Will America go from hunter to hunted in cross-border tax evasion?

 

AMERICA HAS launched brutal assaults over the past decade on countries, such as Switzerland and Liechtenstein, where banks have helped American citizens hide money and thereby evade tax. Forced to clean up, these erstwhile havens have seen much tainted capital flow elsewhere—not least to America itself. Now it is the former aggressor's turn to be on the defensive. Other countries are using similar tools to those America once employed to reveal untaxed money stashed by their own citizens in the worlds largest economy.

As well as fining and prosecuting the enablers of tax dodging—Swiss banks alone coughed up at least $5.5bn—America passed a law known as FATCA in 2010 that required foreign financial firms to spill the beans on American clients. Stung into action, more than 100 other countries signed up to the Common Reporting Standard (CRS), and now swap tax-relevant financial information with each other.

America, however, did not join the CRS. Instead it shares information on the foreign clients of American banks under FATCAs reciprocal provisions. But sharing is patchy; a lot of countries get nothing. Combine that with the high level of anonymity offered by American shell companies, and it is hardly surprising that America has become the destination of choice for many tax evaders. One...



via The Economist: Finance and economics Business Feeds

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