This morning, George Osbourne stated that a number of notorious tax havens have agreed to much greater levels of transparency and information sharing. Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands are among the jurisdictions to have made the concessions, with Cayman Islands making a similar move.
This can be taken as a small victory for those campaigning for a more transparent financial system. Automatic information exchange agreements are integral to the tax justice campaign. Defined by the OECD, “automatic exchange of information (also called routine exchange by some countries) involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income (e.g. dividends, interest, royalties, salaries, pensions, etc)… Automatic exchange of information requires the standardisation of formats so that information can be captured, exchanged and processed efficiently in an automated matching system.”
Greater extension of AIEAs to other countries will mean that tax authorities will have the necessary information to prevent tax avoidance. However, today’s win is only a baby step. For one, these secrecy jurisdictions have only agreed to automatically share information bilaterally with the UK and multilaterally within the G5 (Britain, France, Germany, Italy and Spain). Transferring information to OECD countries who are at the heart of the offshore financial system will not bring about dramatic change just yet.
Another problem is that the UK tax authority HMRC is shamefully understaffed and under-resourced. Since 2004 successive governments have been downsizing HMRC by tens of thousands of staff and millions of pounds, meaning they have been unable to fulfill their current job of making sure tax avoidance and evasion is revealed and kept to a minimum. If the UK government were really committed to a new era of transparency they would invest in HMRC. Or give funding to open data groups and auditors who could do the qualified research for them.
TaxHack would be a willing recipient of this…