With China joining the international effort to combat tax evasion, all G20 countries have now united and committed towards the automatic exchange of information.
Tax evasion involves using illegal methods to avoid paying taxes – it is a crime.
Tax evasion is a serious global problem. Is estimated that approximately 8% of the global financial wealth of households lies in tax havens.
On August 27th, China signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
Tax authorities globally are moving from bilateral to multilateral cooperation on tax evasion, and to automatic exchange of information rather than exchanging information on request.
According to the OECD (Organization for Economic Co-operation and Development), the Convention provides a framework for multilateral cooperation.
It also helps the proper function of other initiatives, including the standardized multilateral automatic exchange model which is currently being developed by the G20 countries and the OECD.
OECD Secretary General Angel Gurría, said:
“Today’s signing is both timely and important as the G20 has endorsed automatic exchange of information as the new global standard. This Convention provides the ideal instrument to swiftly implement automatic exchange, and to do so with a wide range of partners. This also represents another significant step in the strengthening of collaboration between China and the OECD. (Read the full speech)”
The Convention also provides for:
- Assistance in the collection of taxes.
- Simultaneous tax examinations.
- Spontaneous exchange of data.
The OECD describes the Convention as a key tool for authorities in their fight against offshore tax evasion.
The OECD added “The Convention also ensures compliance with national tax laws and respects the rights of taxpayers by protecting the confidentiality of the information exchanged.”
All countries and their people benefit from tax cooperation and compliance all of the time, not just when the public purse needs money.
Finance Ministers and Central Bank Governors said in their last G20 meeting “We call on all countries to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters without further delay”.
Fifty six countries now cooperate to combat tax evasion
The Convention has been signed by the following countries: Albania, Argentina, Australia, Austria, Azerbaijan, Belgium, Belize, Brazil, Canada, Colombia, Costa Rica, China, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Ghana, Greece, Guatemala, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, New Zealand, Nigeria, Norway, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, United Kingdom, and United States.