44 jurisdictions recently issued a joint statement on implementing a global standard for the automatic exchange of information between tax authorities.
The standard obliges countries and jurisdictions to exchange information obtained from their banks and financial institutions automatically on an annual basis.
Among the 44 early adopters belongs Cyprus as well as Argentina, Belgium, Bulgaria, Colombia, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Malta, Mexico, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden, the United Kingdom, Isle of Man, Guernsey and Jersey, Anguilla, Bermuda, the BVI, the Cayman Islands, Gibraltar, Montserrat, and the Turks & Caicos Islands.
In a joint statement, the group of early adopters said that following the agreement on the Common Reporting Standard developed by the Organization for Economic Cooperation and Development (OECD), they intend to implement it according “to an ambitious but realistic timetable.”
The timetable differentiates between accounts opened by December 31st, 2015, and accounts opened as from January 1st, 2016, which will be subject to new procedures.
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The due diligence deadlines also vary based on whether it is a high-value pre-existing individual account, for which the deadline is December 31st, 2016, or low-value pre-existing individual account and entity account, for which due diligence will need to be completed by December 31st, 2017. The information on new accounts and pre-existing individual high-value accounts will be exchanged by the end of September 2017. All other account information will be exchanged by the end of September 2018.
Cyprus as well as the rest of the 38 states committed to early adoption of the common reporting standard by joining the initiative launched by the G5 – France, Germany, Italy, Spain and the U.K. – last April. The Group invited further countries to join the initiative to create a global system of automatic information exchange against tax evasion. “In doing so, we recognized that only those financial centers which adopt the highest standards in tax transparency and work in close cooperation to tackle cross-border tax evasion will prosper in the future,” the joint statement highlighted. Further it says, “Tax evasion is a global problem and requires a global solution. We therefore welcome the new standard in automatic exchange of information between tax authorities developed by the OECD. This will provide a step change in our ability to clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.”
Mr. Gurria, OECD Secretary-General, stated “The commitment by so many countries and jurisdictions to implement the OECD’s global standard on the basis of a specific and ambitious timetable is good news for everyone who wants to see a fair and transparent international tax system. The rapidity with which the new norms are being developed and agreed shows that the political momentum for reform is now overwhelming.”