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Seven new countries sign global tax agreement

Seven new countries have signed up to the Organisation for Economic Co-operation and Development (OECD) Multilateral Competent Authority Agreement (MCAA) on automatically sharing tax information. 08 Jun 2015

Australia, Canada, Chile, Costa Rica, India, Indonesia and New Zealand have joined 54 other jurisdictions in signing up to the agreement to exchange information under the OECD/G20 standard, the OECD said in a statement.

The MCAA is based on the Standard for Automatic Exchange of Financial Information in Tax Matters, developed by the OECD and G20 countries, the OECD said.

The standard covers the annual automatic exchange of financial account information between governments; including balances, interest, dividends and sales proceeds from financial assets. It applies to accounts held by individuals and also entities including trusts and foundations.

The first automatic exchange of information is expected in 2017 or 2018, the OECD said.

OECD Secretary-General Angel Gurría said: "The world is quickly becoming a much smaller place, both for tax evaders and tax administrations. We expect a truly significant amount of additional financial information to circulate among authorities in the coming years, resulting in less tax evasion, greater tax revenues and a fairer tax system for honest taxpayers."

"Our work is already having an impressive impact, with more than €37 billion euros already collected by two dozen countries under voluntary compliance initiatives launched in advance of automatic exchange taking effect," Gurría said.

The ‘Standard for Automatic Exchange of Financial Account Information in Tax Matters’ was launched by the OECD on July 2014. It calls on governments to obtain detailed account information from financial institutions and share the information automatically with other jurisdictions each year.

The OECD is also currently working on a single set of international tax rules to prevent multinational companies from artificially shifting profits to low-tax jurisdictions. Its 15-point 'action plan' on how to tackle these base erosion and profit shifting (BEPS) mechanisms, published in July 2013, included plans to neutralise so-called hybrid mismatch arrangements, prevent the abuse of tax treaties and ensure that transfer pricing rules did not allow companies to avoid being taxed in the jurisdictions where they make their profits.

The European Union is also concerned about tax avoidance, and recently announced a plan for 'fairer and more growth friendly tax systems in Europe', including a re-launch of work on a Common Consolidated Corporate Tax Base.