Ban on bearer shares helps recover billions in evaded tax

Global action by OECD countries to reduce tax evasion has resulted in a 24% global reduction in foreign-owned bank deposits held in international financial centres (IFC)

This has led to the identification of funds amounting to $410bn (£315bn) between 2008 and 2019.

Since automatic exchange of information – sharing tax data on local deposit holders between global tax jurisdictions - began in 2017, there has been a 22% average reduction in IFC bank deposits owned by non-IFC residents.

The figures were highlighted at this week’s 10th anniversary conference of the OCED’s global forum on transparency and exchange of information for tax purposes.

Over 500 delegates from 131 member jurisdictions met to discuss progress in advancing the tax transparency agenda.

Almost all global forum members have eliminated bank secrecy for tax purposes, with nearly 70 jurisdictions changing their laws since 2009.

Almost all members either ban bearer shares – previously a longstanding impediment to tax compliance efforts – or ensure that the owners can be identified.

A bearer share is an equity security which is owned by whoever holds the physical stock certificate. They were a popular vehicle for tax evasion as the issuing firm does not have to register the owner of the stock or track subsequent transfers of ownership.

Since 2017, members must also ensure transparency of the beneficial owners of legal entities, so these cannot be used to conceal ownership and evade tax.

Angel Gurría, OECD secretary-general, said: ‘The global forum has been a game changer. Thanks to international cooperation, tax authorities now have access to a huge trove of information that was previously beyond reach.

‘Tax authorities are talking to each other and taxpayers are starting to understand that there’s nowhere left to hide. The benefits to the tax system’s fairness are enormous.’

OECD global forum 10th anniversary report

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