New era of transparency in the fight against international tax avoidance
Increased globalisation means it is ever easier for taxpayers to make, hold and manage capital investments using financial institutions based outside the state where they are resident. This allows large sum of money to be invested abroad, where they are not taxed, assuming the taxpayer does not comply with their own state's tax obligations.
More than 100 countries have now pledged to engage in automatic information exchange from 2017/18 onwards. Banks, insurers and investment companies will, in future, have to report certain customer data sets to the local tax authorities. They will then automatically transmit this information to the tax authorities of the customer's state of residence.