The effort will strike some in the international community as ironic, as many see the current move towards automatic exchange of information globally as having had its origins in the US Foreign Account Tax Compliance Act of 2010.
Among those who are leading the push-back in the US is Kentucky Republican Senator Rand Paul, who "has single-handedly blocked Senate action on treaties with Hungary, Switzerland and Luxembourg that have been signed by authorities on both sides, but have been awaiting Senate review since 2011," according to a Reuters report published yesterday.
"At least six other tax treaties or treaty updates – with Chile, Spain, Poland, Japan, Norway and Britain – may soon be added to the Senate’s queue for confirmation votes," the Reuters report added.
The article quotes a tax policy director at the Cato Institute, a libertarian think tank based in Washington, as saying he is "very concerned about this increasingly aggressive international exchange of information".
According to Reuters, no new tax treaties or treaty updates have been approved since 2010, when Paul was elected "on a wave of support for Tea Party-aligned Republicans".
Paul is able to obstruct the passage of these treaties because, under Senate rules, a single member may prevent a motion from being voted on.
The phone in Paul’s Washington office was not answered this afternoon, and no one from the office returned telephone or email messages seeking comment. Cato Institute staff also did not immediately responded to requests for comment.
Global move to information exchange
Paul’s campaign comes as countries around the world are signing up to so-called intergovernmental agreements (IGAs) in order to meet the obligations imposed on their financial services companies by FATCA, which was drawn up in 2010 as part of an effort to ensure that Americans were no longer able to take advantage of foreign bank accounts and other overseas facilities to evade US taxes.
It also comes as a growing number of countries have begun looking to implement FATCA-types of information reporting schemes of their own, a trend which culimated on 19 April in a communique released by the G20, following the Group of 20 Nations’ semi-annual meeting in Washington, at which they urged global adoption of a "standard" that would create a system for the "automatic exchange of information" on bank accounts which could be used by individuals to evade taxes in their home countries or tax domiciles.
This followed by about a week an announcement that the UK, Germany, France, Italy and Spain were looking to develop a new “multilateral tax information exchange agreement” among themselves that they hoped to persuade the rest of Europe to sign up to.
Last month, Cato Institute senior fellow Daniel Mitchell set out the organisation’s view of ongoing efforts by the Organisation for Economic Cooperation and Development to rein in the practice by multi-national corporations of using low-tax jurisdictions to reduce their total tax bills. Mitchell’s paper, "OECD Launches New Effort to Undermine Tax Competition", may be viewed by clicking here.
