The U.S. and Australia are set to sign an agreement on automatic sharing of bank information to battle tax evasion, amid plans for a global compact to prevent companies shifting income to low-tax countries.
The two countries have reached an agreement on the Foreign Account Tax Compliance Act “in substance, and plan to sign it soon,” U.S. Treasury Secretary Jacob J. Lew told a media event in Sydney today.
“Automatic exchange of information has quickly become the new global standard,” said Lew, who’s in the city to attend a meeting of finance ministers from Group-of-20 major economies. “The G-20 should continue to provide its full support and encourage all nations to adopt the standard.”
The Foreign Account Tax Compliance Act, passed by Congress in 2010, requires foreign financial institutions to report to the Internal Revenue Service information about financial accounts held by U.S. taxpayers. The Organization for Economic Cooperation and Development is working on plans for global information exchanges to crack down on tax-avoidance strategies used by companies such as Google Inc., Apple Inc. and Yahoo! Inc. The grouping is due to present a report on its progress toward information exchange at the Sydney meeting.
Some companies reduce taxes by attributing profits to jurisdictions with low or non-existent corporate income taxes, including the Cayman Islands, Bermuda and Ireland.
The G-20 meetings this weekend will focus on ways to “ensure that there is a greater transparency and better outcomes in the disclosure of tax liabilities and tax collections,” Australian Treasurer Joe Hockey said in the briefing with Lew today.
The U.K. Parliament has held hearings since November 2012 on corporate tax dodging, examining tactics used by information-technology companies and others such as Starbucks Corp. (SBUX:US) In May, the U.S. Senate held a hearing on Apple’s offshore tax policies. The companies all say they’ve complied with international tax laws.
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