New (KOSDAQ: 160550.KQ – news) rules mean that almost 100 governments around the world will exchange information about bank accounts.
Expat tax dodgers are running out of places to hide, as information about their bank accounts and assets will soon be exchanged between 93 governments globally.
At present, if tax authorities suspect people of tax evasion and want details about their finances, they have to request these of overseas banks and other institutions.
But within two years, tax authorities will automatically exchange information on everyone, every year, regardless of whether they’ve been paying their taxes or not.
The information to be shared includes account balances, interest, dividends and sales proceeds from financial assets. The collection of this information will start from next year with the first exchange of information in 2017. At first, 58 jurisdictions will be involved including the expat offshore centres of the Channel Islands and Isle of Man as well as countries across the EU. Bermuda, the Cayman Islands, Liechtenstein, Argentina and South Africa will also take part.
By 2018, a further 35 countries will have joined including Australia, Canada, China, Singapore, Qatar, Monaco and Switzerland.
Adam Thompson, tax manager at the Fry Group, said: “This is a fundamental change in how information is shared between tax authorities. The previous system was that if HM Revenue and Customs, for example, wanted information about a UK resident’s overseas holdings it had to write to that country’s tax authorities to request the information.
“For those expats who have not been wholly transparent in their dealings with their local tax authority this will be a big change and if they have not disclosed something, they may have a problem. If expats do have unreported assets or income, then now is a good time to disclose it before the automatic regime starts from 2017.”
Jason Porter, director at Blevins Franks, said: “Automatic exchange of information should hold no fear for the fully transparent taxpayer but the serial tax evader should be concerned. In the past, it would have required evidence or suspicion for one state to ask another state for any financial information it may have on an individual.
“So an individual who kept a low profile and wasn’t obvious in his wealth might never have come to light. Automatic exchange of information means the same tax evader will be in the spotlight of one or other tax authority regardless of whether they were actually under suspicion or not.”
The financial institutions involved in the information passing include banks and certain collective investment and insurance firms. Mr Porter said that while those expats “who have maintained a more relaxed attitude” to declaring their worldwide assets, income and gains “could be in for a rude awakening”, it is likely that most tax authorities receiving all this information will focus on those they already suspect of tax evasion. He added: “For the rest, it could be several years down the line before the authorities catch up with them.”
Source Credits: Charlotte Beugge | Telegraph