Under the
pledge signed by a total 47 countries, all financial information will be shared
between governments, including taxpayers’ bank balance, dividends, interest
income and sales proceeds used to calculate capital gains tax.
“It’s
clearly the end of bank secrecy abused for tax purposes,” OECD tax director Pascal
Saint-Amans told journalists at a meeting held by the international think tank
in Paris.
“It means
that governments can really assess the tax owed by people who thought they
could hide in other jurisdictions.”
While most
of the signatories had already committed to sharing tax information on an
automatic basis, the fact that Switzerland and Singapore have now also signed
up is a big step in a fight against tax evasion that governments have
intensified since the global financial crisis.
Facing
mounting pressure to dismantle a cherished culture of banking secrecy, some of
Switzerland’s 300-plus private banks had already signalled last year their
readiness to work with U.S. officials to crack down on wealthy Americans.
Switzerland
is still the world’s biggest offshore financial centre. But Singapore is
breathing down its neck and a 2013 study showed finance professionals see it
soon overtaking the Alpine nation amid a global tax crackdown and tighter
regulation.
With
Tuesday’s deal, the OECD devised a common standard to simplify the exchange of
financial details, which its 34 members and the 13 other countries agreed to
adopt.
Financial
companies will also be required to identify the ultimate beneficiaries of shell
companies, trusts and similar legal arrangements that at present can be used to
evade taxes.
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