G-20 eyes database to fight tax evasion
TOKYO -- The world's leading economies will try to outfox tax dodgers by pooling information on offshore bank accounts.
Later this month in Australia, finance ministers and central bank chiefs from the Group of 20 are expected to agree on such an arrangement, which officials aim to have in place by the end of next year.
The proposal would create a common set of rules for sharing information on bank accounts held by nonresidents in Organization for Economic Cooperation and Development countries.
Financial institutions would input such data regularly into an online network accessible to tax authorities, which would gain instant access to account holders' names, account balances, transactions, and more.
The difficulty of tracking down the people behind offshore accounts has hampered efforts to combat tax evasion. Existing bilateral tax agreements have netted a number of hidden troves, including, in 2011, some 2.5 billion yen (around $30 million) in assets in a Swiss bank, part of the estate of a top Japanese executive of one of Europe's premier fashion houses. But with information normally passed between authorities on CD-ROMs, sometimes only once every two years, the hunt has been slow.
Until now, if Mrs. Watanabe had $1 million stashed in a U.S. bank account, Japanese authorities would have been hard-pressed to find it until the fictional housewife made a transfer. With the new system, they would be able to see an up-to-date account balance at the first sign of wrongdoing.
China and other emerging-market G-20 members are expected to take part in this arrangement. So is the U.K., which would likely bring the Cayman Islands and other overseas territories notorious as tax havens within the scope of the information sharing.
But the new rules would impose an extra reporting burden on financial institutions. Moreover, some countries may resist revealing every detail of nonresidents' bank accounts. How well such a system would work would depend partly on how many countries took part.