More Countries Join Forces to Fight Tax Evasion
Countries throughout the world have been coming together to try to stop tax evasion. For years, the offshore banking industry made it possible for investors to keep millions of dollars in offshore bank accounts without their home countries being aware of such accounts. However, this is increasingly becoming impossible.
Hiding money offshore is no longer an option for most people, as countries that once valued privacy and secrecy are becoming part of international efforts to fight tax evasion through the open exchange of information.
There are now more than 100 different jurisdictions throughout the world that have agreed to work together to combat tax evasion by exchanging information by 2018. For any investors who have their money offshore, there is a good chance that the country where they are keeping their cash has become one of those cooperating countries -- or will become one soon.
This means that now is the time to explore options, like voluntary disclosure, before the government finds out about your offshore account through this exchange of information. A Washington DC tax evasion attorney can explain voluntary disclosure and help you develop the best legal strategy for resolving problems with offshore funds.
The Global Fight Against Tax Evasion
Australia and Singapore have recently agreed to exchange information on offshore accounts with each other. This agreement is part of a growing trend in which different jurisdictions agree to share data with each other. Hong Kong, Switzerland and Singapore, for example, have all agreed to be part of a large group of countries exchanging information on financial accounts.
The Australian Taxation Office and Inland Revenue of Singapore commented that they had agreed to participate in a bilateral data exchange because the jurisdictions are now “satisfied with the confidentiality rules and data safeguards that are in place in other jurisdictions to ensure the confidentiality of information exchanged and prevent its unauthorized use.”
Singapore has been under particular pressure to agree to provide information, as it is a trading hub for some of the largest commodity companies in the world. The Australian government and the governments of other resource-producing countries suspect that commodities companies were making use of the financial centers in Singapore with the goal of avoiding tax obligations.
The commodities companies have denied any effort to avoid taxes and have indicated they chose Singapore for more proximity to Asian clients, easier access to trade routes and access to local experts. However, even though a growing share of their business is in Southeast Asia, commodities companies are still suspected of transacting business in Singapore based on efforts to avoid taxes, rather than for the reasons they claimed.
The increased focus on securing cooperation from Singapore is occurring because of heightened scrutiny on undeclared and untaxed offshore wealth. Indonesia is also putting pressure on Singapore, but Singapore has refused to sign a bilateral agreement with Indonesia because Singapore will only agree to an information exchange with countries that can guarantee data confidentiality.
Of course, for many offshore accountholders, the reason funds were placed offshore was to keep the accounts confidential from their own governments. This exchange of information means the data on the accounts will now be available to government officials, which could result in tax problems for accountholders. Addressing this issue proactively is important, so those with undeclared offshore funds should consult with Kevin Thorn, a DC tax evasion attorney, as soon as possible.