Tax evasion: The data revolution

THE war on those stashing undisclosed money offshore intensified this week when 47 countries, including the Group of 20 and some prominent tax havens, sealed a pact that will shake up the sharing of tax information. Under the present system, countries have to file requests with each other for data on suspected cheats. Even reasonable enquiries are often rejected as “fishing expeditions”. In future the signatories—and dozens of others that will be pressed into joining later—will automatically exchange information once a year. This will include bank balances, interest income, dividends and the proceeds of sales, which can be used to assess capital-gains tax.Some countries are likely to set up special arrangements, with reduced penalties, to encourage non-compliant taxpayers to bring money home now rather than wait to be caught once the new system kicks in, probably in 2017. The deal also increases pressure on banks to identify the ultimate owners of shell companies and trusts, behind which tax evaders often hide.The catalyst for the agreement was America’s Foreign Account Tax Compliance Act (FATCA). The law, passed in 2010, will soon impose stiff penalties on…

Link to article: www.economist.com/news/finance-and-economics/21601880-it-will-soon-be-lot-harder-hide-money-overseas-data-revolution?fsrc=rss|fec

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