BASEL: (ITA) and Swiss Finance Ministry signed on November 27 a declaration of intent regarding the exchange of information about financial accounts. The aim is to enhance cooperation regarding the supply of information, “egalitarian enforcement” of taxation in Israel, truthful tax payment and limit black money.
This is within the framework of the Common Reporting Standard of the OECD. In May this year, the ITA director, Moshe Asher, signed the OECD’s Multilateral Competent Authority Agreement for the Common Reporting Standard (CRS Convention).
According to the announcement, the automatic exchange of 2018 balances by Israel is scheduled to begin in September 2019. But according to the November 27 announcement, commencing in 2017, the two countries will apparently start exchanging bank information upon request, since both countries have signed and ratified an earlier, more general agreement – Convention on Mutual Administrative Assistance in Tax Matters (MAAT Convention).
Upon request is not the same as automatic. It seems there will be a lot of legal hairsplitting when it comes to information exchange.
This entered into force in Israel on December 1, 2016, and will enter into force in Switzerland on January 1, 2017, according to the OECD.
It allows one country to request information relevant for the enforcement of their domestic tax laws whereupon the requested state shall provide such information if it concerns particular persons or transactions. In other words, no fishing expeditions. The ITA cannot contact the Switzerland Federal Tax Administration to request information about all Israelis with bank accounts in Israel, it can only ask about Mr X or transaction Y.
If information available in the tax files of the requested state is not sufficient, it shall take all measures relevant to provide the applicant state with the information requested. (Articles 4 & 5).
This implements the OECD’s Common Reporting Standard (CRS). It entails an electronic system similar to the United States’ FATCA (Foreign Account Tax Compliance Act) system. But FATCA mainly covers the accounts of US persons and accounts in the US. The CRS applies to over 100 additional countries.
The CRS calls for automatic exchange of information by financial institutions of one country to the tax authority of the same country for onward forwarding to the tax authority in each country where the account holder is thought to have links, such as identity number, address, passport and phone number.
