WASHINGTON, DC – Global Financial Integrity (GFI) applauded the governments of France, Germany, Italy, Spain, and the United Kingdom today for announcing that they will be launching the first ever multilateral system of automatic tax information exchange. The Washington, DC-based research and advocacy group hailed the news as a landmark moment for taxpayers and transparency advocates with enormous implications for global development.
“This is a resounding victory for taxpayers and transparency groups; it’s not possible to overstate the significance of this news,” said, GFI Director Raymond Baker. “Automatic tax information exchange ensures that tax authorities and law enforcement in these countries will have the necessary records they require to detect and deter billions of dollars in tax evading money.”
GFI further highlighted the rapid shift in political discourse about the exchange of tax information.
“When we first began advocating for a multilateral convention of automatic exchange of tax information in January 2009, governments would politely receive us and then show us to the door,” commented Heather Lowe, GFI’s Legal Counsel and Director of Government Affairs. “Four years later—after countless hours of work by Global Financial Integrity and others, numerous meetings with government officials, and myriad discussions with journalists who understood the intricacies and significance of the issues—we are ecstatic to see the momentum that’s been building on this issue culminate in the automatic, multilateral approach that we’ve been advocating. This is a seismic, and very welcome, shift.”
In a letter (PDF) to the European Commission Tuesday, the finance ministers of France, Germany, Italy, Spain, and the UK announced that they will be establishing a pilot program for multilateral automatic information exchange, based on the model intergovernmental agreements developed between the United States and these countries over the past several months to implement the U.S. Foreign Account Tax Compliance Act (FATCA).
Most notable, the finance ministers committed to “promoting a global system of automatic information exchange, removing the hiding places for those who would seek to evade paying their taxes.”
“While we welcome and understand the need for a pilot program involving key developed countries such as these, it’s extremely important that the convention be extended to include developing and emerging economies as soon as possible,” added Ms. Lowe. “Indeed, the end goal must be a global system of automatic exchange of tax information. We welcome the commitment from these governments to promote this as the international standard, and we encourage them to realize that commitment with all due haste.”
“The lack of transparency in the international financial system illegally drains roughly $1 trillion each year from developing and emerging economies,” continued Ms. Lowe. “Automatic tax information exchange is key to curtailing those illicit flows. The sooner developing and emerging economies are incorporated into this program, the sooner we can curtail these impoverishing outflows. France, Germany, Italy, Spain, and the UK should set a clear timeframe for the duration of the pilot program, letting the world know when other countries can expect to be given the opportunity to join. For example, India and Mexico are two emerging economies that have repeatedly expressed strong interest in engaging in automatic exchange of tax information with other nations.”