Companies and Markets

OECD says reporting spells the end of bank secrecy

Georgia Wilkins
521 words
23 September 2014
The Australian Financial Review
AFNR
First
19
English
Copyright 2014. Fairfax Media Management Pty Limited.
The OECD has declared the end of bank secrecy, saying key measures agreed upon at the G20 meetings in
Cairns will close loopholes that allow companies to hide profits overseas.

Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, said the decision to
introduce a common reporting standard for automatic information sharing was a "game changer" in the global
fight against corporate tax evasion.

"Five years ago, bank secrecy was the rule in many countries, starting with the major financial centres –
Switzerland, Singapore, Hong Kong, Luxembourg," he told a forum in Sydney.

"Today, bank secrecy is over. All these jurisdictions have committed to exchange information automatically.
There is no safe place to hide left."

The OECD this month unveiled plans to tackle profit shifting and tax avoidance by multinational corporations.

The plans include an agreed push to force companies to report their financial activities overseas, as well the
introduction of new treaty provisions to allow governments to tax companies at an international level.

Mr Saint-Amans, who is in Australia for the G20 meetings, said country-by-country reporting -– where
companies are forced to report their sales, profit and tax in every country in which they operate – was another
significant milestone.

"If all your profit is in Bermuda, your activity is here in Australia, and your market in Europe, I wish you good
luck. You may want to reconsider before filling in a country-by-country report."

But as governments move to shore up corporate tax revenue, accounting firm PricewaterhouseCoopers –
which advises many of the world's biggest companies on how to structure their affairs – said Australia would
be better off lowering its corporate tax rate.

Tom Seymour, managing partner of tax and legal at PwC, said lowering Australia's tax rate from 30 per cent
to 25 per cent would lift GDP by 6.3 per cent – or $590 billion – by 2050.

"This is the bigger picture on base erosion and profit shifting.

"Instead of redistributing the pie, let's grow the pie for all Australians," he said.

Mr Seymour said tax competition would exist as long as nations fought to attract capital and retain jobs:
"Ensuring our tax system collects revenue in the most efficient way will make our nation more competitive and
attract more business and trade to our shores."

But Mark Zirnsak, a representative of the Tax Justice Network, warned against the move.

"The GST is not a progressive tax, which means those on lower incomes are expected to contribute more."

"If [PwC] want to talk about a change in the tax base, they should be addressing issues of equity and fairness
in society, rather than looking out for themselves and their clients, " he said.
Page 1 of 2 © 2019 Factiva, Inc. All rights reserved.
Mr Saint-Amans's comments follow the G20 finance and central bank governors meeting over the weekend,
which set the stage for the G20 leaders' summit in Brisbane in November.

Treasurer Joe Hockey said on Sunday that the G20 governments had united in their ambition to "modernise
global tax rules" and close loopholes.

Document AFNR000020140922ea9n00011

Page 2 of 2 © 2019 Factiva, Inc. All rights reserved.