The UK has signed an agreement on automatic tax information exchange with the Isle of Man based on the US Foreign Account Tax Compliance Act (FATCA), the first time such a deal has been signed between two parties of which neither are the US, reports chartered accountants Northampton Harris & Co.
Chancellor George Osborne described the move as ‘a momentous step forward in tax transparency’, and said the Isle of Man deserved recognition for being the first jurisdiction to back international efforts to tackle tax avoidance.
The Treasury heralded the agreement as a ‘significant move towards a new global standard in the automatic exchange of tax information, which will provide a step change in the international community’s ability to clamp down on those hiding assets offshore to evade tax’.
A wide range of financial information on UK taxpayers with accounts in the Isle of Man will now be reported to HMRC automatically each year.
The government said it is now looking to sign further agreements with other jurisdictions as soon as possible, and is currently in discussions with the rest of the Crown Dependencies and the Overseas Territories.
Osborne said: ‘For anyone attempting to hide their money offshore our message is clear: our resolve is stronger than ever, the net is closing in and the world is becoming a smaller place to evade paying the taxes which are owed.’
Chief Minister of the Isle of Man Allan Bell said: ‘In signing this historic agreement with the UK we are underlining the message to our neighbours and the wider world that our island is a responsible centre for top quality international business.’
In a further boost to UK efforts to increase international cooperation on tax transparency in the wake of the G20 commitments to tackle tax evasion, South Africa is to join the pilot scheme for the automatic exchange of tax information launched by the UK, along with France, Germany, Italy and Spain.
South African finance minister Pravin Gordhan said: ‘The automatic exchange of tax information will contribute to the establishment of a more effective, efficient and fair international tax system. As more countries join this movement, it will ultimately benefit poor countries who are often the victims of organised efforts to undermine their tax bases.’