Exchange of Information for Tax Purposes

1. S. 585Introduction

The ability of corporations and individuals to flout national tax laws has faced increased attention from the public as the global age of media dawns upon the world. The legal tax structures used by large companies such as Google and Starbucks has only added fuel to fire. This threat is a great challenge to the rule of law and the integrity of states’ fiscal systems. Furthermore, the current budget deficits faced by a large number of western governments has put pressure on tax administrations and ‘in the wake of the financial crisis, countries realized their urgent need to unlock new sources of revenue.’

‘The importance attached to the international exchange of tax-related information has been increasing during the last decades, because of the growing globalization of economies.’ Most developed countries tax worldwide income, but enforcement is restricted by their own territories. Thus, a mismatch is created and ‘as states cannot effectively combat this phenomenon, in order to preserve their economic systems, they are forced to cooperate’. There a number of methods of international co-operation, however, exchange of information for tax matters is one of the most impor...