Friday, June 21, 2019
The OECD has reported on the progress achieved to improve tax transparency internationally under the new Common Reporting Standard (CRS), ahead of the meeting of G20 finance ministers in Fukuoka, Japan.
The CRS is the OECD's new tax transparency standard that provides for the automatic exchange of information between countries to support efforts to tackle fiscal crime. According to the OECD, more than 90 jurisdictions are now exchanging data automatically on more than 47 million offshore accounts, with a value of about EUR4.9 trillion.
"The international community has brought about an unprecedented level of transparency in tax matters, which will bring concrete results for government revenues and services in the years to come," said OECD Secretary-General Angel Gurria. "The transparency initiatives we have designed and implemented through the G20 have uncovered a deep pool of offshore funds that can now be effectively taxed by authorities worldwide. Continuing analysis of cross-border financial activity is already demonstrating the extent that international standards on automatic exchange of information have strengthened tax compliance, and we expect to see even stronger results moving forward."
According to the OECD, voluntary disclosure of offshore accounts, financial assets, and income in the run-up to full implementation of the automatic exchange of information (AEOI) initiative resulted in more than EUR95bn in additional revenue (tax, interest, and penalties) for OECD and G20 countries over the 2009-2019 period.
Preliminary OECD analysis drawing on a methodology used in previous studies shows the very substantial impact AEOI is having on bank deposits in international financial centers (IFCs), the OECD said. Deposits held by companies or individuals in more than 40 key IFCs increased substantially over the 2000 to 2008 period, reaching a peak of USD1.6 trillion by mid-2008.
However, these deposits have fallen by 34 percent over the past ten years – a decline of USD551bn – as countries adhered to tighter transparency standards. According to the OECD, a large part of that decline is due to the onset of the AEOI initiative, which accounts for about two-thirds of the decrease. Specifically, AEOI has led to a decline of 20 percent to 25 percent in the bank deposits in IFCs, according to preliminary OECD data. The complete study is expected to be published later this year.
"These impressive results are only the first stock-taking of our collective efforts," Gurria said. "Even more tax revenue is expected as countries continue to process the information received through data-matching and other investigation tools. We really are moving closer to a world where there is nowhere left to hide."