MercoPress. South Atlantic News Agency

Fifty one countries sign 'milestone' accord against tax evasion

The accord will end banking secrecy as it has been known for decades, the finance minister, Germany's Finance minister Wolfgang Schäuble

Fifty one nations on Wednesday signed what was hailed as a milestone in the fight against tax evasion, an agreement that commits them all to automatic exchange of tax information starting in 2017. The accord capped a two-day meeting of officials from most of the 123 nations that have joined the Global Forum, which evolved from an agreement by Germany and Britain two years ago to crack down on tax evasion and tax fraud.

 The accord will end banking secrecy as it has been known for decades, the finance minister, Germany's Finance minister Wolfgang Schäuble, told Bild newspaper.

Notably absent Wednesday were Switzerland, known for the secrecy of its banking system, and the United States, which has preferred to pursue its own path in fighting international tax evasion.

George Osborne, the chancellor of the British Exchequer, joined other ministers in lauding the relative speed with which the agreement had been negotiated and signed. “Tax evasion is a scourge across the world,” he said. The accord “will reduce the places that tax evaders can hide their money.”

A declaration unveiled at the signing ceremony said that “under the new global standard, a wide range of information will be exchanged on offshore accounts, including account balances and beneficial ownership.”

“The ability of tax evaders to hide is vanishing quickly,” it added. “Tax evaders have two choices: come forward, or be caught.”

With Britain, France, Germany, Italy and Spain spearheading the effort, other signatories included Singapore, Liechtenstein and Luxembourg, several British territories, like the Virgin Islands, the Cayman Islands and Gibraltar, as well as the Isle of Man, Guernsey and Jersey.

Mr. Schäuble and other ministers said the Swiss were expected to join the ranks of the 51 “early adopters” within months. Switzerland is part of the Global Forum on Transparency and exchanges information for tax purposes, officials said. Forum members are supposed to introduce automatic exchange of taxpayer information from 2018.

Despite the United States’ absence from the gathering, Mr. Schäuble and others stressed that the Americans had been pioneers with the Foreign Account Tax Compliance Act, known as Fatca, even if Congress remains wary of international accords.

Angel Gurria, secretary general of the Organization for Economic Cooperation and Development, which has played a leading part in the effort, emphasized that the US government was also notably resisting efforts by large American multinational corporations to change their tax residences in order to avoid higher taxes. “The US has been a very strong supporter of everything that we are doing,” he said.

The ministers said more efforts would be required in the future to ensure that large multinational companies actually pay taxes in countries where they take in revenue. “Profits should be taxed where the real economic activity takes place,” Mr. Osborne said.

The 51 countries include: Germany, Spain, UK, France, Greece, India, Colombia, Italy, Mexico, South Africa, Netherlands, Luxembourg, Ireland, plus Anguilla, Barbados, Belgium, Bermudas, Bulgaria, Cyprus, Korea, Croatia, Curacao, Czech Republic, Denmark, Slovakia, Slovenia, Estonia, Finland, Gibraltar, Guernsey, Hungary, Isla of Man, Cayman Islands; Faeroe Islands, Turks & Caicos, British Virgin Islands, Mauritius, Iceland, Jersey, Latonia, Liechtenstein, Lithuania, Malta, Montserrat, Norway, Poland, Portugal, Rumania, Seychelles, and Sweden.