In the recent years, there has been a steady increase in the number of legal acts allowing the governments to automatically exchange tax information. Below, three such legal acts are mentioned.
The U.S. Foreign Account Tax Compliance Act (FATCA) requires all non-US financial institutions to conduct a search in their records and to report assets of suspected US citizens to the U.S. government. The revised EU Savings Directive (EUSD) provides for automatic exchange of information on interest income within the European Union and certain non-EU territories. The Multilateral Convention of Mutual Assistance in Tax Matters allows the countries to which the Convention applies to automatically exchange tax information.
The Convention currently applies not only to large countries which normally are very concerned about tax evasion, but also to offshore centers, such as Belize and Costa Rica. It is expected that, in the near future, the Convention will become applicable to virtually all countries in which one may keep her assets. Certain countries (e.g., North Korea and Somalia) may not sign the Convention. Such countries, however, are and will probably remain unattractive for keeping assets despite of their “privacy” advantages.
The recent trend to adopt legal acts enabling automatic exchange of information will deprive the persons willing to decrease their tax burden of the option to create offshore bank accounts which will be invisible to the tax inspector. The only option that will remain available to such persons will be to move to a country offering an attractive tax regime. Therefore, one can expect a significant number of tax emigrants who will search for a new home. While in the previous centuries, the emigrants were choosing their new residence on the basis of low price of land, the contemporary emigrants will choose it on the basis of low taxes.
The influx of tax emigrants will increase the tax competition between the countries. Small islands will put significant efforts to attract rich individuals who can make those islands (and their economy) even more beautiful. The following sentence said by Gerard Depardieu can be the slogan of the people exercising the right to quit their country due to high taxes: “I am a free man. I feel at home everywhere in Europe.” However, some of the new tax emigrants may feel at home not only in Europe, but all over the world (except in the countries with high taxes).
ebooks about saving taxes
