Under the agreement, a wide range of financial information will be automatically exchanged between the five countries. This will help catch and deter tax evaders as well as provide a template for wider multilateral automatic tax information exchange.
This pilot will be based on the Model Intergovernmental Agreement to Improve International Tax Compliance and to Implement FATCA developed between these countries and the US (which also formed the basis of the subsequent UK-US bilateral automatic exchange agreement). This will help ensure that international tax evasion is tackled in a way that minimises costs for both businesses and governments. A joint letter has today been issued to the European Commission setting out the terms of the agreement.
Exchequer Secretary to the Treasury, David Gauke said:
This is an important further step in the fight against tax evasion and represents the next stage in promoting a new standard in the automatic exchange of tax information. This builds on the agreements we have reached with the Isle of Man, Guernsey and Jersey and the discussions currently underway with the Overseas Territories.
The Prime Minister has set out how he wishes to use the UK’s presidency of the G8 to explore options for greater levels of tax information exchange, particularly on a multilateral basis. The Government therefore sees this agreement as an important early step in a much wider move towards a new international standard in the automatic exchange of tax information, providing a step change in the ability of tax administrations to clamp down on tax evasion.
Notes for Editors
- The G5’s letter to the Commission can be found on the HM Treasury website - http://www.hm-treasury.gov.uk/hmtreasury_news.htm
- FATCA, which is part of the US Hiring Incentives to Restore Employment Act of 2010, aims to combat tax evasion by US tax residents using foreign accounts. It includes certain provisions on withholding taxes and on the reporting of information by foreign financial institutions for US compliance purposes.
- The Governments of France, Germany, Italy, Spain and the UK, with the support of the European Commission, took part in joint discussions with the US Government to explore an intergovernmental approach to FATCA, supporting the overall aim to combat tax evasion, while reducing risks and burdens on financial institutions. A model intergovernmental agreement was developed and published in July 2012.
- The UK and the US subsequently signed the UK-US Agreement to Improve International Tax Compliance and to Implement FATCA in September 2012.
- The Isle of Man, Guernsey and Jersey have agreed to enter into automatic tax information exchange agreements with the UK. The Government is in similar discussions with the Overseas Territories.