• Another Step Forward in Tackling Tax Dodging

    Posted by Ben

    10 September, 2014

    Finding a place to stash illict funds, or avoiding tax by hiding money overseas, just got a little bit harder.

    Last week, the Treasurer announced that Australia will join other countries in implementing the new global standard for the Automatic Exchange of Information on Tax Matters.

    The OECD and G20 have been working on a global standard for the Automatic Exchange of Information on Tax Matters (AEOI) which means that countries are able to automatically receive information when any of their citizens set up bank accounts or make investments in another country.

    International experience has shown that AEOI cuts down on tax dodging by wealthy individuals and corporations. With appropriate privacy safeguards, AEOI makes it much easier for countries to identify people and businesses making use of legitimate international banking needs and what may be illegitimate tax evasion.

    Developing countries lose an estimated $1 trillion each year through illicit outflows – that is, money that was illegally earned, transferred or utilised. A significant proportion of this money is the result of tax avoidance by corporations and wealthy individuals. Most of this money ends up in bank accounts and investments in wealthy countries. If developing countries can automatically access information about potentially taxable income and investments of their citizens, they would be in a stronger position to identify illegitimate transactions and tax evasion.

    We have concerns that this new global standard is not fully accessible to developing countries – particularly the poorest – as it imposes standards of reciprocity and data management which many do not have the capacity to meet. So it's important that the G20 works to support them.

    Please join us in thanking the Treasurer for taking this step forward. Please also urge him to continue working with his G20 colleagues to ensure that developing countries are able to make use of this global standard and to take other measures to tackle tax dodging by multinational corporations.

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    Ben Thurley is the Political Engagement Coordinator for Micah Challenge Australia.