Tuesday, 18 January 2011

Governments' New Extraordinary Data Snooping Powers into Offshore Tax Havens

It used to be under older style tax treaties that countries like Canada going after their taxpayer citizens hiding their money in offshore tax havens could only request the data the foreign country had at its disposal in the normal course of doing its own government administration, which conveniently would normally be very little in a tax haven.

The new breed of tax agreements that are progressively being forced upon the tax haven countries contains a far more intrusive power. The snooping country Canada can request in Article 4 that the tax haven country like Jersey (see Finance Canada's announcement) to actively collect and compile information! And by the agreement, the tax haven country agrees to collect it and hand it over.
" If the information in the possession of the competent authority of the requested Party is not sufficient to enable it to comply with the request for information, the requested Party shall use all relevant information gathering measures necessary to provide the requesting Party with the information requested, notwithstanding that the requested Party may not, at that time, need such information for its own tax purposes."
It's hard to tell how many tax havens are affected so far but the steady flow of new agreements (e.g. Cayman Islands, Bahamas, Isle of Man, Bermuda, three of which are in a recent list of best places to open an offshore account on the Offshore Tax Haven blog) and the fact that the OECD countries back this thrust, suggest it will be more and more difficult to hide from the tax tentacles of governments the world over.

update Jan.19 ... and today Guernsey joins the list


chandra said...

Oh! at least Canada is doing it this wasy. if you taker a look at Indians you will be shocked.

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