Tax rules to create regulatory winners and losers

Related Content Related Video White Papers Related Articles

The tax information exchange agreement signed in Berlin this week by some 50 countries may create significant cost challenges for financial institutions, but some countries such as the UK may benefit because their tax systems are already set up to deal with the expected increase in data shared, according to comments from accountancy and technology.

Baker Tilly, the UK chartered accountant, said that the agreement signed at the Seventh Meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes was different from traditional tax information exchange agreements pursued bilaterally because it provided for more automated sharing of data.

This in turn will create a significant amount of data flowing between the affected jurisdictions, meaning that those such as the UK, which have set up IT frameworks to convert data into information that can be used by tax inspectors, will benefit more.

“With automatic notification commencing in September 2017 for large accounts, and September 2018 for smaller accounts, it will be interesting to see how tax authorities rise to this challenge and announce plans for data handling. This is crucial because none of the 50 or so nations will wish to look like a soft touch, unable to process the information it receives and so incapable of using this as a challenge to tax evaders,” Baker Tilly said.

For financial institutions the outcome is less benign, according to the view of KPMG.

It said that they will face a race to ensure development of their own systems in time to meet the reporting deadlines that the agreement stipulates.

“They will be working hard to get customer due-diligence procedures in place by January 1, 2016 – less than 15 months from now – and then will turn to meet the deadline for the first reporting of information about non-resident account holders required in 2017,” said  Tom Aston, Financial Services tax partner at KPMG in the UK.

The technology challenge was emphasised by Colin Camp, managing director of Products & Strategy at technology provider Dion.

“This agreement from 51 countries to automatically swap tax information shows the global commitment to tackle tax evasion. Now we have to wait for each country to publish their specifics around the data they require and in what format, which could vary somewhat.”

“However, financial firms in each country can’t afford to wait, they need to address their reporting challenges today. Over the coming years, reporting will be one of the leading issues within the regulatory space.”


Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

Read more from Jonathan Boyd

Close Window
View the Magazine

You need to fill all required fields!