The Israeli Finance Ministry announced that Israel will join an international mechanism for the sharing of information on financial accounts.
The cross-border exchange of information, co-ordinated by the Organization for Economic Cooperation and Development (OECD), which is due to be in place by the end of 2018, is expected to make it more difficult to evade paying taxes on financial assets.
The agreement will force governments to collect and exchange information on taxpayers’ assets and income outside their home country, including bank accounts, interest payments, bank balances, and beneficial ownership. Finance ministers and tax chiefs from the 51 countries signed last October an agreement to automatically swap tax information, which Germany's Finance Minister Wolfgang Schaeuble said heralded the end of tax evasion via secret bank accounts.
The new framework would be an important step as it will give us faster access to information from the current practice of requesting for information, under various double-taxation avoidance treaties, which not only takes time but also often is stonewalled.
The European Union has enforced the automatic exchange of interest income since 2005, and America's Foreign Account Tax Compliance Act (FATCA) has required non-US institutions to provide US tax authorities with data on accounts since 2010. Fatca is a law requiring foreign banks to turn over information about U.S.-owned accounts to the Internal Revenue Service.
While banks that fail to comply can face punitive levies in the U.S. it will be up to the individual signatories of the OECD deal to decide whether and how to sanction non-complying banks. Although it is difficult to know how much states have lost to tax evasion, the OECD estimates roughly 25 countries have gained about €37 billion (US$47 billion) in tax revenue over the past five years from voluntary disclosure programs and other initiatives to combat offshore evasion.
