OECD proposes agreement on sharing details of offshore accounts

by Reuters
Thursday, 13 February 2014 14:35 GMT

Banners hang in the OECD's Conference Centre, June 3 2008. OECD//File Photo

Image Caption and Rights Information

By Leigh Thomas

PARIS, Feb 13 (Reuters) - Governments would automatically share information on taxpayers' offshore bank and brokerage accounts with foreign tax authorities, under a draft agreement published on Thursday by the Organisation for Economic Cooperation and Development.

At the request of the Group of 20 biggest economic powers, the OECD devised the automatic exchange of financial information so that tax evaders would have no room to hide when they stashed cash in foreign accounts.

So far, 42 countries have indicated they want to use the standard for reporting financial information to foreign governments, the OECD's tax policy director, Pascal Saint-Amans, told reporters. Among them are Britain, France, Germany and Italy.

The Swiss government, which has recently shown a new willingness to cooperate with foreign tax authorities, said it would take a position on using the standard when it became a global norm.

Other countries will have to decide whether to sign up in the months before a G20 summit in November in Brisbane, Australia, Saint-Amans said.

With many governments clamping down on tax evasion, countries are increasingly sharing information about taxpayers without a specific request or suspicion of wrongdoing. That has created a need for a common standard to simplify the exchange of financial details.

The European Union has estimated that governments lose hundreds of billions of dollars to tax evasion each year. Much of the money is thought to be stashed abroad in undeclared offshore accounts.

Under the OECD's blueprint, banks, brokers and some insurers and investment funds would have to report residents' account balances as well as interest, dividends and other investment income to their government. The government would then make that information available automatically to any other government that had signed the information-exchanging agreement.

"You collect the data, you put it in the pipe and it goes to the other party," Saint-Amans said.

Financial companies would also be required to identify the ultimate beneficiaries of shell companies, trusts and similar legal arrangements that now can be used to evade taxes.

The automatic exchange of tax information has increasingly become the norm internationally as Washington implements its Foreign Account Tax Compliance Act. The act forces banks outside the United States to give the U.S. government details of foreign accounts held by its citizens.

Financial-services companies will probably have to invest in new technology so they can report taxpayers' information, but the OECD says that having one global standard should ultimately reduce the burden.

"The new regime will mean significant costs for financial institutions as they have to modify and build systems to meet their obligations," said Simon Leach, financial services tax partner at PwC.

(Reporting by Leigh Thomas; Editing by Larry King)

Our Standards: The Thomson Reuters Trust Principles.