The US Foreign Account Tax Compliance Act (FATCA) has gone global triggering more than 50 nations signed up to a tax information swapping network.
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In an historic accord, each nation has built up on the foundations of FATCA to build a global database of bank and investment information, interest payments and beneficial ownership of companies and other entities.
The countries will then open this databank to any other nation signed up to the agreement signed at a global forum in Berlin, Germany.
The global FATCA is designed as an international crack down on tax evasion by individuals and companies.
The historic US FATCA started from July 1, 2014, and obliges more than 100,000 financial institutions around the world to report details of their American customers to the US Internal Revenue Service (IRS).
The new global measure will lay bare the secret financial affairs of the wealthy and allow HM Revenue & Customs (HMRC) and other tax authorities to detect undeclared income and assets.
One source in the HMRC suggested the agreement will expose billions of pounds worth of secret cash and investments stashed in offshore hideaways by wealthy British taxpayers.
Chancellor George Osborne spoke in Berlin just before the signing of the agreement.
“Today is a triumph for the persuasion and tenacity of the British government in pursuing those who do not pay the right amount of tax by deliberately trying to hide their wealth,” he said.
“Britain and Germany floated this idea three years ago and it has taken that long to come to fruition. I never hoped that so many countries would sign up in such a short time. The network has 57 member nations and is still growing.”
Nowhere to hide
The drive to unify tax information swapping has been led by the 34 nation Organisation of Economic Cooperation and Development (OECD), which has developed a standard treaty for each nation.
All the world’s leading economies have signed up to the Berlin agreement.
“This is a landmark moment,” said Osborne. “This is a crystal clear message to those who evade paying their taxes that there really is nowhere left in the world to hide your money, because wherever you are you will be found out.
“It’s only a matter of time before tax authorities the world over profile those who are evading their responsibilities and go to get them.”
The first of the 57 nations signing the agreement will start swapping tax information in 2017.
Another 34 countries have pledged to join by 2019.
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