Tax evasion: the bank secrecy recedes

This is ten years ago, in April 2009 in the midst of economic and financial crisis, during the summit of G20 countries in London, that the war against tax haven

Tax evasion: the bank secrecy recedes

This is ten years ago, in April 2009 in the midst of economic and financial crisis, during the summit of G20 countries in London, that the war against tax havens has been officially declared. The Finance ministers of the G20 will be able to measure it, this weekend in Fukuoka, Japan, a part of the progress. Miguel-Angel Gurria, the secretary-general of the OECD - international organization become the armed arm of the G20 for tax issues - they will submit a report, made public this Friday.

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In the arsenal that States are deploying progressively for the past ten years to reduce the amounts escaping from their crates, the weapon considered to be the most effective is the automatic exchange of bank information. When Pascal Saint-Amans, the director of the fiscal affairs of the OECD started to work on the subject, he says, "there were 40 agreements of exchange of information. There are more than 5,000 today." Since the entry into force of the automatic exchange of information from 2017, the OECD has identified that between September and December 2018, 90 countries have exchanged information (the identity of the beneficiary, balance) on bank accounts held in their territory by foreign holders. These data include 47 million accounts and total assets of 4900 billion dollars. More than two-times the GDP of France! Attention, warns Pascal Saint-Amans, this colossal sum does not correspond to the tax fraud. The bulk of these offshore accounts is declared. But recovering the integrity of these data, the tax authorities of a country can then cross-reference the information to track down the fraudsters.

Between 2009 and 2019, the various exchanges of information (which were not automatic until 2017) have helped the countries of the OECD and the G20 to recover $ 95 billion in the form of tax or penalties.

Ten countries do not play the game

This envelope of nearly 5000 billion is not complete, note the OECD. Two large countries, Brazil and Indonesia have not yet provided the amounts of the bank balances held abroad by their nationals. Another hole in the racket: India has not received information from Switzerland, where its wealthy citizens are certainly large amounts of security, believed to be in the OECD.

The secretary-general of the OECD will point to the ten countries (one speaks of "courts" in administrative language), which do not yet play the game the automatic exchanges of information. The Turkey is out of this list which includes the sultanate of Brunei or Saint-Vincent, in the west Indies. More surprisingly, Israel was among the States "in delay". Explanation of the OECD: "a group ultraorthodoxe the Parliament opposed the law allowing for the automatic exchange of banking data at the end of last year. Since then, the legislation has been adopted, and Israel will join countries co-operative.

Decline of 34% of deposits offshore

The OECD has measured that the amount of deposits offshore has fallen to 551 billion, representing a decline of 34% since 2008, whereas between 2000 and 2008, it had swelled to 1,600 billion dollars. The financial crisis has certainly been there but Pascal Saint-Amans ensures that there is a link between the implementation of exchange of information and decline in foreign assets. The correlation is clear, he says, in the Bahamas or Singapore. Hold an account in these jurisdictions is in itself not illegal if the assets are declared to the tax authorities of the country of the beneficiary of the account. But the experience and the scandals such as the Panama Papers have shown that it is often to escape from the tax office that some individuals have opened accounts in these jurisdictions welcoming.

Updated Date: 09 June 2019, 00:00

Kathleen Lees


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