The G20 on Friday endorsed automatic exchange of tax data among nations, calling it the expected new standard for how governments can help each other fight cross-border tax cheating.
A G20 communique, issued at the semi-annual meetings of the IMF and the World Bank, was a small, but meaningful step toward more transparency, tax justice advocates said.
“It is positive reinforcement and really the next step is the G20 members committing to pushing this,” Global Financial Integrity counsel Heather Lowe said.
At a time of intensified scrutiny of tax dodgers, the G20 communique urged “all jurisdictions to move toward exchanging information automatically with their treaty partners.”
Currently, only a small group of countries have signed tax treaties guaranteeing automatic exchange of tax information, as opposed to delivery upon specific request. Earlier on Friday, 14 countries, including Switzerland, were singled out by the Paris-based Organisation for Economic Co-operation and Development (OECD) as laggards in making progress toward meeting new global standards for tax data exchange.
The United Arab Emirates and Panama were also among the 14 countries named as failing to meet the OECD’s Phase 2 standard of international information exchange, according to the report by the OECD, which promotes cooperation among developed nations.
The G20 communique urged the 14 jurisdictions to comply.
“Significant progress has been made ... but significant progress remains to be made,” OECD Centre for Tax Policy director Pascal Saint-Amans told reporters.
“Switzerland for the time being is stuck,” he said, saying that Switzerland has made progress, but needs to make more changes, Saint-Amans said.
The Swiss often complain they are unfairly singled out in the global discussion about tax avoidance.
Swiss Finance Minister Eveline Widmer-Schlumpf told reporters at the meetings: “We are ready to take part in discussions under the condition that it is not just a European standard, but a global” one.
Tax evasion has dominated European headlines in recent weeks, following the admission by a disgraced former French minister that he held a Swiss account and the recent leak of thousands of holders of secret bank accounts worldwide.
Earlier this week, sources told Reuters that Swiss and US governments were weighing a possible solution to end their long-standing dispute over Swiss banks accused of helping wealthy Americans evade billions of dollars in taxes. A historical bastion of banking secrecy, Switzerland has been under fire for several years for turning a blind eye to the sheltering of taxable income by its banking sector.
UBS AG, Switzerland’s largest bank, paid US$780 million in 2009 and handed over thousands of client names to settle US charges that it helped US citizens hide funds.