Israel gold bullion coins money wealth economy 370.
(photo credit: Eli Gross/Keren Or)
The Group of 20 leaders’ summit was held in St. Petersburg, Russia, on September
5-6. It was dominated by talk about what to do about the use of gas in Syria.
But the role of the G-20 is primarily economic.
G-20 leaders met for the
first time in 2008. Their main objective is to “upgrade the level of
consultations within the G-20 to set a framework for preventing future financial
crises, while securing sustainable and balanced global growth.”
shouldn’t be a surprise that after the St. Petersburg conference, the G-20
leaders issued a tax annex to their communique.
Below are a few things
the G-20 leaders have told us to expect: • First, information exchange. This is
currently done using information-exchange rules in bilateral tax treaties. In
July, G-20 finance ministers and central-bank governors endorsed an OECD
proposal for a global model for multilateral and bilateral automatic exchange of
information for tax purposes and declared their commitment to automatic exchange
of information as the new global standard.
Currently, it is considered
unacceptable for the tax authority of country A to embark on “fishing
expeditions” by asking the tax authority of country B to reveal the names of
people who have income or assets in country B. Instead, country A must itself
name the people it wants more information about.
Will the new “standard”
mean that country B will automatically notify countries A to Z of people who
have income or assets in country B? If so, will it be based on FATCA (US Foreign
Account Tax Compliance Act) principles? FATCA will soon require non-US banks to
automatically report about financial accounts held by US taxpayers or foreign
entities in which US taxpayers hold a substantial ownership interest.
this stage, we know the OECD proposal will include a model “competent authority
agreement” and a “multilateral convention.”
The Israel Tax Authority has
recently indicated it is interested in initiating an amendment to the Income Tax
Ordinance to enable Israel to sign up to such agreements. Then the ITA will
presumably be allowed to send information automatically to all other countries
that signed up to the multilateral convention in one go.
Is this serious?
The St. Petersburg communique points out that there is already a multilateral
document – the Convention on Mutual Administrative Assistance in Tax Matters. It
was developed jointly by the Council of Europe and the OECD. More than 70
countries are covered or are likely to be covered by the convention, including
significant financial centers. It allows for all forms of cooperation in tax
matters, including automatic exchange of information. The G-20 communique says,
“We expect all jurisdictions to join the convention without further
• Second, the St. Petersburg communique says that international
collective efforts must also address the tax “base erosion and profit shifting”
(BEPS). This relates chiefly to instances where the interaction of different tax
rules result in tax planning that may be used by multinational
Comments: These measures are still being formulated by the
G-20 and the OECD. But past experience suggests that new tax legislation usually
contains new tax loopholes – a cat-and-mouse situation. Time will
As always, consult experienced tax advisers in each country at an
early stage in specific firstname.lastname@example.org Leon Harris is a certified
public accountant and tax specialist at Harris Consulting & Tax Ltd.