Fifty one jurisdictions became the first signatories of the MCAA at the seventh meeting of the OECD's Global Forum on Transparency and the Exchange of Information for Tax Purposes in Berlin on October 29 2014 (pictured below), 48 of them committing to start automatic exchange of information (AEOI) by 2017. The number of MCAA signatories rose to 54 before today, after Switzerland, Ghana and The Seychelles joined the agreement in recent months.
A total of 94 jurisdictions have committed to AEOI. More are expected to sign the MCAA in the coming months.
The MCAA will enable the Standard for Automatic Exchange of Financial Account Information in Tax Matters, or Common Reporting Standard (CRS) to operate. The Standard requires financial institutions to collect certain information about their accountholders and pass this on to their governments, who will exchange these details with the other jurisdictions that have committed to AEOI.
“The world is quickly becoming a much smaller place, both for tax evaders and tax administrations," said Angel Gurria, the OECD's Secretary General, in a speech at the signing ceremony. "We expect a truly significant amount of additional financial information to circulate among authorities in the coming years, resulting in less tax evasion, greater tax revenues and a fairer tax system for honest taxpayers”.
The signatories' representatives emphasised how they expect the CRS to help their governments in the fight against tax evasion.
"This is an important step in ensuring that all taxpayers comply with their domestic tax obligations. It will help catch taxpayers using hidden offshore bank accounts to evade Australian tax," said Steven Ciobo, the Australian Government's Parliamentary Secretary.
"Through more information sharing and better detection and compliance methods, those who want to evade their tax obligations have
"For implementation of these standards in India and with a view to provide information to other countries, necessary legislative changes have been made through Finance (No. 2) Act, 2014, by amending section 285BA of the Income Tax Act, 1961," a press release from the Indian government stated. "Necessary rules and guidelines are being formulated in consultation with financial institutions."
"This agreement means we will be better able to target multinationals who elude tax in New Zealand whilst not placing unnecessary burden upon those who are meeting their tax obligation," said Todd McClay, New Zealand Minister of Revenue and Associate Trade Minister.
The other jurisdictions to sign the MCAA on Wednesday were Chile, Costa Rica and Indonesia.
The Indian government sees the implementation of AEOI through the CRS as critical in its fight against tax non-compliance by uncovering undeclared assets held by Indians overseas, or so-called black money.
"AEOI based on CRS, when fully implemented, would enable India to receive information from almost every country in the world including offshore financial centres and would be the key to prevent international tax evasion and avoidance and would be instrumental in getting information about assets of Indians held abroad including through entities in which Indians are beneficial owners," the Indian government said. "This will help the Government to curb tax evasion and deal with the problem of black money."
The Lok Sabha, India's lower house of parliament, passed the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill during its last session in May, which imposes a 90% penalty and possible imprisonment for any Indian taxpayer found to have undeclared assets outside the country.
