January 2019 JD Supra
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Four LATAM Countries will work as a TEAM to TACKLE TAX EVASION, Corruption and Other Financial Crimes was published by JD Supra on 1/29/19.

The Global Forum and the Organization for Economic Cooperation and Development (OECD) oversee the internationally agreed standards of

tax transparency and exchange of information via the Common Reporting Standard (CRS).  The Global Forum currently has 154 members and together with the OECD, assists Governments with the implementation of the CRS, which asks OECD CRS signatory member jurisdictions to obtain certain information from their financial institutions and automatically exchange that information with other signatory member jurisdictions on an annual basis.

The CRS specifies the categories of financial account information to be exchanged, the nature of financial institutions required to report, the classes of accounts and taxpayers covered and the due diligence procedures to be followed by financial institutions.

Tax information exchanges required by the CRS commenced in September 2017; with a total of 90 jurisdictions automatically exchanging financial account information.  

In November 20-22, 2018, the Global Forum on Transparency and Exchange of Information for Tax Purposes met in Punta de Este, Uruguay with representation from more than 100 tax jurisdictions in attendance with the purpose of discussing the international community’s fight against tax evasion.  The result of the meeting in Punta de Este was the “Punta de Este Declaration” which “sets up a Latin American initiative to maximize potential of the effective use of the information exchanged under the international tax transparency standards to not only tackle tax evasion, but also corruption and other financial crimes”.  

The Governments of Argentina, Panama, Paraguay and Uruguay have joined forces

The Governments of these countries acknowledge that Increased tax transparency and information exchange provides information that is instrumental to counter tax evasion. They note that:

  • Financial crimes are becoming increasingly sophisticated
  • Financial crimes often involve more than one offence
  • Multiple government agencies may be involved in their investigation and hold relevant information  

According to the Declaration, the four Governments agreed to:

  • Implement the international tax transparency standards of the Global Forum.
  • Establish a Latin American initiative to tackle tax evasion, corruption and other financial crimes and to improve international tax cooperation to counter practices contributing to all forms of financial crimes.
  • Maximize the effective use of the information exchanged under the international tax transparency standards.
  • Use the global infrastructure for exchange of information which has been built in the past decade to counter illicit financial flows and support domestic resource mobilization.
  • Use of all available exchange of information tools for the purpose of deterring, detecting and prosecuting tax evaders.
  • Explore the full range of possibilities for cooperation provided by the multilateral Convention on Mutual Administrative Assistance in Tax Matters including through enhanced cooperation.
  • Consider the possibility of (i) wider use of the information provided through exchange of tax information channels for other law enforcement purposes as permitted under the multilateral Convention on Mutual Administrative Assistance in Tax Matters and domestic laws, and (ii) advance more effective and real-time access to beneficial ownership information across Latin America.
  • Consider carrying out a “self-review” using the principles identified in the OECD report a/k/a Fighting Tax Crime: The 10 Global Principles and the successful practices identified in the OECD reports, Effective Inter-Agency Co-Operation in Fighting Tax Crimes and Other Financial Crimes and Improving Cooperation between Tax Authorities and Anti-Corruption Authorities in Combating Tax Crime and Corruption.
  • Welcome the establishment of the OECD’s Latin America Academy for Tax and Financial Crime Investigation in Buenos Aires, Argentina, which will help train financial crime investigators to pursue tax crimes, corruption and other financial crimes more effectively.
  • Enhance the foundations of public trust in tax administration and other enforcement bodies by eradicating corruption and ensuring confidentiality of the information obtained by public authorities.
  • Establish national action plans to further these objectives and have their respective representatives report on the progress made at the next plenary meeting of the Global Forum.

Don’t be a victim of your own making

Latin American countries already exchanging tax information are focused on combatting tax evasion.  Moreover, they are focused on having access to beneficial ownership information across Latin America. There are existing governmental agreements between the United states and Latin American countries that require the agreement signatories to assist each other with international tax matters crimes investigations.

Individuals and legal entities currently out of tax compliance and who have civil or criminal prosecution exposure for tax crimes investigations in their respective tax jurisdictions ought to immediately consult with specialized tax advisors.