Treasury reveals Government commitment to tackling cross border tax evasion

Earlier this month, we reported how the British Government had pledged to do more to stop tax avoidance by big firms and now it aims to tackle it on an international scale.

The UK has collaborated with the Governments of France, Germany, Italy, Spain and the United States to set out an approach that deals with preventing cross-border tax evasion. The Treasury has today announced a joint statement from all countries regarding an international tactic to improving international tax compliance.

This fundamentally has the goal to combat tax evasion by American tax residents using foreign account and includes certain provisions on withholding taxes and on the reporting of information by foreign financial institutions for US tax compliance purposes.

Presently, there are certain legal difficulties and administrative burdens for financial institutions which affect intergovernmental information exchange.

In the released statement, it reports that all countries will work on building close relationships with respect to mutual assistance in tax matters and that they commit to exploring a practical way forward that supports the overall aim to combat tax evasion, while reducing the risks and burdens on financial institutions. This will work with the use of existing treaties for information exchange between tax authorities, rather than direct reporting by financial institutions to the US Internal Revenue Service.

David Gauke, Exchequer Secretary to the Treasury, said: “The Government is committed to tackling tax evasion, wherever it takes place.  This joint statement builds on the close cooperation of all the countries involved, and of the European Commission, in tackling cross-border tax evasion and provides a practical way forward that should reduce the burdens on the financial sector.”

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