Australia and U.S. sign agreement to counter tax avoidance

Australia signed a tax-information sharing agreement with the U.S. Treasury Department on Monday ahead of a new U.S. law that will crack down on offshore tax avoidance.

The accord, one of a number of so-called intergovernmental agreements (IGA) between Washington and individual countries, comes ahead of the implementation in the United States in July of the Foreign Account Tax Compliance Act (FATCA).

It reduces the overall burden on Australian business, minimizes costs by simplifying due diligence requirements and broadens arrangements between the Australian Tax Office and the U.S. Internal Revenue Service.

Australian banks welcomed the agreement.

“This is an essential development in facilitating capital flows into and out of Australia while having best practice regulation,” Steven Münchenberg, Chief Executive of the Australian Bankers’ Association said.