BRICS to share tax information

•  BRICS nations pledged to share tax information automatically and adopt global standards on tax transparency to check cross border tax evasion.
• The meeting of the heads of Revenue of Brazil, Russia, India, China and South Africa (BRICS) also resolved to support other developing nations in increasing their tax administrations’ capacity to implement the OECD/G20 standard on Automatic Exchange of Information (AEOI).
• BRICS member also urged timely and consistent implementation of the Base Erosion and Profit Shifting Project across as many tax jurisdictions as possible and appealed to all countries to join the framework and participate in the BEPS project.
• The OECD/G20 project on BEPS provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to artificially shift to low or no-tax environments, where little or no economic activity takes place.

Automatic Exchange of Information (AEOI)

• The Standard requires financial institutions to report information on accounts held by non-resident individuals and entities (including trusts and foundations) to their tax administration. The tax administration then securely transmits the information to the account holders’ countries of residence on an annual basis.
• The Standard specifies the financial account information to be exchanged, the financial institutions that need to report, and the different types of accounts and taxpayers covered. To capture a wide range of information, the Standard requires not only deposit-taking banks to report, but also custodial institutions, certain investment entities, and certain insurance companies. The type of account information to be reported on includes account balances, interest, dividends, and sale and redemption proceeds from financial assets.
• In order to ensure that the information is accurate and complete, the Standard also specifies the information gathering procedures to be followed by financial institutions, and these procedures draw on the existing international anti-money laundering standards.
• Confidentiality, data safeguards and proper use of the information is critical, and the Standard sets out clear requirements that must be met by all jurisdictions participating in AEOI.
• The Standard also includes a model agreement for government authorities to use to operationalise the automatic exchanges and a technical user guide to ensure the information is reported in a standardised format.

By: Vishal