Automatic exchange of information

Abstract

The phenomenon of globalisation has facilitated the transnational movement of capital and, consequently, increased tax competition, resulting in a surge in offshore financial centres which have fostered a favourable climate for tax evasion and tax avoidance schemes. The global loss of revenue occasioned by such schemes is estimated to be significant, and there have been several attempts to curtail it through the years. The automatic exchange of information in tax matters is generally regarded as being the most effective method, by requiring that financial institutions report certain financial information from foreign account holders, thus allowing tax administrations to track and analyse the foreign investments of tax residents. The aim of this dissertation is to analyse the two main regulations currently in place regarding the automatic exchange of financial account information for tax purposes, namely the United States’ Foreign Account Tax Compliance Act and the OECD’s Common Reporting Standard, as well as the impact of their provisions on financial institutions.