End in sight for banking secrecy?
Some key tax or moneylaundering havens may be all set to lose the secrecy that surrounds their banking practices, with 64 jurisdictions, including Switzerland, Singapore, Liechtenstein and the Cayman Islands signing on Tuesday a far-reaching declaration on tax data sharing.
Signatories to the ‘Declaration on Automatic Exchange of Information in Tax Matters’ also include all 34 OECD (Organisation for Economic Co-operation and Development) countries, the G20 countries and major financial centres.
The declaration is a commitment to implement an international standard of automatic tax data sharing, developed in February by the OECD. The guidelines for this agreement are likely to be announced in September this year.
Commenting on the declaration, OECD secretary-general Angel Gurría said it is a “major step towards ensuring that tax cheats have nowhere left to hide.”
The new standard will make it mandatory for signatory countries to obtain information from their financial institutions and exchange that information automatically with other countries on an annual basis. The implementation of this pact would help India recover information on the overseas accounts of its residents as it attempts to combat the problem of black money.
Currently, Switzerland has been refusing to share information with India of accounts in the “HSBC list” that France gave to India, on the pretext that the list came from “stolen data”.
Tax analysts are sceptical that countries such as Switzerland, Luxembourg, Austria and the UK could influence the language of the new standard to make it more ambiguous.
“The UK is fighting for ‘trusts’ not to be placed on public record. Banking secrecy will diminish, but (then) the use of trusts could increase… A number of accounts with respect to Indian residents are held in discretionary trust account structures,” senior analyst, Tax Justice Network, Markus Meinzer told HT.