G20: Pressure rising on tax haven USA
Tax Justice Network | 10/07/2017
The pressure is rising over non-compliant territory: the era of tax havens seems to slowly come to an end since even the USA could be threaten by economic sanction if they don’t comply with the Common Reporting Standard (CRS) by 2018.
Whilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice.
It’s so good we quote it in full below. But the key point is in our added italics: the EU (and presumably others) have managed to get the US to sign up to the new international standard for automatic, multilateral exchange of tax information, the Common Reporting Standard (CRS).
The US is currently the only financial centre of any size not to sign up to the CRS.
Further on in the text the communiqué threatens sanctions against countries which do not meet the agreed international standards on tax transparency which include adoption of the CRS. So has the US given up on the opaque road marked ‘Tax Haven USA’?
The logic of the communiqué is clear. If the OECD is serious about enforcing international standards of tax transparency, it must blacklist the US if it fails to adopt the CRS before 2018. This will pave the way for other countries to put in place sanctions against US banks, forcing compliance. Whether the OECD will have the political space, or the guts to do that to its biggest member, is another question altogether. But it’s now clear that the EU is promoting the CRS as the standard it expects the US to reach. The EU blacklisting process will also be watched with interest.
International Tax Cooperation and Financial Transparency: We will continue our work for a globally fair and modern international tax system and welcome international cooperation on pro-growth tax policies. We remain committed to the implementation of the Base Erosion and Profit Shifting (BEPS) package and encourage all relevant jurisdictions to join the Inclusive Framework. We look forward to the first automatic exchange of financial account information under the Common Reporting Standard (CRS) in September 2017. We call on all relevant jurisdictions to begin exchanges by September 2018 at the latest. We commend the recent progress made by jurisdictions to meet a satisfactory level of implementation of the agreed international standards on tax transparency and look forward to an updated list by the OECD by our next Summit reflecting further progress made towards implementation. Defensive measures will be considered against listed jurisdictions. We continue to support assistance to developing countries in building their tax capacity. We are also working on enhancing tax certainty and with the OECD on the tax challenges raised by digitalisation of the economy. As an important tool in our fight against corruption, tax evasion, terrorist financing and money laundering, we will advance the effective implementation of the international standards on transparency and beneficial ownership of legal persons and legal arrangements, including the availability of information in the domestic and crossborder context.
More details here