A bid to make tax evasion more difficult for rich people and corporations has taken a massive step forward as a slew of countries have signed up to a tax information sharing agreement.
Growing numbers of countries are signing up to the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters with 44 countries already signing on the dotted line, including the UK, US and Germany.
Another nine countries – including Austria, Saudi Arabia, Luxembourg and Singapore – are expected to add their names to the agreement which allows tax authorities to hand over requested information to colleagues in other countries.
The OECD says another seven countries are close to signing and the agreement could move from handing tax information over on request to an automatic transfer of information.
A spokesman for the OECD said: “The convention being signed is a comprehensive instrument for tackling tax avoidance and evasion which has now become a top priority for all countries.”
Global tax network
He added that interest in signing the convention is picking up because the next G20 Summit being staged in Russia is expected to make tackling tax mitigation a main priority.
This has already been flagged up in a communiqué issued in April when the G20 said it was expecting all countries and jurisdictions to either sign up, or to express an interest in signing, the convention before the G20 Summit begins.
The OECD says its convention makes it easier for countries to implement international tax laws while respecting the rights of its taxpaying citizens.
However, the main thrust of the convention is that it encourages signatory countries to work together in assessing and then collecting taxes by exchanging relevant information and offering international assistance.
The convention began life in 1988 and was designed by the OECD and the Council of Europe – though the European Commission has recently announced its plans to develop a law which will bring tax mitigation across the EU to an end.
Tax evasion is an increasingly controversial subject and one that the UK’s government is keen to promote.
Indeed, the Prime Minister David Cameron has written to all of the British dependencies and territories telling them to sign up to international conventions.
The OECD convention signatories have attracted the attention of tax campaigners and Joseph Stead, who is an economic advisor to Christian Aid, said the move increased the pressure on UK-linked tax havens to sign-up.
He said: “These tax havens must follow suit or it’s time now for the UK government to say ‘enough is enough’ because the time for asking them to sign-up nicely is over.”