Announced today, the Tax Exchange Agreements will allow the Inland Revenue to negotiate with Crown Dependencies and British overseas territories to exchange tax information. At present there is no effective method by which the Revenue can receive details about the foreign transactions of UK taxpayers and multinationals.
Previously, the chancellor has made it clear that he intends to reduce the sort of evasion offered by offshore centres that help businesses avoid British tax. While the chancellor cannot alter the islands’ constitutional control over taxes, he intends to encourage information exchange, which he believes is the way ahead for tax authorities to combat fraud.
By introducing greater transparency to tax evasion, Brown will also strengthen the government’s stand against the proposed European withholding tax. Last month, paymaster general Dawn Primarolo attempted to ease the withholding tax impasse by suggesting similar information exchange between member states in order to tackle evasion.
The government of Bermuda (a UK overseas territory) has already shown interest in negotiating such a deal.
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