit to automatic exchange of tax, financial info
May 7th, 2014 (InsideCostaRica.com) Tax evaders and privacy advocates beware – Costa Rica and 46 other countries signed up yesterday to automatically share banking, financial, and tax information in what the OECD is touting as a major step towards cracking down on global tax evasion.
The Declaration on Automatic Exchange of Information in Tax Matters was endorsed during the OECD’s annual Ministerial Council Meeting in Paris by all 34 member countries (which include the United States and Canada), along with Argentina, Brazil, China, Colombia, Costa Rica, India, Indonesia, Latvia, Lithuania, Malaysia, Saudi Arabia, Singapore and South Africa.
Under the declaration, Costa Rica, the United States, Canada, and 44 other countries have committed to “swiftly” pass new domestic laws that will allow them to collect information on all bank accounts and automatically exchange it with other participating countries.
Previously, countries would have to request data on suspected tax cheats using a process that was often complicated and some countries were uncooperative.
“The Declaration commits countries to implement a new single global standard on automatic exchange of information. The standard, which was developed at the OECD and endorsed by G20 finance ministers last February, obliges countries and jurisdictions to obtain all financial information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis,” the OECD said in a press release.
“Tax fraud and tax evasion are not victimless crimes: they deprive governments of revenues needed to restore growth and jeopardize citizens’ trust in the fairness and integrity of the tax system,” OECD Secretary-General Angel Gurría said. “Today’s commitment by so many countries to implement the new global standard, and to do so quickly, is another major step towards ensuring that tax cheats have nowhere left to hide.”
The United States was the catalyst for the change with its Foreign Account Tax Compliance Act (FATCA), which requires international banks to provide data on accounts held abroad by its citizens and companies or face sanctions.
The OECD will deliver a detailed Commentary on the new standard, as well as technical solutions to implement the actual information exchanges, during a meeting of G20 finance ministers in September 2014.