By Sneha Shankar - U.S. and Australia are planning to sign an agreement to battle tax evasion and to prevent companies from shifting their income to low-tax countries by sharing bank information through an automatic process, media reports said Friday.
U.S. Treasury Secretary Jacob J. Lew reportedly said Friday that the countries have reached an agreement on the Foreign Account Tax Compliance Act, or the FATC Act, and “plan to sign it soon,” reports said, adding that the pact could be finalized as soon as the upcoming G-20 summit this weekend in Brisbane.
“Automatic exchange of information has quickly become the new global standard. The G-20 should continue to provide its full support and encourage all nations to adopt the standard,” Lew said, according to Bloomberg, while attending a meeting with finance ministers from the G-20 economies in Sydney.
Passed in 2010 by Congress, the FATC Act requires foreign financial institutions to disclose details about accounts held by U.S. taxpayers to the Internal Revenue Service.
The Organization for Economic Cooperation and Development is trying to put global information exchange in place to deal with tax-avoidance methods adopted by companies such as Google Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL) and Yahoo! Inc. (NASDAQ:YHOO), and a report is expected to be presented about the progress on information exchanges at the meeting in Sydney, Bloomberg reported.
Australian Treasurer Joe Hockey reportedly said in a meeting with Lew Friday that G-20 nations should devise methods to “ensure that there is a greater transparency and better outcomes in the disclosure of tax liabilities and tax collections.”
The British Parliament also has been holding hearings on corporate tax evasion, analyzing strategies being used by information-technology companies and others such as Starbucks Corp. (NASDAQ:SBUX), since November 2012. The U.S. Senate held a hearing on Apple’s offshore tax policies last May.