The elimination of tax evasion is a laudable objective.
Governments miss out on revenue if assets are moved to other
jurisdictions to evade taxes, and the impact is greater in poorer
However, it is reasonable to ask whether international efforts
for the automatic exchange of information (AEOI) strike an
appropriate balance between the objective of eliminating tax
evasion and the legitimate concerns of individuals concerning their
privacy and safety.
The use of planning techniques to lawfully minimise taxation
combined with honest tax reporting is very different from illegally
hiding assets and income to avoid accurately reporting to tax
authorities. However, those who pay higher tax rates may be
forgiven for begrudging those with the resources to structure their
affairs utilising lower tax jurisdictions, potentially only further
increasing the substantial proportion of global wealth held by a
tiny proportion of the population. The Tax Justice Network, a tax
research and advocacy group, estimates that offshore financial
centres (OFCs), many of which are United Kingdom (UK) dependencies
or territories, hold USD21 to USD32 trillion of individuals'
Governments and media have described tax avoidance as a moral
evil, often distinguishing between aggressive and ordinary tax
planning. However, taxpayers cannot be expected to comply with
subjective notions of morality.
Rather, the imposition of tax through application of clear laws
should be the objective. In order to implement appropriate tax
laws, governments may require information regarding the
transactions and entities that their residents benefit from locally
and abroad. The Organisation for Economic Cooperation and
Development (OECD) and many governments are concerned that OFCs
attract foreign investment by: imposing low, or no income or
corporate taxes on foreign investors; and facilitating foreign
investors to keep their identities and financial affairs
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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