Confidentiality concerns grow pre-global tax evasion crackdown

Governments and tax partners need to work to ensure confidentiality is protected when new international tax transparency rules come into force in 2017, according to OECD director, Pascal Saint-Amans.

“There is a fundamental difference between the automatic exchange of information and the existing system of exchange upon request, particularly because of issues around confidentiality,” said Saint-Amans to an audience of more than 400 tax, trust and wealth management professionals in London last week.

The director of the OECD Centre for Tax Policy and Administration proposed a mechanism for peer review to allow countries to check other jurisdictions before information is automatically sent across. He also suggested it would be practical to have prior investigations of tax authorities.

In October last year, 51 countries signed the information exchange agreement in a bid to clampdown on cross-border tax evasion

“Tougher incentives”

Saint-Amans said the playing field needs to be levelled for all jurisdictions to ensure the countries signed up to the agreement are abiding by the same single standard.

“Those who don’t play by the rules should not be in a position to get any benefit from the exchange of information,” he said. “There needs to be tougher incentives and defensive measures to ensure jurisdictions implement their commitments.”

“Those who don’t play by the rules should not be in a position to get any benefit from the exchange of information”

Jersey was praised by Saint-Amans who said the region had helped drive forward and shape the international tax agenda. He added that other smaller jurisdictions were now moving to become compliant with the global standards, realising how a lack of cooperation could be detrimental to their reputation.

“We are at a critical juncture and we don’t know what the future will be, but I think it’s important that we keep this level of cooperation.”

“Pressure is on”

Also during the conference, Colin Powell, the Jersey Government’s adviser on international affairs, said: “We have got to be seen as a cooperative jurisdiction if we want to be accepted.

“Big countries are quick to latch on to reasons to be negative towards smaller jurisdictions if they appear to be uncooperative.

“The pressure is really on,” he said. “There is still lots to do to make sure individuals within the industry know they will be penalised if they don’t comply.”