The OECD has dealt another serious blow in the fight against international tax evasion and avoidance. The Paris-based organisation has defined the common rules that require financial intermediaries, lawyers, tax advisors and banks to inform tax authorities of any schemes they put in place for their clients to prevent the identification of the beneficial owners of entities or trusts, as well as other schemes to circumvent CRS (Common Reporting Standard) obligations, the global standard developed under the OECD/G20 for the automatic financial information.
The publication of the Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures on 9th. March 2018 on the OECD website responds to an explicit request from the G7. With the Bari Declaration of 13 May 2017, the Finance Ministers of the world’s major economies had called for the opening of discussions on possible means to identify and limit the ability of taxpayers to hide their income and assets offshore through opaque tax evasion schemes.
It should be recalled that the automatic exchange of information, following the adoption this year of the Common Reporting Standard by over 100 jurisdictions, has already enabled tax authorities to recover over $ 85 billion of additional tax revenue, according to OECD estimates. Many taxpayers, aware that they would no longer have a secure “roof” under which to shelter, declared their offshore assets to their respective tax authorities. However, despite this significant achievement, considerable work remains to be done. As underlined in an OECD statement, there are still persons who, often with the help of advisors and financial intermediaries, continue to put in place aggressive tax planning schemes to try and hide their offshore assets and fly under the radar of CRS reporting.
The disclosure rules developed by the OECD respond precisely to this phenomenon and should make it possible to identify the persons who still try to evade taxation, introducing an obligation on a wide range of intermediaries to disclose the schemes to circumvent CRS reporting to the tax authorities. The new rules also require the reporting of structures that hide the beneficial owner of offshore assets, companies and trusts. The information to be disclosed by the intermediaries includes all the steps and transactions that form part of the structures aimed at circumventing the CRS, including key details of the investment, organisation and the persons involved, and the relevant tax details of the clients and users, as well as information regarding other intermediaries involved.
