Los Angeles, CA – Finance officials from 51 countries have signed an agreement to speed the automatic exchange of tax information, eliminate banking and tax fraud and reduce international tax evasion.
The new pact – the Multilateral Competent Authority Agreement – was negotiated over several years and was finalized at a recent conference in Berlin, Germany, organized by the Paris-based Organization for Economic Cooperation and Development (OECD).
OECD Secretary General Angel Gurria said the taxation deal should “help to recover the trust the public today has lost” during the global financial crisis and economic downturn.
“Tax evasion is not just illegal, it is immoral,” Britain’s finance minister, George Osborne, told a news conference by the ministers. “You are robbing from your fellow citizens and you should be treated like a common thief.”
French Finance Minister Michel Sapin described the Berlin agreement as the “first pillar in fighting tax fraud committed by private people”. “Then we need to reduce tax optimization by companies,” he added.
The European Union has enforced the automatic exchange of interest income since 2005 and America’s Foreign Account Tax Compliance Act (FATCA) has required non-U.S. institutions to provide U.S. tax authorities with data on accounts since 2010.
The U.S. was not a signatory to the new agreement, however, Germany, France, Italy, Spain and the UK are negotiating with Washington for FATCA to be implemented reciprocally.