The data revolution
It will soon be a lot harder to hide money overseas
THE war on those stashing undisclosed money offshore intensified this week when 47 countries, including the Group of 20 and some prominent tax havens, sealed a pact that will shake up the sharing of tax information. Under the present system, countries have to file requests with each other for data on suspected cheats. Even reasonable enquiries are often rejected as “fishing expeditions”. In future the signatories—and dozens of others that will be pressed into joining later—will automatically exchange information once a year. This will include bank balances, interest income, dividends and the proceeds of sales, which can be used to assess capital-gains tax.
Some countries are likely to set up special arrangements, with reduced penalties, to encourage non-compliant taxpayers to bring money home now rather than wait to be caught once the new system kicks in, probably in 2017. The deal also increases pressure on banks to identify the ultimate owners of shell companies and trusts, behind which tax evaders often hide.
The catalyst for the agreement was America's Foreign Account Tax Compliance Act (FATCA). The law, passed in 2010, will soon impose stiff penalties on foreign financial firms that fail to declare their American clients. Once America began pushing for automatic declarations, other big countries did the same.
本次协议的催生因素是美国国外账户应税法案（America's Foreign Account Tax Compliance Act，FATCA）的颁布。这部2010年通过的法案，将要求政府对未按要求披露美国本国客户情况的外国金融公司进行严厉的惩罚。一旦美国开始推行自动财务信息披露的机制，其他大国也会纷纷效仿。
The most eye-catching signatory to the accord is Switzerland, whose banks were at the centre of the scandals that gave rise to FATCA. The world's most famous offshore wealth-management centre was built on supposedly ironclad bank secrecy, but it has been forced to buckle under international pressure. This is momentous: for the Swiss, agreeing to swap client data systematically is the cultural equivalent of Americans giving up guns. Singapore, which has earned a reputation as the Switzerland of the East, is also a party to the deal.
Several challenges must be overcome to make it work. Data-collection systems need to be upgraded and harmonised. Even the most sophisticated tax authorities could struggle to process the deluge of information coming their way. Without assistance, poor countries whose elites dodge taxes using rich-world havens will not reap the benefits.
More havens need to be brought into the fold. Britain's offshore satellites, such as Jersey and the Cayman Islands, are grudgingly on board. But it will be harder to corral Panama, Dubai and the havens dotted around the Indian and Pacific Oceans. Until they sign up, the likes of Switzerland and Luxembourg may have an excuse to drag their feet in implementing the new rules.
Still, the pace of change has been remarkable. Global information exchange, unthinkable a decade ago, is within reach. Tax evaders can be ingenious, but their options are narrowing fast.