OECD report to help G8 offensive against tax evaders

The OECD provided ammunition Tuesday for an expected G8 offensive against tax evasion in a report outlining how to bring about automatic sharing of financial information that would shoot a hole through banking secrecy. Prepared at the request of G8 leaders meeting in Northern Ireland, the report outlines how to swiftly achieve their goal of tightening the noose of information exchange around tax havens. It suggests that countries adopt broad, relatively standardised, framework legislation so that bilateral information-sharing agreements can be quickly and easily negotiated. "Offshore tax evasion is a global issue requiring global solutions," noted the report, "otherwise the issue is simply relocated, rather than resolved." It also urged countries to look at more than just bank accounts so that people do not simply shift their funds into other assets or vehicles such as trusts. Spelling out the measures that banks must take will also help ensure that they make the effort to provide quality information, it added. With public outrage mounting over recent cases of brazen tax evasion and avoidance at a time of tax rises and budget cuts, G8 host British Prime Minister David Cameron has targeted making progress in shooting a hole through the banking secrecy which allows people to hide assets. The likely weapon is bilateral agreements on the automatic sharing of financial information. Last year the United States and five European countries decided to move in this direction by drafting a model agreement based on a 2010 US law. Called the Foreign Account Tax Compliance Act (FATCA), it obliges all banks to automatically provide US authorities with all information they hold concerning all assets owned by US taxpayers, instead of upon request as was the previous practice. The OECD, a policy advisory body of 34 industrialised nations, was later tapped to help ensure that the model can be swiftly implemented globally.