OECD proposes data exchange norm in tax evasion crackdown

AFP, Paris :
The OECD unveiled Thursday a global standard for the automatic exchange of financial data between countries amid an intensifying international effort to crack down on tax evasion.
As public outrage mounted during the global economic crisis over wealthy individuals escaping paying taxes by hiding money abroad, world leaders agreed to a radical shift in practice in which countries will begin to automatically share information on bank accounts. The 34-nation Organisation for Economic Cooperation and Development was charged last year with coming up with a global standard on this information exchange, and its chief Angel Gurria said it will prove to be “a real game changer”.
“This new standard on automatic exchange of information will ramp up international tax co-operation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion,” he said in a statement.
Developed in cooperation with the Group of 20 gathering of advanced and leading emerging markets, it requires countries to gather information from their financial institutions and automatically exchange the data with other participating countries, and the system should come into force in 2015.
Previously, countries would have to request data, the process was often complicated, and some countries were uncooperative.
The United States was the catalyst for the change with is so- called FATCA law which requires international banks to provide data on accounts held abroad by its citizens and companies or face sanctions.
The OECD said its proposed standard sets out what financial account information is to be exchanged, which institutions need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed.
The proposed standard will be proposed for the endorsement of G20 finance ministers during their meeting in the Australian city of Sydney on February 22-23.