Thursday, March 21, 2013
Itai Grinberg (Georgetown) presents Improbable Bedfellows: Emerging Countries and Financial Institutions in the Battle Over Taxing Offshore Accounts at UCLA today as part of its Tax Policy and Public Finance Colloquium hosted by Jason Oh and Kirk Stark:
A new international regime in which financial institutions function as cross-border tax intermediaries is emerging. We are in a narrow window of time—a span of perhaps only a few years—in which the contours of that regime are being established. The outcome will have important consequences for the tax administrations of developing and emerging economies. A uniform, multilateral automatic information exchange system would improve both these jurisdictions’ ability to tax offshore accounts of their residents and their capacity to effectively implement taxation of portfolio income from capital.
Interestingly, multinational financial institutions and emerging countries’ concerns with the emerging international regime are in many ways aligned. As a result, they may find that they have improbable allies in each other as they navigate the battle over taxing offshore accounts. With the G-20 as an agenda setter and international financial law as the model, a governance structure for an automatic information exchange regime that could be useful to emerging countries and lower multinational financial institutions’ compliance costs could emerge. The paper explores the necessary architecture.