Fifty-one countries sign OECD pact to tackle tax cheats
Oct 30, 2014 08:46 AM EDT
Oct 30, 2014 08:46 AM EDT
Finance ministers and tax chiefs from 51 countries signed an agreement on Wednesday to automatically swap tax information, which Germany's finance minister said heralded the end of tax evasion via secret bank accounts.
"Let's make a joint contribution to more transparency and fairness in our globalized 21st century," Wolfgang Schaeuble told a taxation conference of about 100 countries coordinated by the Organization for Economic Cooperation and Development.
The pledge from so many countries -- Schaeuble said there were 51 signatories from four continents, after one country joined at the last minute -- is the result of years of OECD efforts to facilitate tax authorities' access to bank data.
OECD Secretary General Angel Gurria said the taxation deal should "help to recover the trust the public today has lost" during the global financial crisis and economic downturn.
"Tax evasion is not just illegal, it is immoral," Britain's finance minister, George Osborne, told a news conference by the ministers. "You are robbing from your fellow citizens and you should be treated like a common thief."
Schaeuble had told German newspaper Bild before the talks that the OECD agreement was making tax evasion more difficult, adding: "Banking secrecy in its old form has had its day."
The European Union has enforced the automatic exchange of interest income since 2005 and America's Foreign Account Tax Compliance Act (FATCA) has required non-U.S. institutions to provide U.S. tax authorities with data on accounts since 2010.
The United States was not a signatory in Berlin. Gurria said it was having its own internal debate on taxes, but was a "very strong supporter of everything we are doing".
He added that Switzerland was part of the process but was not one of the 51 states which had agreed to be "early adopters" before the 2018 deadline.
Schaeuble said the OECD deal "would not have been possible without FATCA, which was the trigger for our own process". The "G5" biggest European economies -- Germany, France,Italy, Spain and Britain -- have negotiated with Washington for FATCA to be implemented reciprocally.
French Finance Minister Michel Sapin described the Berlin agreement as the "first pillar -- fighting tax fraud committed by private people". "Then we need to reduce tax optimization by companies," he added.
Schaeuble, whose father was a tax adviser, has campaigned for the European Union to close loopholes used by multinational firms to reduce tax bills by exploiting differences in national tax rules. He is now targeting "patent boxes" that permit firms tax breaks on profits generated by patented research.
But the 72-year-old minister said he had no illusions that the ancient art of tax evasion would be consigned to history.
"The risk of being found out becomes very high. But as long as people exist, they will not all obey the law. They'll work out new ways to dodge taxes," Schaeuble said.
But it should end the controversial practice of some German state governments of buying CDs with tax data stolen from Swiss banks, which has led to a rise in the number of people turning themselves in to avoid prosecution for evasion.
"Hopefully tax CDs will soon no longer be worth it. I always found it problematic to cooperate with 'fences' to enforce the law," said Schaeuble, referring to someone who receives stolen goods.
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