Evasion crackdown singles out investment banks

Global investment banks will be a key focus for tax administrations in the international push to stamp out tax avoidance and evasion.

The spotlight on high net worth individual clients within these banks was outlined by a gathering of global tax heads, including those from Australia, UK and South Africa, at an OECD forum in Paris last week.

Dave Hartnett, permanent secretary for tax at HM Revenue and Customs, said Swiss banks with HNW individuals as clients are particularly susceptible to the sweeping crackdown.

'There is no doubt we differentiate between types of banks that have in the past been big risk takers and posed a big risk to tax administrations,' he said.

He did, however, concede the relationship between tax administrations and banks is changing, with as many as eight global investment banks assisting in an OECD study to identify the markers of riskier institutions.

'We've seen clear indications of this relationship improving. We're spending an increasing amount of time in the boardroom with banks…there are positive indications. If I can be very bold, banks have learnt a lesson in the last 12 months,' he said.

According to Michael D’Ascenzo, commissioner of taxation for Australia, banks that use more structured finance techniques are becoming increasingly aware of the downside risks to an aggressive approach.

'We're going to be looking at the risk profiles of these banks and the behaviour they show and we'll be paying more attention to these,' he said.

Further Reading:

OECD removes last three jurisdictions from tax 'blacklist'

Brown feels tax haven pressure from Commonwealth