A total of 51 countries, including Britain and Spain, have signed a new agreement to share economic data, in a sweeping move to end international tax evasion, the Organisation for Economic Cooperation and Development announced this week.
Finance officials hailed the agreement as a major step in ending the role of banks in tax evasion schemes.
“Banking secrecy in its old form has had its day,” said German finance minister Wolfgang Schaeuble.
The agreement aims to bring a new level of transparency and shared data to global banking, a move which has been underway for the past 10 years. The EU has mandated the automatic exchange of interest income since 2005 and the U.S. passed a sweeping in law in 2010, Foreign Account Tax Compliance Act (FATCA), which requires overseas banks to provide account information.
But the new agreement is far more sweeping, calling for banks to provide “all financial information” automatically on an annual basis to other countries. The new agreement will go into effect in 2017, although some countries will delay until 2018.
Famed tax have Switzerland supports the plan, but did not sign on as an “early adopter” and likely won’t implement the guidelines until 2018, officials said. The United States also was not among the 51 signees, although U.S. government officials reportedly support the measure.
Officials described the new law as “the first pillar” to curbing tax evasion by private individuals, with stiffer measure in the works for corporations.
“Tax evasion is not just illegal, it is immoral,” Britain’s finance minister George Osborne, told reporters. “You are robbing from your fellow citizens and you should be treated like a common thief.”
International property buyers are notorious for looking for ways to stash income and profits. This new agreement will certainly make that more difficult, while sending a clear signal that there is a new level of interest in enforcing the law. Anyone looking for a tax dodge better be very, very careful.
But officials acknowledge the new agreement won’t put an end to tax evasion.
“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.