Tax records will be shared around the world by 2015 as part of a G20 pledge to crack down on international tax evasion. China was the sole holdout until it agreed to the plan just days before the summit in St. Petersburg.
The G20 representatives issued a statement of their commitment to the automatic exchange of information as the new global standard. The G20 countries will develop the details of the plan throughout 2014 with the goal of beginning to exchange information automatically on tax matters among G20 members by the end of 2015.
In announcing the agreement, the G20 trumpeted their progress toward global tax transparency and enforcement since 2009, including
- a declaration of the end of the era of bank secrecy at the G20 London Summit in April 2009;
- 120 countries having committed to the G20’s standards of tax transparency, including FATF’s (Financial Action Task Force) recommendations on the disclosure of beneficial ownership of entities;
- an agreement to consider the voluntary automatic exchange of tax information at the Cannes Summit in 2011;
- acceptance of the OECD report on automatic tax information exchange at the 2012 Los Cabos Summit; and
- G20 Finance Ministers and Central Bank Governors full endorsement of the OECD proposal for global multilateral and bilateral automatic exchange of information for tax purposes in July 2013.
“The 20 largest economies in the world having committed to full-scale automatic exchange of tax information represents a sea change in global tax enforcement,” said Jim Mastracchio, Co-Chair of BakerHostetler’s Tax Controversy Practice. “Presumably, the G20 countries will use their leverage to bring the rest of the world into this new enforcement regime.” Jay Nanavati, a former DOJ Tax Division Assistant Chief added, “the global dragnet for unreported income, accounts, and even real property, is closing around individuals and entities worldwide.”