US, UK, Australia To Provide Tax Information To Others
Tuesday, May 14, 2013
It has been announced that the tax administrations from the United States,
Australia and the United Kingdom have developed a plan to share tax information
involving trusts and companies holding assets on behalf of residents in jurisdictions
The Internal Revenue Service (IRS), the Australian Taxation Office and HM Revenue
& Customs (HMRC) are each said to have acquired a substantial amount of
data revealing extensive use of such entities organized in a number of jurisdictions
including Singapore, the British Virgin Islands, Cayman Islands and the Cook
Islands. The data contains both the identities of the individual owners of these
entities, as well as the advisors who assisted in establishing the entity structure.
The three tax offices have been working together to analyze this data and have
uncovered information that may be relevant to tax administrations of other jurisdictions.
Thus, they have developed a plan for sharing the data, as well as their preliminary
analysis, if requested by those other tax administrations.
"This is part of a wider effort by the IRS and other tax administrations
to pursue international tax evasion," said IRS Acting Commissioner Steven
T. Miller. "Our cooperative work with the UK and Australia reflects a bigger
goal of leaving no safe haven for people trying to illegally evade taxes."
While it was emphasized that there is nothing illegal about holding assets
through offshore entities, it was noted that "such offshore arrangements
can often be used to avoid or evade tax liabilities on income represented by the
principal or on the income generated by the underlying assets." In addition,
advisors may be subject to civil penalties or criminal prosecution for promoting
such arrangements as a means to avoid or evade tax liability, or to circumvent
information reporting requirements.
"These arrangements may be perfectly legitimate or may involve tax avoidance,
evasion or other serious offences by taxpayers and we need to look closely at
the information we now hold," Australian Tax Commissioner Chris Jordan
On its part, HMRC has confirmed that it has, so far, identified over 100
people who benefit from such offshore arrangements, and a number of those individuals
had already been identified and are under investigation for offshore tax evasion.
They have also identified more than 200 UK accountants, lawyers and other professional
advisors who advise on setting up these structures who will also be scrutinized.
It is expected that this multilateral cooperation and coordinated effort will
allow many countries to efficiently process this information and effectively
enforce any laws that may have been broken. Increasingly, it was added, tax
administrations are working together in this way to assist one another in identifying
non-compliance with tax laws.
In fact, following the announcement by the three countries, the Ministry of
Finance, in conjunction with the Inland Revenue Authority of Singapore (IRAS)
and Monetary Authority of Singapore, confirmed that Singapore is fully committed
to working with the tax authorities of Australia, UK and US in the investigation
of structures that may be involved in wrongdoing.
It was added that, following the completion by those countries
of their analysis of the data to determine if such structures have been used
for any wrongdoing, Singapore will assist them to the fullest extent possible
under its laws and tax agreements, which allow for the exchange of information,
including banking and trust information.
The Singaporean authorities are also looking into whether any tax offences
have been committed in Singapore. They have started requesting these tax authorities
for the data of entities linked to Singapore to be shared with Singapore. As
part of IRAS's ongoing programs, IRAS audits and conducts compliance investigations
into entities that could be using offshore structures to conceal income and
avoid being taxed in Singapore.